The country is under growing pressure to define its place in the global race for artificial intelligence, with senior government officials developing a national approach that weighs economic opportunity against energy demands and security needs. While lobbying from the tech sector has intensified, the federal government has yet to finalise any major deals. This contrasts with countries such as the UK, UAE and Norway, which have already pledged billions to AI infrastructure.
As global tech firms pour capital into AI, data centres are emerging as the core of the digital economy, powering cloud platforms and large language models. These facilities, however, demand significant energy and land. With over 100 existing data centres, Australia is being encouraged to streamline approval processes, support renewable energy integration and consider subsidies for private operators to remain competitive globally.
Departments including Industry, Science and Resources are assessing the challenges of publicly funded support. Australia benefits from its status as a “tier one” country under US AI export rules, which allows easier access to advanced chips essential for AI technologies. Still, it has not secured the type of exclusive relationships with leading AI labs seen in other nations, instead leaning on broader regulatory frameworks to retain chip availability.
A major issue is determining who will benefit from this technological growth. Public institutions and universities are already investing in high-performance Nvidia chips to boost domestic capability. Security agencies are reportedly pushing for more government-backed sovereign AI infrastructure, though others are cautious. There is concern about directing public funds towards industries that create few jobs, consume large amounts of energy and offer uncertain long-term value for Australians.
Environmental concerns add another layer of complexity. AI data centres use vast quantities of electricity and water, raising questions about their sustainability and impact on existing infrastructure. Some believe that with the right strategy Australia could lead in green AI infrastructure, though others argue the country must ensure strong economic outcomes and avoid becoming a service provider for foreign tech firms.
