Australia has more artificial intelligence potential than many Australians realise, according to a new report which says the country has important “strategic cards” to play in the global AI landscape.
The research highlights opportunities for Australia to become a major regional data centre hub, leverage its critical minerals to strengthen global AI supply chains, and play a greater role in shaping international AI standards and norms.
However, the report warns that Australia still faces significant gaps in regulatory frameworks, particularly in how data is collected, stored, and accessed in ways that protect privacy and uphold human rights.
It also stresses the need for stronger focus on powering data centres with renewable and clean energy to ensure sustainable AI growth.
The report, Expanding AI Sovereignty to AI Agency, was released by the Tech Policy Design Institute (TPDi) and provides an independent national-level assessment of Australia’s AI capabilities.
Using a newly developed “AI Agency Tool” created with input from more than 250 experts, the study evaluates Australia’s strengths across 103 AI-related capabilities and offers policy recommendations.
It also compares findings with the Australian government’s 2025 National AI Plan to assess how well current priorities align with evidence-based needs.
According to the report, Australia’s AI capabilities are stronger than commonly perceived, with significant foundations already in place for future growth.
Lead author Zoe Jay Hawkins said Australia is in a stronger position than it often acknowledges, noting that the country has valuable assets that must be used strategically.
She added that Australia has “valuable cards in its hand” and should deploy them wisely to maximise national benefit in the global AI race.
The report identifies areas of “very high agency” including critical minerals, medical and geospatial data, environmental datasets, infrastructure data, and international influence in AI governance.
It also highlights opportunities in data centre development, public cloud systems, and AI adoption across government and small businesses.
However, it points to weaker areas such as AI chip manufacturing and frontier model development, where Australia has limited competitive advantage.
The report further raises concerns about gaps in regulatory oversight, public-sector computing investment, and the development of culturally inclusive AI systems.
It also calls for improved data lifecycle management and stronger efforts to build public trust in AI technologies across society.
As global interest in data centres grows, the report notes increasing pressure on energy and water resources, warning that unchecked expansion could challenge Australia’s climate goals and infrastructure sustainability.
Environmental groups have also raised concerns, arguing that rapid data centre growth could increase fossil fuel dependence and strain national emissions targets if not properly managed.
