Australia must invest in homegrown AI now or risk | Australian Markets

Australia is on a fast observe to turning into a “global laggard” in artificial intelligence (AI), with the Federal Authorities urged to behave now to nurture native AI industry growth and strengthen sovereign AI capabilities, defending national security and driving broader financial growth.

Australian AI developer Trellis Knowledge has backed a latest pre-Finances 2025-26 submission from the tech industry peak physique, the Australian Data Trade Affiliation (AIIA), which argues that Australia’s future financial prosperity, productiveness growth and security hinges on sufficient Authorities investment on this fast-emerging technology.

The submission highlights the nation’s dearth of investment within the native AI industry, significantly compared in opposition to different developed economies, in addition to the risk of our dependence on unsecured foreign-developed AI fashions.

For example, the AIIA notes that each Canada and Singapore have made substantial financial commitments ($2.7 billion and $5 billion, respectively) in direction of AI development and adoption.

To date, the height physique argues, the Australian Authorities has “avoided making any significant investments” in AI.

Not a single AI-focused analysis project will obtain funding from the 2026 Australian Analysis Council Centre of Glorious (CoE) grants, the AIIA says, “exposing a fundamental flaw in Australia’s approach to supporting AI innovation”.

This lack of strategic investment and analysis funding in AI will in the end threaten Australia’s “economic competitiveness, productivity and social equity”, it argues.

Skilled companies group PwC predicts that AI may ship an up to 26% increase to the GDP of economies worldwide. This might see an extra $15.7 trillion added to the worldwide economic system by 2030 – more than the present output of China and India mixed.

As nicely, each the AIIA and CSIRO-backed Trellis warn that Australia dangers undermining its national security with out a “secure, sovereign” AI functionality. Following the Australian Authorities’s latest banning of the Chinese language-developed massive language model (LLM) DeepSeek R1 – which boasts related capabilities to the US-developed ChatGPT model – within the public sector citing “unacceptable risks”, Trellis stresses that Australia can not depend on nor totally trust foreign-developed AI fashions and should work to develop its own.

“Australia can’t afford to always rely on foreign AI that we neither control nor fully trust,” writes Michael Gately chief govt of Trellis Knowledge.

“We need sustained investment in Australian AI companies to ensure our data remains secure, our AI capabilities remain competitive, and our economy benefits from homegrown innovation.”

He believes the Federal Authorities can and may “lead the way by actually adopting and utilising more home-grown AI solutions”.

“A strong, sovereign AI sector isn’t just an economic advantage – it’s a national security imperative,” Gately mentioned.

For AIIA chief govt Simon Bush, the Finances presents an “urgent opportunity” to offer significant funding for AI analysis, together with by way of a devoted AI Centre of Excellence (CoE) backed by industry and targeted on translating analysis into commercialisation and adoption.

“With out important investment, we risk turning into an unattractive vacation spot for technology companies, resulting in decrease productiveness and financial stagnation and loss of deep analysis AI expertise.

“The Albanese Government needs to urgently rectify this, or risk Australia being left behind in the global AI race,” Bush mentioned.

The AIIA has known as for at the least $150 million in initial funding for the CoE to assist elementary AI analysis and commercialisation alternatives. This, it mentioned, would additionally serve to separate the tech funding course of from the “flawed” Australian Analysis Council ARC grant course of, which “omits any software-related technology and AI research”.

As nicely, the AIIA needs Australia’s focus to be on “creating AI” (elementary analysis and development), which is differentiated from “using/customising AI” (utility to unravel sector-specific issues).

Amongst its 10 suggestions to Authorities the AIIA has known as on policymakers to a) assist AI adoption by Australian companies, “ensuring they remain globally competitive while maintaining ethical AI standards”, b) commercialise and unlock deidentified public datasets, c) fund digital cadetship and digital expertise building, supporting the transition of staff to the fashionable economic system, and d) speed up the rollout of the Nationwide AI Functionality plan targets to handle the AI analysis funding hole.