Forging a Sovereign Future: A National Strategy for Artificial Intelligence in Australia

1.0 The Strategic Imperative: Why Australia Needs a Sovereign AI Capability Now

Artificial intelligence (AI) is the general-purpose technology of our time, a transformative force reshaping the global economy, national security, and society itself. For Australia, this moment represents a critical juncture. With the global economic impact from AI projected to exceed A$20 trillion by 2030, the path forward presents a stark choice: to proactively design our AI future, securing our national interests and digital autonomy, or to become a passive consumer of foreign technology. Without a cohesive national strategy, Australia risks ceding control of its most valuable data, weakening its national security posture, and facing a new form of "digital colonialism" where external entities dictate the technological and regulatory frameworks that shape our economy and public life.

The urgency to act is acute. The rapid pace of global AI development leaves little room for hesitation, and the Australian government has set a pressing timeline to deliver its National AI Plan by the end of 2025. Failure to cultivate a robust domestic capability would have profound and lasting consequences, placing the nation at a significant strategic and economic disadvantage.

"If Australia were to fail to grow its sovereign AI capability—and instead relied on purchasing technology created abroad—it risks putting our industries at a competitive disadvantage and ceding control of our technology to foreign commercial and national interests."

— Australian Institute for Machine Learning (AIML)

The foundational challenge, therefore, is to define what AI sovereignty means in the Australian context. This requires a shared understanding that can guide coherent policy, prioritise investment, and rally a national effort toward a common goal.

2.0 Defining AI Sovereignty for Australia: A Framework for Control and Opportunity

Establishing a clear, shared definition of AI sovereignty is a strategic priority. The term is "often invoked but rarely defined," meaning different things to different stakeholders, from data ownership to infrastructure control. This ambiguity makes it challenging to prioritise investment or set a coherent national strategy. To move forward, Australia requires an authoritative Sovereign AI Framework that provides clarity and a common language for policymakers, industry, and researchers.

Grounded in national consultations and expert analysis, AI sovereignty for Australia should be understood as a multi-faceted concept that encompasses a "full stack view" of the entire AI ecosystem. This holistic framework includes:

• Infrastructure: The foundational hardware, including onshore High-Performance Computing and Data (HPCD) capabilities and secure domestic data centres for storage and processing.
• Models and Data: The development of homegrown AI models trained on datasets that accurately reflect the diversity, complexity, and values of Australian society.
• Skills: The cultivation of a world-class domestic workforce with the expertise to build, deploy, manage, and govern sophisticated AI systems.
• Governance: The capacity for the Australian government and its agencies to act as effective regulatory overseers, ensuring that AI is developed and deployed responsibly and in the national interest.

This vision of sovereignty is not about isolationism but about achieving a strategic balance between control and opportunity. Leaning too far toward absolute control risks cutting Australia off from vital global collaboration and innovation. Conversely, a failure to invest in sovereign capability makes us passive recipients of other nations' priorities and values, embedded within the very technology we use. The goal is a model of digital sovereignty that enables Australia to shape its future without closing itself off from the world.

The table below contrasts the inherent tensions in this pursuit, highlighting the risks of imbalance.

Risks of Isolationist Control

Risks of Strategic Dependency

Potential for isolationism and technological stagnation.

Becoming a passive recipient of other nations' priorities and values.

Hindering valuable global research and commercial collaboration.

Losing control over how national values are represented in foundational models.

The following sections outline the core pillars of a national strategy designed to navigate these tensions and build a balanced, resilient, and prosperous sovereign AI capability.

3.0 The Pillars of a National AI Strategy

A successful sovereign AI capability rests on five interconnected pillars: foundational infrastructure, a skilled workforce, a thriving public-private ecosystem, robust data governance, and deep integration with national security priorities. Each pillar is essential, and together they form a comprehensive strategy to secure Australia's digital future.

3.1 Pillar 1: Foundational Infrastructure – Building Australia's Digital Backbone

Sovereign technological infrastructure is the bedrock of sovereign AI. Without sufficient onshore High-Performance Computing and Data (HPCD) capabilities, Australia will remain dependent on other nations for the critical processing power required to train and deploy advanced AI models. This dependence hinders our ability to tailor AI tools to Australian-specific challenges and creates unacceptable risks for data security. A national priority must be the development of what the Lowy Institute has termed an "AussieCloud"—a comprehensive national digital infrastructure that integrates data centres and AI supercomputing labs. However, this digital backbone is inert without the world-class AI workforce detailed in Pillar 2 to build, operate, and innovate upon it.

The key components of this digital backbone include:

• Domestic Data Centres: Essential for maintaining sovereignty over sensitive data, these facilities are a critical national security requirement. Operators like NEXTDC are already playing a key role by hosting major sovereign AI initiatives, demonstrating the private sector's readiness to support this national goal.
• AI Supercomputing: The scale of ambition required is significant. The recent investment by Sovereign Australia AI in a large cluster of NVIDIA Blackwell B200 GPUs—the largest in Australia—is a concrete example of the compute power needed to train foundational models at a scale that puts Australia on the global AI map.
• Secure Cloud Environments: The concept of "sovereign clouds" is a critical component of this strategy, enabling organisations in regulated industries like finance and healthcare to meet data localisation requirements. These environments are designed to adhere to specific local regulations, ensuring that sensitive data is stored and managed within Australia's legal jurisdiction.

3.2 Pillar 2: The Human Element – Cultivating a World-Class AI Workforce

Advanced infrastructure is only as valuable as the people who can build with it. Australia faces a significant AI skills gap that threatens to undermine its sovereign ambitions. The government understands that the country will require as many as 161,000 new specialist AI workers within the next seven years, yet the Australian Institute for Machine Learning (AIML) has asserted that "there is currently no mechanism to achieve this." This talent pipeline will be the engine of our sovereign capability, but it can only thrive if provided with access to the cutting-edge sovereign compute and data infrastructure outlined in Pillar 1.

Drawing inspiration from the highly successful Canadian model, Australia should implement the following actions:

1. Invest in University Research Clusters: Emulate Canada's strategy of making substantial, globally competitive investments in university-based AI research hubs. These clusters act as powerful magnets for attracting top global talent, serve as anchors for private sector R&D investment, and stimulate the commercialisation of cutting-edge research.
2. Expand Education and Training: Boost AI skills development across the entire education pipeline. This includes developing school curricula so every Australian student can learn basic AI skills, providing targeted training for VET students in applied AI, and expanding postgraduate and postdoctoral programs to create a new generation of AI specialists.
3. Stimulate Commercialisation and Spin-outs: Establish dedicated funding mechanisms to support the transition of university research into new Australian companies. This will ensure that the intellectual property and economic benefits generated from publicly funded research are retained in Australia, helping to grow a vibrant domestic industry.

3.3 Pillar 3: A Thriving Ecosystem – Fostering Public-Private Collaboration

A robust sovereign AI capability cannot be built by the government alone. It requires a thriving ecosystem where small and medium-sized Australian tech companies can flourish on the foundation of our national infrastructure (Pillar 1) and powered by our domestic talent (Pillar 2). Currently, these companies face immense challenges, including intense competition from AI multinationals with deep pockets and systemic difficulties in accessing public sector procurement opportunities. To build a more resilient and innovative domestic market, two strategic shifts are required.

• Prioritise Sovereign Procurement: Government procurement processes must be reformed to prioritise home-grown technology and smaller Australian companies. The success of programs like the Small Business Innovation Research (SBIR) initiative in the United States provides a proven model. By directing public investment toward domestic innovators, the government can act as a powerful catalyst for the entire ecosystem, creating a stable market that allows local firms to scale and compete globally.
• Foster Strategic Alliances: Building a national capability is a team effort. Deep collaboration between industry, academia, and government is essential for success. The partnership between the Australian Computer Society (ACS), the Department of Industry, Science and Resources, and the Tech Policy Design Institute (TPDi) to define AI sovereignty is a prime example of the kind of strategic alliance needed to align national efforts and deliver an evidence base that informs effective government decision-making.

3.4 Pillar 4: Data as a National Asset – A Framework for Governance and Access

In the age of AI, data is the means of production. A truly sovereign AI model must be trained on data that accurately reflects the diversity and complexity of Australian society, securely housed within our national infrastructure (Pillar 1). Only then can we ensure these models are effective, equitable, and just. Ceding control of our sensitive personal and business data to global corporations is not merely a commercial transaction; it is a profound strategic risk that allows foreign entities to know more about us than we know about ourselves. Australia must therefore treat its data as a core national asset, governed by a framework that balances access for innovation within our domestic ecosystem (Pillar 3) with robust protection.

A principles-based approach to national data governance should be built on established international best practices:

• UNESCO Recommendation on Open Science: Implementing this framework will help unlock the full potential of Australian public sector data for research and innovation, fostering transparency and collaboration.
• FAIR Principles: This framework ensures that public data is managed in a way that makes it Findable, Accessible, Interoperable, and Reusable, maximising its value for the entire AI ecosystem.
• CARE Principles for Indigenous Data Governance: To ensure the ethical and respectful use of Indigenous data, governance must adhere to the principles of Collective benefit, Authority to Control, Responsibility, and Ethics.

Alongside these principles, technical solutions like data masking and tokenisation are crucial tools. They allow sensitive information to be protected by replacing it with fictitious or non-sensitive identifiers, enabling valuable analytics and AI model training to occur without compromising individual privacy.

3.5 Pillar 5: National Security and Defence – Securing an Asymmetric Advantage

The Department of Defence has identified AI as key to enhancing capability, strengthening deterrence, and achieving a "decision advantage" in line with the National Defence Strategy. Securing this advantage is contingent upon the preceding four pillars: it requires assured access to sovereign infrastructure, a trusted and vetted workforce, a resilient domestic industrial base, and secure control over national data. In an environment where Australia must seek military advantage in innovative ways, the responsible adoption of AI and autonomy offers a critical asymmetric edge in areas from logistics and intelligence to targeting and strike applications.

Specific Defence initiatives and commitments underscore AI's central role in national security:

• AUKUS Pillar II: AI and autonomy have been identified as an immediate priority for joint research and development with the United Kingdom and the United States, focusing on rapidly delivering advanced capabilities for all three partners.
• Responsible Military Use: Defence is committed to the responsible development, deployment, and use of AI. It is developing an internal policy aligned with international best practice and actively participates in global discussions to shape shared international norms, including those concerning autonomous weapons systems (AWS).
• Legal Compliance: All AI-enabled weapons systems acquired and deployed by the Australian Defence Force are subject to rigorous legal review to ensure full compliance with Australia’s domestic and international legal obligations, including international humanitarian law.

This commitment to responsible use in the military domain reflects a broader societal need for an ethical framework that builds public trust in AI across all sectors.

4.0 A Framework for Trust: Embedding Ethics and Responsibility into Australia's AI

Technological capability alone is insufficient. To secure a social license and earn public trust, Australia's sovereign AI must be built on a robust ethical foundation. Fortunately, Australia is well-positioned to lead in this domain, with its national AI Ethics Principles providing a clear and comprehensive framework for the responsible design, development, and deployment of AI systems. These principles must be championed as the national standard for both the public and private sectors.

Australia's eight AI Ethics Principles are:

1. Human, societal and environmental wellbeing: AI systems should be designed to benefit individuals, society, and the environment.
2. Human-centred values: AI systems must respect human rights, diversity, and the fundamental autonomy of individuals.
3. Fairness: AI systems should be inclusive and accessible and must not involve or result in unfair discrimination against individuals or groups.
4. Privacy protection and security: AI systems must respect and uphold privacy rights and ensure the robust security of all data they handle.
5. Reliability and safety: AI systems should operate reliably, safely, and in accordance with their intended purpose throughout their lifecycle.
6. Transparency and explainability: There must be responsible disclosure to ensure people understand when they are being significantly impacted by an AI system.
7. Contestability: When an AI system significantly impacts a person, there should be a timely process to allow them to challenge its use or outcomes.
8. Accountability: Those responsible for the different phases of the AI system lifecycle should be identifiable and held accountable for its outcomes.

Leading industry players are already demonstrating how these principles can be put into practice. The commitment by the newly launched Sovereign Australia AI to be an "ethics-driven" company by compensating Australian copyright holders for the data used to train its models is a powerful example of building ethical considerations into the core of a business model.

This ethical framework is not a barrier to innovation but an enabler of it, providing the foundation of trust upon which a thriving and accepted national AI ecosystem can be built.

5.0 The Path Forward: A Call to Action for Australia's AI Future

Australia stands at a strategic crossroads. The choice before us is clear: we can either take decisive action to forge our own sovereign AI future, or we can resign ourselves to a future of dependency on foreign technological ecosystems, where our data, values, and national interests are secondary. The economic and national security stakes are too high for inaction. The time has come to move beyond discussion and implement a coherent, ambitious, and well-resourced national strategy.

This white paper proposes a path forward built on five interconnected pillars. To operationalise this vision, the following strategic actions must be prioritised.

Key Strategic Actions

• Establish a National Definition: Finalise an authoritative Sovereign AI Framework based on the national consultation, providing a shared language and clear direction for public policy and private investment.
• Fund Critical Infrastructure: Commit to a long-term, large-scale investment strategy for a national "AussieCloud," including the development of onshore AI supercomputing facilities and a network of secure domestic data centres.
• Launch a National AI Skills Initiative: Implement a coordinated national strategy, modeled on international successes like Canada's, to build a domestic workforce of over 161,000 specialist AI workers and retain them in Australia.
• Reform Public Procurement: Mandate a "buy Australian sovereign AI" priority in government procurement processes to provide a stable domestic market that supports local SMEs and fosters a competitive national industry.
• Adopt a National Data Strategy: Implement the UNESCO Recommendation on Open Science and formally embed the FAIR and CARE principles in all public sector data governance to maximise the value of our national data assets responsibly and ethically.
• Operationalise Ethical AI: Champion Australia’s AI Ethics Principles as the single national standard for the public and private sectors to build trusted, secure, and responsible AI that earns the confidence of all Australians.

By taking these decisive steps, Australia can secure its digital sovereignty and position itself as a global leader in the development, adoption, and governance of trusted, secure, and responsible artificial intelligence. The future is not something to be predicted, but something to be built. Let us begin.

‍