Sovereign AI for Australia: defining and delivering our future

Artificial intelligence is becoming embedded in the way governments deliver services, how industries compete, and how societies function.

At the National Press Address in July, Scott Farquhar, co-founder of Atlassian and Chair of the Tech Council of Australia, set the tone for our time, stating: “Australia is standing at the edge of the next great industrial revolution. One powered not by steam or electricity but by artificial intelligence.”

And he is right. AI is becoming a fundamental layer of our nation’s infrastructure.

The question governments now face is not whether to adopt this technology, but how to ensure it strengthens our autonomy, protects our citizens, and creates lasting economic value. This is the essence of sovereign AI.

What is sovereign AI?

The term is often used but rarely defined. Some see it as simply keeping data within national borders, while others link it to local control of applications. The reality is broader. Sovereign AI encompasses the full stack: chips and compute, data and models, skills and governance.

A useful definition for Australia might be this: sovereign AI is the nation’s capacity to design, develop, deploy and operate important AI systems on its own terms, using infrastructure, data and talent under Australian jurisdiction, so that critical services remain resilient to external disruptions and aligned with national laws and values.

This is not about absolute self-sufficiency. No country, not even the largest, is aiming to be fully independent across the entire AI ecosystem. Rather, it is about strategic autonomy: ensuring that, where national interests are at stake, Australia can rely on its own capability.

Why urgency matters

Global developments make this an urgent issue. Compute has become a strategic resource, with demand for graphical processing units outstripping supply. Leading technology companies are booking capacity years ahead and consuming more electricity than small cities.

Nations from Europe to Asia are investing in supercomputers and sovereign model programs. Japan, Singapore, South Korea, India and the Gulf states are all expanding their domestic AI horsepower.

At the same time, semiconductors are at the centre of global competition. The United States, China and Europe are investing billions in chip production. Australia cannot assume frictionless access to world-class hardware. Our opportunity lies instead in securing trusted supply through alliances, pooled procurement and smart policy.

Energy is another constraint. Large-scale AI requires stable power and advanced cooling. Some companies are building their own power generation, even exploring nuclear options. Australia’s renewable potential could be a comparative advantage, but only if matched by grid upgrades and water-conscious designs.

The underlying message is clear: dependency carries risks. Relying on offshore APIs for critical services leaves us exposed to price shocks, access restrictions or abrupt policy changes. Sovereign capability is our insurance policy.

What Australia needs

Building sovereign AI requires progress on several fronts. We need AI-optimised compute clusters and sovereign cloud regions. We need to grow a specialised workforce, spanning engineers, data scientists and product builders, supported by scholarships, retraining and targeted migration.

We must also build trusted datasets and models in domains where local context matters most: public services, health, agriculture, biosecurity and safety-critical systems.

Policy settings are equally important. Procurement frameworks should reward sovereignty-aware solutions, with clear disclosure of runtime locations and dependencies. Open standards and swappable architectures should be encouraged to avoid lock-in.

International collaboration will accelerate progress. The goal is to benefit from shared research and global ecosystems while retaining domestic control for sensitive workloads. Partnerships must come with clear commitments on locality, access and data protection.

Key takeaways

To summarise, there are five key points that should be considered in relation to sovereign AI:

• Sovereignty is about control and resilience, not isolation.
• Compute, chips and energy are strategic resources; scarcity must be planned for.
• Australia’s best model is hybrid: global frontier capability combined with sovereign control.
• Talent is the pacing factor; infrastructure without skilled people will underperform.
• Early investment in facilities, datasets, and models will reduce dependency and create momentum.

The balance we must strike

Sovereign AI is not about isolation. It is about balance: being open to global collaboration while anchored in our own capacity. Other nations are already moving quickly. If Australia hesitates, we risk dependency and higher costs. The opportunity is not just to safeguard national interests, but to set a global example of how sovereignty in AI can be open, practical and forward-looking. That is the standard Australians should expect — and the future we can build.

Top image credit: iStock.com/BlackJack3D