Australia must move up the AI ‘value chain’ to capture maximum value from the technology: Andrew Charlton

Australia must move up the Artificial Intelligence (AI) value chain rather than simply hosting data centres, the Assistant Minister for Science, Technology and the Digital Economy, Andrew Charlton, says.

In a lecture to be delivered at the ANU Crawford School Tuesday titled “Why Australia Needs to Turn Compute into Sovereign AI”, Charlton argues Australia needs to leverage its data centre advantage and translate that into benefits and growth for the broader economy.

Charlton has given the strongest signals to date about the government’s expectation for AI companies to give support for Australian start-ups, enter research partnerships with Australian universities, and bring world-class AI talent to Australia.

“That is the express thinking behind Expectation 5 of the government’s National Data Centre Expectations – the vital connective tissue that transforms data centres from being a dry utility to a strategic catalyst that unlocks second and third round benefits for Australia”, Charlton says in his speech, released ahead of delivery.

“We can increase our economic dividend from AI by leveraging our strengths to play higher up the value chain.” But, “Unless we take timely action, Australia is on course to be a large and permanent importer of intelligence.

This might mean that AI grows the Australian economy, but much of the value flows offshore.” Australian AI spending is increasing by about 20-40% every quarter, effectively doubling each year, he says.

“If artificial intelligence becomes embedded across most knowledge work, Australian spending could plausibly reach twenty to forty billion dollars annually within a decade.

"At that point it would rank among Australia’s largest imports.

We could easily spend more importing artificial intelligence than we currently earn exporting wheat.

That would represent one of the largest recurring outflows in the Australian economy.” Charlton says that from the perspective of public policy, what matters is where the money ultimately ends up.

“Only a few cents of the AI dollar buys electricity.

Perhaps another ten cents buys the physical data centre.

Most of the dollar flows further up the stack - to the chips and servers, the models and software, the research and intellectual property.

"For Australia, that matters.