Bold strategy will help carve out our place in AI race
Astoundingly, we are one of the world’s only major economies without an AI strategy, yet AI will be in the 21st century what manufacturing was in the 20th century. It will bring fundamental changes to the way we work, make goods and deliver services across the economy. It’s also the key tool to lift productivity in the next decade.
A report commissioned by the Tech Council of Australia found that between 2023 and 2030, high adoption of generative AI could create 200,000 jobs and lead to gross value added gains of $115bn a year, 70 per cent of which would come from productivity growth.
This reflects an average increase in GDP due to productivity of just more than $11bn – an opportunity that cannot be missed.
That kind of uplift is essential because for at least two decades Australia’s productivity growth has been underwhelming. (MFP) and labour productivity growth have averaged less than 1 per cent a year, compared with comfortably more than 1 per cent a year in the decade ending in 2005. Multifactor productivity and labour productivity growth have averaged less than 1 per cent a year, compared with comfortably more than 1 per cent a year in the decade ending in 2005.
A single strategy defining a bold vision for AI adoption, development and deployment is vital. This must balance the overwhelming economic imperative with risk, creating the right environment for AI to thrive. It also must address how Australia can play to its strengths, carving out a niche in the global AI race.
How do we build an AI sovereign capability? How do we incentivise our brightest minds to stay onshore? And how do we provide business with the certainty it needs to invest in AI technologies?
We need to emphasise existing strengths and make strategic investments to address weaknesses.
An AI strategy also must decide on the regulatory model that Australia will adopt, one that will help businesses invest with confidence. It will give the public trust that AI use will be safe and responsible, without hindering innovation through regulatory burden, as is occurring in the EU.
Research and development equate to investment and innovation that will diversify our economy and grow sovereign capability.
The government has launched a strategic examination of research and development that reports at the end of 2025. The review was commissioned because investment in R&D is at an all-time low just as other nations are ramping up their R&D spending.
The review is a critical opportunity to set a vision and target for innovation and investment.
It must review and reform our regulatory, tax and investment frameworks to deal with the shift from physical to digital R&D investments, the ability to commercialise a greater range of research strengths, and the need to attract domestic and global capital to scale current industries and build new ones.
Australia also needs to get smarter about the way it sets and administers policies. It should launch a tech and innovation strategy, tied to the budget and government procurement, that can be updated annually and hold long-running, multi-year reviews only when essential. That will let the government undertake reforms in a more co-ordinated and dynamic manner.
Government services are the place to start. There is an important opportunity to adopt technologies and use data to improve public service productivity and the institutions of government. This includes digitising services and administrative processes to provide a better experience for citizens, using data in decision-making and adopting tools that improve the efficiency and quality of public service work. It’s also an alternative to the extreme Department of Government Efficiency-style remaking of the public sector in the US.
As a country, we need to start talking about the centrality of tech to our future prosperity. The opportunities are endless and they are ours for the taking.
Kate Pounder is a former chief executive of the Tech Council of Australia, and a board director.
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