AI investment could boost Australia’s economy by AUD $235 billion

Australia could see its economy boosted by up to AUD $235 billion over the next decade if it moves quickly and decisively to invest in artificial intelligence (AI), according to new research from the Australian Academy of Technological Sciences and Engineering (ATSE) and consulting firm Kearney.

Economic potential

The report estimates that effective government intervention, including an additional public investment of AUD $5 billion over five years, could enable AI to contribute between AUD $160 billion and AUD $235 billion to the economy. This would represent a 6 to 8% increase in national GDP. Over half of this projected growth is expected to be driven by small and medium-sized enterprises (SMEs).

The anticipated benefits rely on widespread adoption of AI technologies, substantial reskilling of the workforce, and the creation of national AI infrastructure and talent pipelines.

Investment gap

The research highlights that other leading economies, including the US, Singapore, and Germany, are investing up to ten times more than Australia in AI-related infrastructure and skills. Australia's current level of investment places it at risk of falling behind these countries and becoming increasingly dependent on foreign-developed AI systems.

"AI is a swift-moving technology and will be critical to Australia's future security, resilience and independence," said Kylie Walker, CEO, Australian Academy of Technological Sciences and Engineering.

Blueprint for growth

The ATSE and Kearney report sets out a number of recommendations to bolster Australia's AI capacity. These include developing regional AI factories to connect research, talent, industry, and government, and establishing a national talent pipeline. Establishing population-scale AI training initiatives and curating datasets designed for domestic applications in sectors such as geoscience and health are also recommended.

Specialised Australian AI models, as well as sovereign infrastructure, are viewed as priorities. The proposed strategy aims to ensure local industries are able to adopt AI systems tailored for national needs.

Policy imperatives

Government involvement is seen as necessary to trigger large-scale private sector investment. The report estimates that a public commitment of AUD $5 billion could unlock up to AUD $49 billion in private capital, amplifying the impact of initial outlays and accelerating the formation of a domestic AI ecosystem.

"Australia can significantly uplift its productivity and compete at the technological frontier with AI-if it acts now," said Anshuman Sengar, Partner - Global Data & AI Lead, Kearney.

Investment priorities include workforce development programmes, sovereign computing capabilities, and the creation of innovation hubs for AI research and implementation.

Workforce transition

The adoption of AI will require nation-wide reskilling and upskilling, particularly for SMEs, to ensure workers and companies can successfully transition to more technology-driven operations. Training initiatives of this scale are expected to help Australians access new high-value job opportunities emerging globally as AI reshapes industries.

"Re-skilling and up-skilling are the most underestimated drivers of AI adoption," said Tomas Ptacek, Senior Director - Data & AI, Kearney.

"The government has a unique opportunity to orchestrate a nation-wide capability uplift - especially for small businesses - ensuring Australians benefit from the global wave of high-value AI jobs," said Ptacek.