Australia’s AI Capability Plan risks falling behind as global powers race ahead. With the 2025–26 Budget looming and elections on the horizon, experts warn the nation must act fast—or be left reliant on foreign tech giants while allies secure digital dominance.
Time is running out. With Treasurer Jim Chalmers set to deliver the 2025–26 Budget at approximately 7:30 pm AEDT on Tuesday, March 25, 2025, the current Federal Government must act with unrelenting urgency to fortify Australia’s artificial intelligence (AI) capabilities and secure national resilience. The countdown to this defining moment—now mere weeks away—demands a seismic shift in our AI strategy.
Elections loom in April 2025, amplifying the stakes, while the 2024 budget remains etched in memory as a "sad day" for technology professionals, its paltry $39.9 million over five years for AI—a measly $8 million annually—derided as "negligible" by the Australian Information Industry Association (AIIA).
Australia, as a middle power, stands at a perilous crossroads: our technological challenges stem from a lack of bold vision, and the snail’s pace of federal policy threatens not only our attractiveness for investment but our resilience against rapidly advancing Asia-Pacific neighbors.
Managed by the Federal Department of Industry, Science and Resources, the Capability Plan aims to “supercharge” Australia’s AI industry through consultations wrapping up in late 2025. The National AI Capability Plan, launched on December 16, 2024, promises a $600 billion GDP boost by 2030—but without immediate, transformative action, that promise risks evaporating. Ed Husic MP positions it as a business-centric strategy, promising high-value jobs and resilience in supply chains and infrastructure. However, its timeline lags behind global leaders. The EU’s AI Act and Canada’s Artificial Intelligence and Data Act are already shaping markets, while Australia’s plan remains a blueprint, its impact hinging on uncertain post-2025/26 budget funding.
As a middle power, Australia faces a stark reality. Our technological ambition must match our geopolitical weight, yet years of lackluster federal AI investment have left us vulnerable. The 2024 budget’s timidity—$21.6 million to shift the National AI Centre, $15.7 million for policy coordination, and a scant $2.6 million for security risks—drew outrage from the AIIA and the Australian Computer Society alike.
Helen McHugh of the latter noted, “We are concerned that more must be done,”
a sentiment echoing across a sector watching allies like the United States, United Kingdom, European Union, Gulf states, and Canada pour billions into AI supremacy. The rejection of the AI Growth Plan in 2024, a precursor to the current strategy, underscored federal indecision as peers accelerated. Now, with Asia-Pacific neighbors racing ahead, Australia’s hesitancy could weaken our economic and strategic standing, leaving us over-reliant on foreign tech giants like Microsoft and Google rather than building a sovereign AI ecosystem.
The global contrast is jarring. The US’s $500 billion Stargate project constructs AI supercomputing hubs, the UK commits billions to dominate by 2030, and France fuels AI-powered data centers with EU backing. Gulf states like Saudi Arabia bankroll ventures like Neom, while Canada’s CAD $125 million Pan-Canadian AI Strategy since 2017 powers innovation hubs. Australia’s $101 million over five years (2023-2028) is a whisper against these roars.
Australia’s delayed National AI Capability Plan—slated for late 2025, with critical funding deferred to 2026/27 or later—risks pushing essential infrastructure like AI labs, data centers, and workforce training programs to 2027. This timeline could cost Australia its share of the global AI market, projected to reach $826 billion by 2030. Industry leaders are sounding the alarm: Simon Bush, CEO of the Australian Information Industry Association (AIIA), condemns the pace as “unacceptable,” while UNSW’s AI expert Toby Walsh argues delays will leave Australia “uncompetitive and unproductive.”
The Tech Council of Australia (TCA), which first proposed the plan in August 2023, reiterates its support but insists urgency is paramount:
“We support the Government’s National AI Capability Plan… but this work needs to be brought forward. Australia cannot wait for the plan to be finalised by the end of 2025.” (TCA Statement, 25 January 2025).
With Asia-Pacific rivals accelerating their own AI strategies, the stakes are clear: Will Australia’s sluggish timeline deter investment and undermine its resilience in a region racing to dominate the future of technology?
France is rewriting the playbook, proving that a nation not traditionally at the forefront of AI technology can shift from underdog to architect of a towering digital ecosystem. Under President Emmanuel Macron, France has surged into the spotlight, securing €109 billion in private AI investment with backing from Saudi Arabia’s sovereign funds and beyond, positioning itself as Europe’s pacesetter against the USA. Macron’s vision leverages France’s nuclear-powered grid, a low-carbon engine driving AI’s relentless demands, unveiled with commanding clarity at the Paris AI Summit on February 10, 2025.
This strategic leap landed €20 billion from Canada’s Brookfield and up to €50 billion from the UAE’s MGX fund, marking a bold pivot toward nation-building that secures France’s digital future and leadership in Europe through mid-century. For Australia, a middle power with untapped potential, France’s ascent is a clarion call. We can aspire to more—shedding hesitancy to become a leader and net exporter of AI innovation. Drawing from our own legacy—Snowy Hydro’s grit, Sydney’s Olympic 2000 overhaul, and the NBN’s continental reach—Australia must ignite a vision that rivals neighbors, fuels competition, and commands Asia’s respect. France shows it’s possible; now, Australia must act to claim its own ascent.
To change course, the Federal Government must seize the 2025–26 Budget as a launchpad for transformative action. Federal Minister for Industry and Science Ed Husic has laid the groundwork—AI partnerships with Singapore, AI Month at SXSW Sydney, and pilot projects in health and manufacturing signal progress. His focus on cybersecurity ties AI to resilience amid geopolitical flux. But this is just the beginning. Here’s the roadmap to accelerate:
The 2024 budget’s reliance on small funding and foreign partnerships—Microsoft and Google’s data centers overshadowing federal efforts—stifled local innovation. South Australia’s new Assistant Minister for AI and the Digital Economy, Michael Brown MP, offers a state-level spark, but federal inertia dims its impact. Industry demands scale, not scraps, and the AIIA labels Australia a “slow adopter.”
Last year Paul Fletcher Opposition Shadow Minister Minister for Science, Arts, Government Services and the Digital Economy stressed the urgent need for a more "tech-friendly government" suggesting a Liberal government would deliver "build technology now” to align AI with security and self-sufficiency, outpacing Asia-Pacific peers. He argued that the Australian tech sector has the potential to drive prosperity and better lives for Australians, but only if the government is willing to support it.
As Treasurer Jim Chalmers prepares to unveil the 2025–26 Budget next week, he faces a crucible of unprecedented challenges: navigating a looming trade tariff war, taming rising inflation, and bolstering defense spending amid global turbulence. Yet, these pressures seem incompatible with the current government’s tepid commitment to AI, a legacy of half-measures that Chalmers must now confront.
Can the Labor Treasurer break the mold, defying the odds to deliver a surplus and shatter past years’ lackluster AI spending—feeble against allied nations’ buildup?
Ed Husic’s National AI Capability Plan offers a lifeline—a fragile thread that could unravel without resolute action. Its triumph demands audacity: vast capital over paltry handouts, urgency over inertia, and dedicated ministers to spark fierce competition. A Labor victory in April 2025 could cement this path if funding floods in; a Liberal triumph might recalibrate with billions to rival global titans.
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