While Australia has positioned itself as a leading global data centre hub, the nation’s approach to sovereign AI infrastructure remains under-resourced, outside the private sector, compared to international counterparts. Dr Sue Keay, Director of the UNSW AI Institute, recently warned that Australia’s “relentless determination” not to invest in sovereign AI infrastructure creates clear strategic risks.
“If we rely solely on foreign technology providers, whose IP, profits and loyalties lie outside Australia, we will lose control over critical data and infrastructure and risk having our national agenda shaped by outside interests,” she cautioned.
Macquarie Data Centres defines sovereign AI as “a specialised, self-supporting AI solution trained and built using a nation’s infrastructure, data, and workforce to serve that nation’s digital sovereignty.” As a Certified Strategic provider under the Australian Government’s framework, Macquarie argues that sovereign infrastructure reduces foreign interference risks while ensuring data compliance with national regulations and supporting the development of AI solutions that reflect local contexts and priorities.
Critical issue
David Hirst, CEO of Macquarie Data Centres, sees both the opportunities and the gaps in Australia’s current approach to sovereign AI development. When comparing Australia’s position to countries like South Korea, Japan, and EU members he is quick to point out AI infrastructure must be viewed as critical infrastructure and invested in accordingly.
“Data centres are the foundation of our digital economy. They are the critical infrastructure that supports artificial intelligence, cloud services, national defence, and essential public services,” he tells W.Media. “Around the world, governments have acknowledged their strategic importance and recognised the need to invest directly and more strategically into the industry as trusted partners.”
This perspective aligns with concerns raised by Dr Keay. The question of control over critical technology infrastructure becomes particularly relevant when looking at the geopolitical tensions that can arise when nations attempt to regulate foreign technology providers.
Hirst identifies a specific gap in Australia’s approach. “We’ve seen government recognition of the industry, policy measures to fast-track development approvals and incentivise investment, but our public sector is yet to buy a genuine stake in the productivity measures and broader technology benefits data centres can catalyse,” he says.
“For example, we see great potential in the development of government-backed supercomputers which can be deployed to serve AI solutions, emerging technology R&D, national security and cyber security uplift,” he says. “This is how governments can use the compute power available in data centres to accelerate the delivery of AI and other technology advancements that are in the national interest.”
State versus federal?
Hirst welcomes the NSW government’s announcement of a new investment delivery authority for critical technology infrastructure. “The NSW Government has continued its reputation for strategic, innovation-driven investment with its announcement of the new Infrastructure Development Authority which will have the mandate to fast track development approvals for data centres in the state. It’s a strong indicator that the NSW Government recognises the economic and productivity dividends data centres bring to the state.”
However, he sees broader opportunities for federal leadership that extend beyond regulatory frameworks. “The federal government and other states can definitely learn from this. If we look at the sector, there’s no shortage of capital investment and strong incentives to drive the industry,” he says. “What’s missing is government taking a more direct stake in the opportunities that exist through utilisation of super-computing capacity found in latest generation data centres.”
“We’d like to see the federal government acquire super-computing capacity and use it to drive the government’s agenda, raise productivity and accelerate R&D for emerging technologies. AI will be at the heart of the capabilities that deliver that agenda,” he added.
Hirst points to existing frameworks that could facilitate such investment. “The federal government in particular already has effective frameworks in place to validate the nation’s most trusted data centre providers, such as its Certified Strategic partners, meaning it can select and invest in partners aligned with the national interests such as sovereignty.”
Building sovereign capabilities
Australia’s focus on AI regulation and ethical frameworks, while important, has not been matched by equivalent investment in infrastructure capabilities. This regulatory-first approach contrasts sharply with the infrastructure-led strategies adopted by other developed nations.
From an industry perspective, Hirst sees Australia’s existing strengths while acknowledging the need for greater sovereign capability development. “Australia has developed a reputation as one of the world’s leading data centre hubs in the world, and we’ve seen the power of that through the growing number of international hyperscalers and AI pioneers leveraging the data centres we’ve built and operate here.”
But he argues this foundation should support more ambitious sovereign AI development. “We should continue this and grow our reputation as a regional, trusted hub, but we also need to recognise the importance of Australia investing in its own sovereign AI models,” he says. “This is where future global leaders will separate themselves. It’s well known that funding in this area so far has been insufficient and spread across many different areas when a greater and more concentrated investment would deliver greater impact.”
Hirst says the federal government has recent precedent it should follow for AI. “Funding under the National Reconstruction Fund of Psi Quantum provide the government is open to investing big in a single capability leader in an effort to shape the future of the world’s next defining technology,” he explains.
Critical infrastructure recognition
The question of whether sovereign AI capability should be treated as critical infrastructure has gained urgency as AI systems become foundational to essential services across healthcare, banking, transportation, and defence sectors. Hirst believes Australia has taken important first steps but needs to go further. “Through the Security of Critical Infrastructure (SOCI) legislation, the government has taken the right steps to ensure the digital infrastructure that is needed to support sovereign AI is recognised as critical to our national security and economic interests.”
However, he argues the scope of critical infrastructure protection needs to expand. “The next logical step is to ensure the actual AI solutions we’re developing and those we’d like to see the Government invest in more, are also covered by this legislation,” he said. “Digital sovereignty isn’t just a label, it’s about data, operations, ownership, and staff being onshore.”
Private investment and public partnership
Recent announcements, including ResetData and Nvidia’s sovereign public AI-factories, have been welcomed, but many still question whether private investment alone can achieve the scale and coordination required for national AI competitiveness.
Hirst acknowledges the value of private initiatives while emphasising the need for government involvement. “Speed and scale of the market is critical for the Australian economy to compete at a global level in the digital age. Any investment in local capability is well received, that being said more needs to be invested now and into the future to keep up with the rest of the world,” he says. “The government is a critical part of this investment as we have seen by many other governments investing around the world including the EU, Britain, India and the US.”
Countries like South Korea, with its KRW 9.4 trillion AI semiconductor initiative, and EU projects like Gaia-X and EuroHPC, demonstrate how coordinated government investment can rapidly deploy AI infrastructure at national scale. These examples highlight the gap between Australia’s current approach and international best practices.
Hirst is blunt about what needs to be done. “Countries that are serious about their sovereignty care about sovereign AI and are prepared to invest to ensure its successful development,” he said. “Every country needs to be serious about its AI sovereignty. Australia is no different.”
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