Australia's AI crossroads: Build or be left behind

While global competitors invest hundreds of billions in AI infrastructure, Australia risks drifting into an era where we consume technology rather than create it, becoming digital tenants in someone else's future and ceding the AI advantage to others.

The numbers tell a sobering story. Australia's direct tech sector contributes just 3.8 per cent to GDP, compared to 10.2 per cent in the United States and 8.1 per cent in the United Kingdom. Of our AI investment, 52 per cent goes to commercial software and 30 per cent to integration services. Only 18 per cent goes towards building foundational capabilities. We are buying someone else’s solutions, not building sovereignty.

AI is fundamentally reshaping work. We are rapidly heading towards an AI-augmented economy where small, technically sophisticated teams achieve what once required hundreds. And those teams are hybrid, people and agents. Yet Australia faces a projected AI talent gap of 40,000 specialists by 2027, double today's shortage. More concerning, at the beginning of 2024, 59 per cent of Australians had never used generative AI, and 48 per cent of workers felt unsafe admitting to their manager that they used it. While executives race to deploy AI, cultural acceptance lags dangerously behind.

The technical leadership void

While Australia has exceptional data science talent, we need more of our experts gaining global prominence and recognition. After 7-10 years, our best technical talent faces a critical decision point - deepen expertise in technical contributor roles with limited advancement, or transition into management and abandon their technical edge. 

When organisations lack technical depth at senior levels, they default to implementation over invention. Just 35 per cent of Australian chief data officers hold technical qualifications as their highest credential. Without technical leaders who understand AI's capabilities and limitations, organisations risk catastrophic misallocation of resources.

The opportunity cost is staggering. A technically-led organisation could achieve with 10 people what traditionally requires 100, while improving both quality and speed. The global competition for markets, talent and innovation is increasingly won by those who can effectively blend human expertise with AI capabilities.

Australia has demonstrated world-leading innovation: the multi-channel cochlear implant, polymer banknotes, HPV vaccine, Google Maps, the black box flight recorder. Yet in the field of AI, our investment in generating breakthroughs and retaining the talent capable of creating them has been lacklustre, driving our up-and-coming technical leaders to seek their fortunes offshore because Australia lacks structures to retain technical excellence at senior levels.

Government action accelerating - But is it fast enough?

Recent developments signal growing urgency. In June, Amazon announced a $20 billion investment in Australian data centres. The National AI Capability Plan, due in late 2025, projects AI could generate $600 billion annually toward GDP by 2030.

The Actuaries Institute, through recent dialogues by Jon Shen and Victor Bajanov identifies critical enablers that must be addressed urgently in Australia’s capability plan.

Infrastructure and sovereignty

We need strategically placed data centres with renewable energy access. This is not about matching Silicon Valley - it is about enabling scale for Australia’s AI demands, and unlocking sovereign capability for sensitive applications in finance, healthcare, defence and infrastructure. Privacy Act reforms recognise local processing is necessary. But data centres alone are not enough. We must rapidly deploy robust, sustainable energy networks to power AI systems while keeping energy affordable for all Australians.

AI literacy as a national priority

Immediate, coordinated intervention across Australia’s schools, workplaces and communities. Every Australian should understand how AI affects their life and recognise AI-enabled scams. The ASIO Director-General warns AI enables disinformation that can "undermine factual information and erode trust in institutions." This is about developing critical thinking and adaptability skills that will serve Australians as technology continues its rapid evolution.

Building technical leadership pathways

Organisations must create genuine technical career tracks that allow experts to reach senior levels while maintaining technical focus. This means dual career pathways with authority over technical strategy, rethinking leadership development beyond traditional programs and fostering organisational cultures that celebrate technical excellence. Australian organisations need to embrace small, high impact teams where world-class technologists with AI tools can outperform traditional large departments.

Responsible AI requires technical depth

Deploying AI responsibly requires deep technical understanding. Poorly implemented AI can disproportionately harm marginalised communities because they are the least equipped to challenge erroneous decisions made against them. AI systems require ongoing maintenance, protection against adversarial attacks and continuous evaluation as business and societal contexts evolve. Without technical leaders who understand these complexities at decision-making levels, organisations risk deploying systems that cause real harm while believing they're following best practices.

The window is closing

The pace of advancement is exponential and the AI competitive advantage shifts rapidly. Australian companies may find themselves debating whether to adopt basic AI tools, while global competitors are developing systems that outperform entire departments.

We have talent, research capability and innovative spirit. We now need the organisational will to create technical leadership pathways and Australia must act now to secure a future where AI serves our economic sovereignty.

This opinion draws on Thought Leadership from Members of the Actuaries Institute:

• Building Tomorrow: Preparing Australia for the Age of AI by Jon Shen (May 2025) and 
• Where are Australia’s Data Science Leaders? The case for Technical Career Pathways by Victor Bajanov (October 2025).