Australia could become the digital infrastructure hub powering the Asia Pacific’s AI needs and beyond, unlocking an additional $134 billion economic windfall and an average of 14,300 additional jobs a year, according to a landmark report that provides a roadmap for building our next major industry – one that will lay the foundations for future productivity growth.
Produced by Deloitte Access Economics for Google LLC, Digital infrastructure for the AI age: Australia’s opportunity to lead the Asia Pacific explains the economic imperative of investing in AI infrastructure, why Australia is well placed to meet the Asia Pacific’s growing data demands, and how we can get there, if we act within the next two years and seize the moment before it disappears.Releasing the report, Head of Deloitte Access Economics, Pradeep Philip, said: “Data is the new oil of the modern economy and compute power is the new engine. AI is the technological breakthrough of a generation, and its promise of economic returns is driving significant global investment.
“Australia can and must become an AI nation to build economic prosperity by driving productivity. Much of the economic potential for Australia is in our own backyard – in the Asia Pacific region alone, investment in AI will exceed $165 billion by 2028.”
Deloitte Access Economics Partner and report lead author, John O’Mahony, said: “This is a sliding doors moment for Australia. The chance to build an Asia Pacific-focused digital infrastructure ecosystem represents the opportunity to build the next great Australian industry that could support our continued national prosperity for decades to come.
“Catching this wave means doubling our investment in compute power over the coming five years. Australia is on track to generate around 3.3GW of data centre capacity by 2030. To this, we need to add a further 3.1GW of high-quality compute power, quadrupling our current national capacity. We estimate some $52 billion in infrastructure investment is required between 2026 and 2030 to scale capacity, enable advanced AI applications and secure long-term competitiveness.
“This investment growth would create an average of 14,300 additional jobs each year and add a cumulative $134 billion to the economy by 2050 over and above an organic growth scenario. It benefits sectors like construction, utilities, renewables, mining, healthcare, and financial services while
strengthening Australia’s IT and startup ecosystem through increased AI activity.
“A failure to seize this opportunity would represent a generational economic fumble.”
What’s needed to make it happen and why?
Early movers will capture an outsized share of the returns.
John O’Mahony continued: “AI demand projections for the Asia Pacific region range anywhere from 55GW to 92GW of compute capacity by 2030, with even the most conservative estimates suggesting most of the enabling infrastructure is yet to be built.
“This signals a major opportunity for countries that move fast to become digital infrastructure leaders. Australia must seize the opportunity to capture the rising demand for computing power across Asia Pacific and compete early with countries such as India, Japan, Singapore, Thailand, and Malaysia.
“In so doing, Australia could achieve the dual economic benefit of exporting clean compute and other services abroad while supporting unique, high-value activities at home such as training new models, developing advanced applications, and deploying location-dependent edge computing.
“Markets home to these activities will be the ones that attract global talent, anchor venture capital, shape international norms and standards, and capture the greatest benefits from AI’s global user base.”
Pradeep Philip noted: “Those businesses and countries that use the current geopolitical volatility as an excuse to do nothing would be major losers, while early movers won’t just drive the digital infrastructure boom – they’ll capture an outsized share of the returns as they learn through experimentation, failure, and success.”
Australia is better placed than many regional competitors to develop digital infrastructure.
Australia has a history of successfully developing digital infrastructure – already ranking among the top ten countries globally for data centre capacity – and has the potential to go further.
John O’Mahony said: “Across most of these crucial AI factors, Australia is either less constrained than its neighbours or has an outright natural advantage over them. For example, Singapore faces limits on land, water and clean energy, while many other countries in the region have a less stable regulatory environment.
“Despite Australia’s natural advantages, other nations are moving fast to develop their pipelines of digital infrastructure. Australia has the foundations to win this race, but inaction and a failure to remove roadblocks could see the country miss out.
“For instance, data centres require significant amounts of energy. We can generate this energy, but if it’s not clean and green, it raises the spectre of significant social licence concerns. To mitigate these risks, we must take concurrent actions, like advancing clean energy generation.
Pradeep Philip noted: “In order to capture the true productivity benefits of AI, Australia must move faster on its clean energy transition to provide cheaper, more reliable, and lower emissions intensive power. The application of AI to this energy transition can lower the cost of the transition and drive the uptake of AI, all while reducing emissions.”
Seizing the opportunity will require deliberate action by industry, investors and government.
Pradeep Philip concluded: “The race to establish global digital infrastructure hubs is intensifying, with data centres increasingly clustering in regions that offer the right balance of connectivity and talent. While the United States and Europe currently lead in this space, opportunities remain for Australia to claim a place among the frontrunners.
“The Australian Government recognises the potential of AI to address national challenges and drive productivity. The Treasurer has called for Australia to embrace AI as a transformative force, positioning the country to maximise opportunities and become a global leader in AI innovation.”
John O’Mahony concluded: “The Federal Government, in partnership with the private sector, can create the new modern Australia. But the window is tight and the race is on.
You can read the full report here.
