Opposition groups warn that national guidelines under negotiation for artificial intelligence data centres in Australia are “unrealistic” and could deter investors from building new facilities.
Prime Minister Anthony Albanese announced plans in July to introduce legal requirements governing the use of AI and data centres. He is convening a meeting of the nation’s leaders later in August to discuss the facilities, aiming to reach an agreement on uniform standards. This follows the refusal of Queensland and the Northern Territory to agree to national policy settings.
Energy Minister Chris Bowen reaffirmed that the Commonwealth would override the two governments if they held out. He warned that the result would mean higher bills for consumers.
“What we’re not going to do is let one state or one territory dictate to the rest of the Commonwealth or the other states,” Bowen told ABC radio on Thursday.
“Their way is going to be the lowest common denominator. Nor is it in the best interest of the country. Just say let it rip… just let them do whatever they want. I think that does have the risk of increased bills and reduced reliability.”
Energy targets and investor flexibility
Bowen revealed on Wednesday that data centres would have to underwrite new energy generation capacity through the renewable electricity guarantee of origin scheme. This measure is designed to prove that facilities are fully offsetting the power they use with renewable energy.
Acting Opposition Leader Jane Hume said the investments were important to ensure Australia’s economy was “contemporary and fit for purpose.” She argued that imposing strict conditions, particularly aiming for Chris Bowen’s 82% renewable energy target, would simply turn investors away.
Opposition energy spokesman Dan Tehan said it should be a matter for developers to decide on their energy source. He argued for flexibility.
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“They should have the flexibility to decide how they go about their energy mix, and if they want to, how they should offset their emissions reduction,” Tehan told ABC radio.
“Our view is we should be technology agnostic when it comes to our energy source, and that’s how you pursue energy abundance in this nation, which means you can actually put downward pressure on prices.”
The economic outlook for AI
Australia was already the top destination of data centre investment outside the US, but this investment risked being pushed elsewhere by lengthy approval times and slow upgrades to energy and water infrastructure. A report released by consultancy EY on Thursday showed AI could deliver the nation a productivity boost of up to 2.4%, potentially ending a decade of weak productivity growth responsible for declining living standards.
This would result in a $116 billion increase to real GDP and an extra 44,000 jobs in the economy as the technology reshapes the labour market.
Australia has suffered one of the biggest declines in living standards in the developed world in recent years, driven by real wages falling 5.1% since March 2021, according to an OECD report in July.
Labour productivity growth had averaged just 0.3% a year in the past decade, which was why the potential uplift from AI mattered, EY’s regional chief economist Cherelle Murphy said. Whether Australia can fully harness AI’s productivity potential depends on whether it gets the regulation right.
While businesses cautioned that greater regulation would limit AI adoption, more than 80% of Australians wanted stronger rules on how organisations use AI, Murphy said. Despite community fears about widespread AI job losses, EY found most industries would register a lift in employment as a result of productivity gains or stronger real wages boosting demand, although capital-intensive industries such as mining and agriculture could experience a slight decline.
