Industry responds to Government's proposed AI standards and data centre rules

What will it take to achieve the push for sovereignty — and what stands in the way?

Australia needs a national framework for AI and data centres, Prime Minister Anthony Albanese announced in a major speech at Sydney University yesterday.

The goal is for the country to be more than a workhorse for overseas investment and to instead lead with sovereign capability and reap the economic benefits. There was little detail, however, and many questions remain about the complexity and challenges ahead.

The Government will bring the legislation to Parliament early next year and the PM promised consultation with industry and trading partners.

Lisa Fortey, GM, Logicalis ANZ, welcomed the clear policy direction and standards to provide certainty for investment and innovation, but it can’t stop there.

“Success will ultimately be measured by how effectively government, industry and technology partners work together to accelerate AI adoption across the economy,” said Fortey.

National AI framework

The Government wants to shape a set of Australian Standards for AI through a regulatory framework. This includes data centres but there was no detail on other elements such as models, data protection, ethical practices or specific sovereign requirements.

Srinivas Gutta, technical practice director, Adactin said regulatory certainty should encourage AI investment, but he warned that success depends on strong data privacy and responsible AI practices, investing in workforce skills and sustainable energy infrastructure.

Gutta also warned that SME businesses, not only large enterprises, need support needed to implement these standards effectively.

“Legislation often moves faster than organisations can build internal capability, so practical implementation support will matter as much as the standard itself,” he said.

Some questioned whether a national AI framework is reinventing the wheel, when there’s already the EU AI Act and cautioned against regulation before properly establishing how we’ll use AI – something Australia has yet to do.

“How you use AI should drive how you secure AI,” said Derek Ingram, head of cyber security and compliance, Redd.

“We don't want knee-jerk controls that do more harm than good, because unravelling ineffective recommendations later undermines business confidence in the whole framework and pushes companies towards non-compliance simply because it's cheaper and easier,” he added.

Office of AI to sit in PM&C

A new Office of AI will be established in Prime Minister and Cabinet to coordinate AI policy across all levels of government. It will work across industry, copyright, energy, education, employment, defence and national security, signalling that AI is a whole-of-government priority.

“It screams Australia sees AI as being well beyond just technology. Housing the Office of AI within the Department shows that it requires coordinated leadership — rather than separate agency initiatives,” said Vito Rinaldi, MD, Blue Crystal Solutions.

“That whole-of-government approach will give industry greater confidence that Australia is developing a consistent national direction – and that we’re serious about it,” he added.

Mandatory rules for AI data centres

The Government wants large AI data centres to become net generators rather than net users of power and water. As such, new centres must underwrite new electricity generation, pay grid connection costs and build new renewable generation and storage.

In addition, data centres will need to minimise water consumption and pay for additional water infrastructure. They will also need to comply with national location, energy and water standards.

Ingram questioned whether the current grid can handle the uptick in demand without brownouts, and who pays for the upgrades.

“Australia is hot, these facilities generate enormous heat, and conditions change dramatically from state to state. Under these restrictions I don't think Australia will be the natural home for the biggest hyperscale builds,” Ingram told CRN Australia.

“But that's not the opportunity, anyway. We could be a world leader in designing data centres that are more economical and more environmentally sustainable. If Australian engineering could solve the heat problem by even a few degrees, that's worth billions globally. And it can be done,” he added.

AI sovereignty

The Government wants Australia to become a place where AI is built, not simply consumed. This includes sovereign AI capability, AI manufacturing, attracting frontier AI investment and supporting local AI development underpinning economic resilience and national security.

“Like cyber security, AI is an area where nationally consistent professional recognition helps us ensure powerful digital technology works for us, and not the other way around,” said Australian Computer Society (ACS) CEO Dr Prins Ralston.

“In the age of AI, we need to go beyond raw technical ability and ensure those skills are applied responsibly, ethically and with sound professional judgement,” Ralston added.