Australia's path to AI sovereignty lies in strategic control, not reinvention

Achieving genuine AI sovereignty for Australia requires a nuanced strategy.

Instead of focusing purely on the ‘build or buy’ question for the AI models themselves, the most effective path is in strategically controlling how the world’s best models are governed, audited and applied on our shores. This pragmatic approach allows Australia to harness world-class technology while ensuring our data and national interests remain secure.

Redefining AI sovereignty: from ‘building’ to ‘controlling’

True AI sovereignty means the AI that powers our essential services, like health care and banking, operates under Australian law. It means our sensitive data stays onshore, and that our AI systems must reflect local regulations and values.

Governments worldwide are shifting from a purist ‘build everything here’ mindset to a more layered view that separates model training from control of data, compute and governance.

Australia already treats AI sovereignty as a core economic and national security priority, with procurement policies including the ‘Buy Australia Plan’ and ‘Digital Sourcing Framework’ designed to favour local capability and secure onshore services.

The federal government has also moved to host secure, onshore instances of leading models for the public service, reducing exposure to foreign policy shocks and tightening data protections.

Don’t rebuild, re-use

Training frontier-scale foundational models is extraordinarily capital- and compute-intensive, costing hundreds of millions of dollars and demanding access to the latest GPU chains. And this isn’t a one-off cost. To remain competitive, these models must be constantly retrained with new data and upgraded with the latest technological breakthroughs, adding massive, recurring costs on top of the initial investment.

Replicating existing, high-performing Western, English-language models offers marginal additional benefit for Australia. This would come at the direct expense of what Australia actually needs: building up our local talent, modernising our digital infrastructure, and helping our industries put AI to work.

Australia’s real competitive edge lies in how it applies AI to local problems, regulates it, and embeds it into its economy, not in trying to match the research and development budgets of hyperscalers.

This shift is already happening in the market, with some local firms pivoting from ‘sovereign’ branding to ‘Australian-made’ while openly using global data and tooling. This is a clear signal that the future lies in hybrid approaches that combine domestic hosting and governance with global models.

Sovereign inferencing: the smarter play for data and security

The smarter play is to focus on running world-class AI models on infrastructure that Australia can directly control and secure — known as ‘sovereign inferencing’. Instead of insisting that every parameter must be Australian-owned, this approach ensures that prompts, data and outputs are processed within Australian jurisdictions and subject to Australian law.

This model addressed the core data sovereignty challenge: keeping sensitive government, health, defence and commercial data onshore while still accessing best-in-class global models. It also reduces geopolitical and supply-chain risks by limiting exposure to cross-border outages, sanctions or abrupt changes in foreign policy that could affect access to AI services.

Focus investment where it counts: infrastructure and people

Multiple industry bodies argue that Australia’s priority should be building sovereign AI infrastructure and capability, not chasing full-stack sovereignty.

The Australian Computer Society, for example, estimates that co-investment of around AU$2–4 billion would be needed to establish competitive national AI infrastructure, a fraction of what a full frontier-model training strategy would require.

Capital should flow into AI-optimised compute clusters, sovereign cloud regions and energy-efficient data centres capable of running inferencing at scale. That is already happening, with local providers partnering with global hardware leaders to build ‘AI factories’ and sovereign-grade facilities that keep data within Australian borders.

Equally important is investing in workforce sovereignty: a skilled domestic talent pool in applied AI, data engineering, cybersecurity and governance. Every dollar directed towards skills, safe deployment and sector-specific use cases compounds into productivity gains over the next decade.

By strategically investing in compute, skills and infrastructure, Australia can become a global leader in AI application and governance. That is how AI can remain truly aligned with Australian laws, values and long-term prosperity — an approach defined by strategic control rather than expensive reinvention.

Image credit: iStock.com/Just_Super