Australia faces 'sliding doors' moment to turn AI boom into local wealth

Christopher Sampson had to take his Australian artificial intelligence (AI) startup overseas before customers at home would take it seriously.For Michael Gately, scaling up his AI company from Australia has meant competing in a global scramble for expensive and increasingly sought-after computing power.Both chief executives have found ways around these business constraints. Still, their experiences highlight the challenges Australia faces as it tries to capture more of the economic gains from AI.Assistant Minister for Science, Technology and the Digital Economy Andrew Charlton has declared Australia is at a "sliding doors" moment to ensure the country becomes a "creator" rather than a "renter" of AI.The nation's AI startups agree and want Australia to leverage its advantage as an attractive destination for data centres to negotiate guaranteed and affordable access to computing power.Australian companies are reliant on the small number of businesses that control the world's advanced computing capacity, generated by electricity-hungry data centres. (Supplied)How Australia can get a 'return' for hosting data centresAustralian companies currently are heavily reliant on the small number of tech businesses that control the world's advanced computing capacity.That capacity is generated by large electricity-hungry data centres. Australia has become a very attractive place to host these centres. The federal government is in the process of developing national standards to govern the approval of data centre projects, which have increasingly attracted community backlash.Working with states and territories, the government will establish rules around their location and their use of electricity and water.Once built, data centres employ relatively few people directly, which means simply hosting them does not guarantee Australia a large share of the economic benefits they enable.The federal government has unveiled a new "Buy Australian AI Partnership" to help local AI companies win customers. (ABC News: Supplied)But Mr Charlton has argued Australia does have the bargaining power to dictate better terms."If you want to build a data centre in Australia, you should be prepared to make some of that compute available to Australian businesses, researchers and startups," he said in a speech this month.Mr Charlton said this would ensure Australia got a greater "return" from the AI boom.Australian companies urged to buy local AI technologyComputing power is not the only hurdle, however, with many Australian AI startups struggling to find domestic buyers to support their companies.Yesterday, the federal government unveiled a new "Buy Australian AI Partnership" backed by the nation's Big Four banks to help local AI companies win customers.Mr Charlton said the more than 1,500 Australian AI companies were already building "world-class" technology, but the challenge was getting in front of the organisations that could buy their product."We are in a sliding doors moment for Australia's AI industry," he said."As the importance of this technology grows, we need to ensure Australia is a creator and not just renter of AI."The difficulty convincing Australian businesses to buy local AI products is well known to the Tiliter co-chief executive Mr Sampson, whose company creates vision software widely used by retailers, including for self-checkouts.He said it took proving his technology in international markets to get "validity" back in Australia."Fortunately, I had a German co-founder, which gave us access to that market," Mr Sampson told the ABC."If I didn't, I'm not sure I would have taken that step."So I do wonder how many great Australian companies get stifled because they just can't get over that threshold in the early days in the Australian market."Mr Sampson said there must be "leadership and risk taking" at a corporate level."If we're willing to back Australian companies, we do have capability here that we can unlock," he said.Australia at risk of being 'squeezed out' of AI raceThe Buy Australian AI partnership is an initiative of startup accelerator Stone & Chalk, with chief executive Stela Solar saying it is key to helping local tech companies succeed.Stela Solar is behind the initiative to encourage more Australian companies to buy local AI technology. (Supplied)"Australian enterprises really need to lean in a little bit more and open the door to Australian innovation," she told the ABC.Local companies are developing tools for medical diagnosis, speech and image recognition, agriculture, mining, finance and retail uses.Along with encouraging more Australian businesses to purchase these tools, Ms Solar said it was critical the government worked to secure domestic computing power for startups to grow."If we don't secure compute capability for homegrown technologies, we actually risk being squeezed out of the very sovereign AI foundations that we're building here," she said."That means while we might experience productivity gains from AI, we won't gain from the wealth growth that AI is bringing because that will land in other countries."Ms Solar, who has previously worked for tech giants in the US, said there was also a need for deeper investment, research and development partnerships between major tech players and Australian startups."Australia can sometimes be treated like a sales office, and that's something with the data centre wave we actually have every chance to reshape," she said.Australian-owned technology key to solving AI 'trust issue'It is a sentiment shared by Mr Gately, who is the chief executive of Trellis Data, an AI firm based in Canberra.Michael Gately says securing affordable access to computing power will be a game changer for Australia. (Supplied)Mr Gately said the computing power his company needs can take months to secure, while its price can change by as much as 50 per cent in the space of a week."Given the amount of investment that Australia is accepting from the US tech suppliers, such as Nvidia or Dell, we should provision a set aside for Australian companies to be able to have price certainty for a period of time," he said.Mr Gately said Australia's negotiating position was particularly strong due to the backlash of the poorly managed rollout of data centres in the US.He said there was clearly a "very big trust issue" with AI at the moment and believed establishing a strong Australian industry was key to gaining community support."There is a substantial fear among Australians broadly around AI," he said."They definitely know they need to use it. And those who know there's a future of massive benefit are very pro Australia having its own capability in this space."Mr Gately said he often found people were relieved to learn Australia was producing globally competitive AI models."I think people go, 'Well, thank goodness for that, that someone is out there able to compete,'" he said.