Over the next decade, Australia’s artificial intelligence adoption is expected to increase by around 50%. Oxford Economics head of economics Harry Murphy Cruise told a conference in Sydney on Monday that Australia was sitting on the “cusp of a data centre boom”.
“We expect AI adoption in Australia to increase, jumping to around 50 per cent over the next decade and then topping out at around 80 per cent by 2025,” Murphy Cruise said.
As the global frontrunner in AI adoption, around 30% of firms in the US have a paid subscription to AI market leaders such as OpenAI or Anthropic to use ChatGPT or Claude, making them the global front runner in AI adoption.
AI uptake is also growing in markets including Japan, China and India, although Australia is expected to move ahead more quickly. One factor shaping the different rates of adoption is the mix of work within each economy. Markets with a higher proportion of manual and frontline roles may have fewer immediate opportunities to apply AI to day-to-day tasks, which can affect the pace at which the technology is adopted.
Oxford Economics expects AI to have a growing impact on Australia’s productivity over the coming decades. Its modelling suggests the technology could carry out the equivalent of around 15% of current work tasks by 2060, while lifting Australian productivity by about 2.5% by 2035 and 4.5% by 2060.
Supporting that growth will require significant investment in the infrastructure behind AI. Oxford Economics’ head of impact Michael Brennan said Australian data centre investment was expected to rise from $20 billion in 2026 to $60 billion by 2030.
“Whenever you build a data centre, you’re going to involve a whole supply chain of telecommunications, maintenance professional services, and engineering,” he said.
The investment is also expected to support employment well outside the facilities themselves, spanning construction through to their ongoing operation and maintenance.
By 2030, data centres could contribute $78 billion to the Australian economy through investment, while supporting an average of between 80,000 and 100,000 jobs each year.
“This infrastructure build-out is going to have a pretty sizeable impact on the economy,” Brennan said.
However, the rapid expansion of data centres will also place additional pressure on Australia’s energy system. Electricity consumed by the sector is projected to account for between 5% and 12% of total usage within the next decade.
Oxford Economics head of energy Alex Hooper said the speed at which new data centres are being developed was creating another challenge. Developers were increasingly being asked to reduce construction timelines from around six years to as little as one, while the energy infrastructure needed to support those facilities could take considerably longer to deliver.
“So there’s a little bit of a mismatch” that governments need to respond to, Hooper said.
