[Sponsored] Australia is entering a defining phase in its digital transformation agenda as government and industry converge on a new national focus — building AI capability rather than chasing the elusive idea of “sovereign AI”.
According to Australian Computer Society chief executive Josh Griggs, this is about how Australia takes ownership and control of AI outcomes, not just where the infrastructure sits.
“It’s not about making every chip or model here,” he said. “It’s about ensuring Australian organisations have the skills, frameworks and governance to guide and use these systems in ways that serve our national interests. That’s what we mean by ‘AI agency’.”
The shift reflects the government’s evolving approach since ACS called for a National AI Capability Plan earlier this year.
The organisation has since hosted 15 roundtables across Australia, drawing more than 300 participants from government, academia, startups and major technology firms to inform recommendations through the Tech Policy Design Institute in partnership with the Department of Industry, Science and Digital Economy.
Mr Griggs said the engagement has revealed a huge appetite for collaboration, particularly in ensuring Australia’s digital infrastructure, workforce and governance frameworks evolve together.
The term “sovereign AI” has gained traction globally, but ACS is encouraging a more practical framing. Sovereign AI implies that every component must be domestically produced, according to Mr Griggs.
“That’s not realistic or necessary. Capability means we can build, train, or adapt what we need locally, and have the skills and legal structures to steer those outcomes,” he said.
The concept of AI agency expands that focus further, encompassing the ability to shape systems, protect national interests and extract long-term economic value from global supply chains.
ACS’s advocacy for an investment program between $2 to $4 billion to build national AI capability is now being reflected in the market. Several homegrown firms, including Sovereign AI, Sharon AI, Reset Data and MainCode, have recently announced substantial local infrastructure and model-training projects.
Mr Griggs says this activity marks a tipping point. “You can feel the momentum — the conversation is no longer just about hosting data centres, it’s about creating the skills and ecosystems that make Australia an AI contributor, not just a consumer.”
While investment is rising, Australia’s workforce readiness remains a challenge. Fifty-one per cent of Australian workers lack at least one digital skill needed for their current role, while 77 per cent of technology workers also reported at least one skill deficiency, according to the ACS Digital Pulse 2025 report.
These gaps are costing the economy an estimated $25 billion in lost productivity each year and preventing more than 150,000 businesses from fully adopting new technologies.
The report also found that although VET and industry certifications are highly trusted by employers, 88 per cent of tech job ads still require a university degree, signalling a mismatch between hiring practices and the skills-based economy now taking shape.
Mr Griggs says this needs to change: “If we continue to gatekeep through degrees, we’ll miss out on tens of thousands of capable people,” he said.
“The Digital Pulse shows nearly half of tech workers gained their skills through alternative pathways. The system has to catch up.”
The ACS is working to reform professional accreditation using the Skills Framework for the Information Age, giving formal recognition to non-traditional learning and microcredentials as valid indicators of digital capability.
Mr Griggs argues that digital capability is no longer confined to the tech sector, it is foundational to every industry. “Whether you’re in agriculture, finance, or health, technology now sits at the centre of how you create value,” he said.
“That means every business is a tech business, and every worker is part of Australia’s digital workforce.”
The Digital Pulse report also found that the average Australian worker now spends three hours a day using digital tools — a total of 180 million hours a week across the economy.
“Getting that right, through smarter upskilling and better policy settings, is how we move from being a nation of technology users to a nation of technology makers,” Mr Griggs said.
Mr Griggs says the direction is clear: “We’re not just building skills for today’s jobs — we’re building the capability for Australia to have real agency in a digital world.”
This article was produced by InnovationAus.com in partnership with the Australian Computer Society.
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