Australia will establish a dedicated government AI office to oversee the country’s artificial intelligence strategy, as Prime Minister Anthony Albanese unveiled plans to strengthen AI governance and regulate the environmental impact of large data centres.
The AI office will operate within the Department of the Prime Minister and Cabinet, coordinating AI policy across government and developing national standards for the rapidly growing technology sector. Albanese said the move marks a shift from sector-specific AI regulation towards a more coordinated national approach.
As part of the plan, the government will require large AI data centres to become net energy producers and limit their water consumption. The proposed legislation, expected to be introduced in Parliament early next year, will also provide clearer approval processes for AI-related infrastructure investments.
“This is our time to decide what AI looks like here in Australia. It is not a question of if or when AI will transform our economy, we are past that,” Albanese said while announcing the initiative.
The announcement comes as Australia seeks to position itself as a regional hub for AI investment and data centres. However, concerns have grown over the sector’s rising electricity demand, water use, and environmental impact. Critics have also warned that unchecked expansion of AI infrastructure could place additional pressure on energy systems and increase operating costs.
Australia currently has no dedicated AI legislation, relying on existing privacy, consumer protection and online safety laws. The proposed AI office is expected to provide a more comprehensive framework for regulating the technology while supporting innovation.
