Albanese rolls out a rule book and a red carpet for AI companies

analysis Albanese welcomes AI companies to Australia on our terms. We just don't know what those are yet Thu 16 Jul 2026 at 5:00am Prime Minister Anthony Albanese chose an intriguing backdrop for his much-hyped speech on how Australia will respond to the AI boom. It was hard to ignore. Both literally, because a giant plastic #USYD sign took up a great portion of the stage, but also because the prime minister began with a reflection on his formative years at the institution. The choice of venue was ostensibly because the University of Sydney's researchers and students are embracing AI. They're using it in research, they're making commercial products with it, and they're adapting their teaching to it. What went unmentioned, perhaps understandably, is the way that AI is turning the university sector upside down. AI-assisted cheating is rampant, educators are being forced to redesign curricula on the fly, and there are fears their use may stop students from developing their own skills if misused. It's a neat encapsulation of the thorniness of AI as an issue. There is a near infinite amount of hype, with many businesses, institutions and people looking at it as a great opportunity to be seized. It's already becoming a big part of daily life in industries as wide-ranging as health, baking and mining. At the same time, there's a great public unease about the way the insurgent technology is stressing systems that were already buckling: our challenged higher education sector, our electricity grid, even our shared sense of reality. Australia to harness benefits of AI The prime minister drew a line between his experiences at university and the current moment. Albanese studied political economics during the late 1970s and early '80s, amid the Reagan-Thatcher era. Rather than minimising what the government owed its citizens, Australia, Albanese was proud to say, went the other way and instead came up with policies like Medicare that expanded what the state might do. No doubt the PM was influenced by his studies, but the common stories we've heard about a young Albanese have little to do with what was happening in lecture halls. Notoriously, Albanese cut his teeth as a political participant in the grand old tradition of university protest: climbing clock towers, doing sit-ins, and dumping a caravan at the university with a message scrawled across it. What would that young activist think of AI today? We can't know for sure. There is one part of the University of Sydney campus that is covered with graffiti saying "F*** AI" — a cruder but perhaps representative view of the fears that young people have about AI's risks outweighing its benefits. Now, in a very different position, Albanese has used this speech to mark out his intention to have Australia harness the benefits of AI. One of his announcements was the creation of the Office of the AI, a new unit inside the Department of Prime Minister of Cabinet. This is meant to coordinate the government's response to AI, bringing together all the various disparate departments and agencies working on issues that cross portfolios. Rules for data centres Another major part of his speech was to make clear that what had been essentially voluntary guidelines for data centre providers would now become something binding. The idea is to come up with some basic rules for large data centres, have the states agree to them, and pass them into law early next year. Prior to this, states had been largely going it alone on approving data centres. We got some details on what these might look like: data centres providing more energy than they consume, covering the cost of their connections to the grid and minimising water use. Both of these measures have been fairly widely welcomed from groups ranging from the Business Council of Australia, to Australian Unions, to AI companies OpenAI and Anthropic, to creative groups like APRA and ACMOS. (The Greens have criticised the announcements, saying that standards and greater powers need to be figured out before we build any more data centres.) Everyone likes the idea of some centralisation and certainty. And while these new standards don't provide certainty just yet — given that we don't yet know specific details about how big a data centre needs to be to qualify or how much water they will be allowed to use — they're a promise that certainty is imminent. Now, here comes the hard part: certainty also means making tough decisions. No doubt Albanese hopes that one of the messages that people take away is that Australia is being tough on big tech, dictating our demands if big tech companies want to come down under. But Albanese's speech also made another message very clear: Australia wants and needs major AI companies to make major investments here. Assuming you tick a few of these boxes, we're ready to roll out the red carpet. What was striking was the way that — despite the talk of building trust, building AI tools, building sovereign capability — there was little talk of supporting Australian-built AI models, of which there are some and could be more. Nor was there a mention of the open source AI models that are the free alternatives to ChatGPT and Claude that anyone can run. While these models are not cutting edge, they are increasingly being used by people and businesses around the world because they are endlessly customisable and typically significantly cheaper. While Australia might not have a frontier model AI company like OpenAI or Anthropic, these alternatives offer us an option to make sure we're not solely dependent on products from a handful of companies run by a handful of Silicon Valley types. There was no new money flagged, there were no real new powers announced. For all the challenges mentioned across government, there was little new in the speech about how we're going to handle the society-wide impacts of AI outside of data centres. LoadingA moment to be seized Outside of the Great Hall, University of Sydney's quad was mostly empty. It's university holidays so, instead of uni students, there was what looked like a gaggle of school-aged kids sitting and playing on the green, manicured grass, completely unaware of what was going on just inside. That's what AI feels like at the moment. For all the promises of drastic change — mass job losses, data centres crowding out our cities, people eschewing real people for AI companions en masse — we haven't seen major upheaval, yet. If you sit on the grass on a beautiful Sydney day, it's like AI doesn't even exist. That's because both proponents and critics are projecting forward. They're looking at the tech and the early signs and saying, this is what we need to do now, even if it will take years for its full effects to be felt. So it's one thing for Albanese to say that the federal government truly believes that things are urgent, that this is an important moment, and that we will do what it takes to seize the moment. It's another to actually commit to making those hard decisions when that means trade-offs right now that will affect our work, our communities and our future. Copyright was mentioned, with Albanese giving a robust defence of Australian creatives against "theft" by big tech and alluding to a solution. Right now, however, most major AI companies don't seem like they're in a rush to hash out deals, so it's not clear what will force these companies to come to the table. There seems to be a promise that Australians won't pay more for electricity, but there's no talk of what happens to Australia's climate goals if we build out power hungry data centres, even if they're bringing their own energy. And a promise of community consultation in sped-up and simplified data centre approvals is welcome. But what happens when a local community says no, even with all the new conditions? If we accept the Albanese's case that computing power is important to our sovereignty, why are we waiting for global AI companies to decide to come to us to build it? These are the tough decisions that need to be made and, if Australia is truly going to coax these major AI companies to choose us rather than the other suitor nations with similar ambitions, they need to be made soon. Otherwise, a decision delayed is a decision made. [Image text:] SYDNE * THE UNIVERSITYOR SYDNEY