AI is stored in data centres - massive facilities that process data from cloud servers, with complex operations being needed by millions of customers.
Industry figures say the nation's AI storage facilities are lacking. Australia currently has 314 data centres, with tech giant Amazon pledging to build more after meeting with Prime Minister Anthony Albanese in June.
However, KPMG's national technology lead Simon Dubois said Australia is in a position to do much more, and not capitalising on it could see a productivity slump.
"If we're going to keep pace and get productivity like the government and everyone wants, we need to invest in the infrastructure that's going to power that," Mr Dubois said during a panel talk in Canberra.
"If we don't invest and give (businesses and entrepreneurs) the ecosystem behind them to do it, they will find a way. Most likely that way will be a going to (another) place."
Chief technology officer at computer hardware manufacturer Firmus, Daniel Kearney, said having data stored onshore is important as most Australians would not want their health or financial data stored overseas.
"It's a billion dollars for a 100 megawatt data centre," Dr Kearney told the panel.
"So when you see people throwing around numbers like 300 megawatts, 500 megawatts, that's a significant amount of investment."
Dr Kearney said storing foreign data could also benefit the economy.
He spoke about the European Union whose economy is "stagnating", and will not be able to capture the economic benefits that AI can bring because of regulation.
While the US has been more open to AI innovation, he said Australian lawmakers should take inspiration from both when drafting AI legislation.
Australia does not currently have strict AI laws, and chair of corporate regulator ASIC Joe Longo recently cautioned against over-regulation.
He urged governments not to address a perceived problem by simply throwing more rules at it.
But winning over the public's perception of AI is a challenge of itself, as a KPMG report found that only 36 per cent of Australians trust AI.
Mr Dubois said there is a fine balance between storing AI ethically and powering our economy through data centres.
AI is expected to become a major focus at the government's economic roundtable in August, however, unions are calling for appropriate safeguards for employees.
7°C