A new report by the National AI Centre, part of Australia's national science agency, CSIRO, suggests that Australia has the potential to become a global leader in artificial intelligence (AI).

The report, titled 'Australia’s artificial intelligence ecosystem – Catalysing an AI industry', was published during Australia’s inaugural AI Month and posits commercialising AI research could significantly boost the country's international competitiveness. It identifies 31 potential application domains, the top five being livestock production, medical technology, horticulture, optometry, and dermatology.

Despite producing 1.6% of global AI research, Australia accounts for only 0.2% of global AI patents where the inventor resides within the country. This disparity suggests a significant opportunity for Australia to capitalise on its AI research and turn it into commercial ventures.

National AI Centre Director Stela Solar believes that this commercialisation could attract investments, foster talent growth, and fuel the development of new sectors and jobs.

The report identifies 31 potential application domains for AI in Australia, with the top five being livestock production, medical technology, horticulture, optometry, and dermatology. Dr Alexandra Bratanova, Senior Research Scientist at CSIRO’s Data61 and author of the report, suggests that AI innovation hotspots will help catalyse the formation, growth and development of these industry-specific AI opportunities.

Australia's AI industry has seen substantial growth in the past decade, with the number of AI companies increasing significantly. The report finds that there are 544 AI companies in Australia, a figure that is on par with other global AI leaders like Canada. In the past 10 years, 396 new AI companies have opened, with 204 of these in the past five years alone.

Most of Australia’s AI companies provide data services that develop and optimise AI capabilities, including data analysis and management. These companies show patterns of geographic clustering, with eight hotspots across Sydney, Melbourne, Brisbane, Adelaide, and Perth. Over half (54%) of AI companies are located in these hotspots, indicating a concentrated effort to foster AI innovation in these regions.

Chief Research Consultant at CSIRO’s Data61 and lead author of the report, Dr Stefan Hajkowicz, said Australia can now pinpoint and strengthen its areas of AI specialisation to enhance its global market advantage.

“Australia’s AI ecosystem is experiencing rapid growth, specialisation and diversification, and we need to keep applying innovative AI to areas Australia already leads on a global scale," he stated. “This report identifies 31 potential application domains that can help Australia become a globally competitive AI maker and exporter.”

AI innovation hotspots will help catalyse the formation, growth and development of these industry-specific AI opportunities, said Dr Alexandra Bratanova, Senior Research Scientist at CSIRO’s Data61 and author of the report.

“Homegrown AI solutions can be higher in quality, tailored to domestic needs and more aligned to our values of safe and responsible AI products than those from big international AI providers,” said Dr Bratanova. “Each AI cluster has between 6 and 146 AI companies with an average distance between two being only 80 meters. This proximity is likely to facilitate collaboration, knowledge sharing and skills development.”

The report also includes insights from consultations held with 28 stakeholders across the AI ecosystem in Australia, including representatives from companies developing and adopting AI technologies and supporting services, government agencies and academic institutions.