Australia's signals directorate tells an inquiry it is entirely reliant on US-housed AI processing

Abigail Bradshaw asked the inquiry to attach conditions to any frontier developer that trains models in Australia, including government oversight and early access to advanced models ^[12]. "We will get more assured access, earlier access, more detailed technical access, and better integration with technical experts at the frontier," Bradshaw said ^[11]. Those are the asks of a buyer who has already told the same room that her agency has no substitute ^[6].

Andrew Hastie's Copilot story and Bradshaw's dependency are different problems. One is a consumer assistant offering an inappropriate suggested reply to a letter about voluntary assisted dying ^[1]. The other is where the processing sits when a network is contested ^[6]. Hastie used the first to argue for AI run by Australians ^[2].

The developers have named their price. Copyright reform is the pillar of the proposed standards that has not been settled, and AI developers are refusing to train models in Australia without it ^[15]. The proposal to give them access by default to everything Australians create online drew a wave of backlash from creatives, who say the companies could pay for local licensing deals instead ^[16]. Jenna Priestly, an assistant secretary at the attorney general's department, told Friday's hearing that looser copyright would also affect AI access to foreign-made content distributed in Australia ^[17]. The companies wanted to train on "maybe billions" of pieces of information, she said, and striking deals with every rights holder was practically "impossible" ^[18]. "As Australia's copyright framework protects not only copyright material that's Australian in origin, but worldwide, I think it is a fairly large number that [companies] would need to go and strike deals with," Priestly said ^[19].

What Defence is asking for is location. "We do not want to be using AI tool sets that are located offshore ... we want the compute, we want the application, we want the data, we want the decision making, all based in Australia," Chris Crozier, the defence department's chief AI officer, said ^[10]. He put the risk in terms of someone else's decision: "Somebody can't wake up and have a bad day and decide they're going to turn it off" ^[9]. The datacentres meant to deliver that are being built under a contract with Google, spread across the country and disconnected from the US ^[8].

Bradshaw put the directorate's warning in terms of relative capability: "If a digital adversary has access to newer, more capable models than we do, they may be able to identify and exploit vulnerabilities in systems and networks before we can identify them," she said ^[7]. The defence establishment told the inquiry that cutting the companies out could be catastrophic ^[4]. The hearing was the fullest public account so far of the Albanese government's wish to bring Anthropic and OpenAI to Australia, against calls to slow them down or shut them out ^[3].

The remaining levers are still in draft. The government is consulting on standards that would force AI companies to report issues and breaches and potentially reserve some computational power for local research ^[13]. Large datacentres would have to engage with communities, build away from schools and homes, and underwrite new renewables in most states ^[14]. The timetable is being argued elsewhere: the Greens senator David Shoebridge, who wants a pause on AI development, said Labor refused him a seat on the inquiry committee ^[20]. Until copyright is settled, the case Defence made on Friday waits on a decision taken in the attorney general's portfolio.