Australia's sovereign AI adoption stays governance-led

Dell Technologies and IDC have published survey findings on sovereign AI use in Australian government organisations, showing a governance-led approach to adoption.

The Australian results form part of a broader survey of 360 government IT decision-makers across eight Asia Pacific markets. Locally, they point to a slower, more selective approach than the wider regional picture. More than half of Australian respondents, 52%, said their organisations were evaluating sovereign AI technologies, while 40% were conducting initial testing or proofs of concept without a defined spending plan.

The figures suggest many agencies remain in an exploratory phase rather than moving to large-scale deployment. Investment decisions also appear to be shaped by questions of oversight, data control and national interest.

Agentic AI drew strong support among Australian respondents, though that support was tied to governance. Some 73% said agentic AI could accelerate AI adoption if paired with strong oversight and governance.

This appears more cautious than the broader Asia Pacific trend. Across the region, 99% of government leaders surveyed said agentic AI would accelerate adoption, with many saying robust governance frameworks would be needed before it could be used at scale.

Priority sectors

In Australia, the strongest sovereign AI use cases were concentrated in areas closely tied to the state. National security and defence, and healthcare and public health, were each cited by 38% of respondents as leading areas for application.

"What stands out in this report is Australia's focused approach to Sovereign AI. Unlike other parts of Asia Pacific that are approaching sovereignty more strictly, Australia is concentrating on high-risk, mission-critical systems where security, accountability, and operational control matter most. It's a pragmatic model that protects national interests while still encouraging innovation, said David Hall-Johnston, Chief Technology Officer – Australia & New Zealand.

When asked where sovereign AI could deliver the greatest public value, 46% pointed to national security and cyber-resilience. Financial and taxation systems followed at 42%.

Those responses align with the broader regional pattern, where governments identified mission-critical public services as the main justification for sovereign AI investment. Across Asia Pacific, national security and cyber-resilience topped the list at 45.6%, followed by justice and public safety and financial and taxation systems, both at 37.5%.

The regional study found sovereign AI had risen from the seventh to the second-highest government investment priority in one year. It also found that 76.9% of government leaders across Asia Pacific believed investment in sovereign AI would improve resilience against geopolitical risks and supply chain disruption.

Skills gap

Australian respondents also identified practical barriers that could slow progress. Security vulnerabilities were named by 42% of those surveyed as the biggest obstacle to scaling sovereign AI.

Workforce shortages were even more widespread. Some 86% said digital skills gaps or shortages were affecting, limiting or significantly affecting digital initiatives.

This mirrors the wider regional picture, where nearly nine in 10 government organisations reported critical skills shortages. The hardest roles to fill were closely tied to sovereign AI readiness, including AI safety and alignment researchers, data architecture and analytics specialists, sovereign data governance professionals, sovereign cloud architects, and AI policy and governance specialists.

The survey was conducted in December and included respondents from Australia, India, Indonesia, Japan, Malaysia, the Philippines, Singapore and South Korea. It covered national civilian government, defence, financial administration, public safety, healthcare, education and critical infrastructure.

The results indicate sovereign AI is now being treated by many governments as a strategic issue rather than a narrow technology project.

"This research confirms what we're hearing from government leaders across Asia Pacific: the question is no longer whether Sovereign AI matters, but how to operationalise it at national scale," said Nicole Jefferson, Vice President, Global Government Affairs, Dell Technologies.

"What stands out is the region's confidence in agentic AI as an accelerator and the understanding that strong governance is an enabler of progression, not a hindrance. The findings show a region that is serious, structured, and pragmatic about building AI capabilities it can trust. Governments want partners who understand that sovereign-ready infrastructure, skills transfer, and governance maturity are inseparable from the technology itself. At Dell Technologies, we're committed to helping public sector organisations build AI on their own terms - with the security, resilience, and openness that mission-critical national services demand," Jefferson said.

IDC linked the findings to growing interest in using autonomous systems to ease staffing constraints in government, while warning that security and privacy concerns remain central to deployment decisions.

"Agentic AI is moving quickly from concept to practical consideration for government and executive decision-makers," said Ravikant Sharma, Research Director, IDC.

"The study shows strong momentum, with public sector leaders looking to autonomous systems to help close skills gaps, ease workforce pressure and accelerate AI adoption. However, that momentum is conditional. Governments will only move at scale if they have confidence in the security, privacy, sovereignty and infrastructure foundations underpinning these systems," Sharma said.