APS 'dependence' on foreign AI crowding out Canberra firms

The feedback comes as the public service wraps up its trial of Microsoft's AI tool CoPilot, in a world first use of the technology across government.

On Wednesday, July 17, the Senate committee on adopting AI heard from a panel of Canberra-based tech firms.

Two of those, in their submissions, raised the issue of local firms missing out due to a "dependence" on foreign AI solutions.

David Hohnke and David Sheard, who helm Nuvento, a Canberra-based tech firm that provides software to a range of public sector clients, acknowledged that governments had a challenging job when it came to balancing risk and innovation, but said there was a misconceived perception among the public service that local firms were not in the AI race.

"We find that the default opinion is that any tech that is any good must come from Silicon Valley," Mr Hohnke said.

The co-directors highlighted a "scepticism" among government agencies and officials that an Australian company could develop a unique AI solution, but one that was not shared by the private sector.

"While Nuvento struggles to gain traction and attention within government for our purpose-built AI solution (Nu42), interest from the private sector has been substantial, with active trials of Nu42 already underway with similar use cases."

A similar experience was recounted by Dan Saldi, CEO and founder of Xaana.Ai, who said that due to every APS computer already loaded with Microsoft software, picking a Microsoft AI solution came naturally.

"You don't have to implement [the technology] because their products are already highly integrated."

Mr Saldi said this overlooked local companies that could store data in Australia, had local development teams and were on hand if something went wrong.

"This dependence on foreign AI solutions stifles the growth and competitiveness of local AI firms and undermines the development of a sovereign AI industry in Australia," Mr Saldi told the committee.

These concerns arise as the federal government winds up its trial of Copolit for Microsoft 365, a generative AI tool, for nearly 7500 public servants.

The six-month trial, coordinated by the Digital Transformation Agency, was announced by Anthony Albanese alongside Microsoft chairman and CEO Satya Nadella in San Francisco in November last year.

Now complete, the trial is expected to inform how Australian government agencies adopt AI, but had already sidelined a number of local competitors, who had tenders cancelled after the initial announcement.

Outside of procurement decisions, the committee heard the "horse has already bolted" when it came to regulation of AI.

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But just as Australia had local requirements for television, without a similar requirement for AI, Australians could miss out on content that reflects their culture and values, even as local creators have their content harvested for free.

The journalists and creatives union had referred to this use of the work of writers and producers as theft, without consideration of a due benefit for the original creator.

Mr Saldi however said there were even more intrinsic considerations.

"We have our own sporting culture, we have our own accent. Australia is a very special country, we have our own way of doing things. There are Australian values in considering how we are governing, regulating or using some of these models," he said.