Australia will push ahead with national standards for AI data centres, despite opposition from states and territories choosing to take a "let it rip" approach.
Prime Minister Anthony Albanese announced plans to introduce legal requirements governing AI use and data centres in a major speech in July.
He will convene a meeting this month of the nation's leaders to discuss data centres in a bid to reach an agreement on uniform standards, as Queensland and the Northern Territory hold out.
Energy Minister Chris Bowen reaffirmed the Commonwealth would override the two governments if they refused national policy settings, warning the result would mean higher bills.
"What we're not going to do is let one state or one territory dictate to the rest of the Commonwealth or the other states," he told ABC radio on Thursday.
"Their way is going to be the the lowest common denominator. Nor is it in the best interest of the country.
"Just say let it rip ... just let them do whatever they want. I think that does have the risk of increased bills and reduced reliability."
Mr Bowen on Wednesday revealed data centres would have to underwrite new energy generation capacity through the renewable electricity guarantee of origin scheme to prove they were fully offsetting the power they used with renewable energy.
Opposition energy spokesman Dan Tehan said it was a matter for developers to decide what they put forward as their energy source.
"They should have the flexibility to decide how they go about their energy mix, and if they want to, how they should offset their emissions reduction," he told ABC radio.
"Our view is we should be technology agnostic when it comes to our energy source, and that's how you pursue energy abundance in this nation, which means you can actually put downward pressure on prices."
Australia was already the top destination of data centre investment outside the US, but that investment risked being pushed elsewhere by lengthy approval times and slow upgrades to energy and water infrastructure.
A report released by consultancy EY on Thursday showed AI could deliver Australia's economy a productivity boost of up to 2.4 per cent, potentially ending a decade of weak productivity growth responsible for the nation's declining living standards.
That would result in a $116 billion increase to real GDP and an extra 44,000 jobs in the economy as the technology reshapes the labour market.
Australia has suffered one of the biggest declines in living standards in the developed world in recent years, driven by real wages falling 5.1 per cent since March 2021, according to an OECD report in July.
Labour productivity growth had averaged just 0.3 per cent a year in the past decade, which was why the potential uplift from AI mattered, EY's regional chief economist Cherelle Murphy said.
Whether Australia can fully harness AI's productivity potential depends on whether it gets the regulation right.
While businesses cautioned that greater regulation would limit AI adoption, more than 80 per cent of Australians wanted stronger rules on how organisations use AI, Ms Murphy told AAP.
Despite community fears about widespread AI job losses, EY found that most industries would register a lift in employment as a result of productivity gains or stronger real wages boosting demand, although capital-intensive industries such as mining and agriculture could see a slight decline.
