The political contest over artificial intelligence has shifted onto industrial ground, with the Coalition arguing that Australia’s next manufacturing chapter will be written in code as much as on the factory floor. Shadow Energy Minister Dan Tehan has warned that the country risks squandering a rare opening to rebuild its industrial base unless AI becomes a genuine focus of federal policy rather than a talking point.
In comments carried by Sky News Australia, Tehan argued that Australia will “miss out” on the growth in advanced manufacturing now sweeping through comparable economies if the technology does not sit near the top of the government’s agenda. The framing is deliberate. It ties two issues that have dominated the past year of debate in Canberra, the future of local industry and the enormous energy demands of the AI boom, into a single argument aimed squarely at the government’s economic credentials.
The news
Tehan’s intervention lands at a moment when manufacturing has drifted back to the centre of national politics. Both major parties have spent much of the term talking up a “Future Made in Australia” ambition, promising to onshore everything from batteries and solar components to defence materiel and critical minerals processing. What the Shadow Energy Minister has done is graft AI onto that story, suggesting that the modern factory is a data-rich, automated operation and that countries which fail to invest in the underlying technology will find themselves assembling other people’s designs rather than creating their own.
His portfolio matters here. As the Coalition’s energy spokesman, Tehan has a direct interest in the collision between AI’s appetite for electricity and Australia’s already stretched grid. Data centres, the physical engine rooms of modern AI, are power-hungry by nature, and the same infrastructure that trains large models also runs the automation, robotics and quality-control systems that a revitalised manufacturing sector would depend on. By linking AI to manufacturing, Tehan is effectively arguing that energy policy and industrial policy can no longer be treated as separate files.
Two views on the same problem
The Coalition’s case is that the government has been long on rhetoric and short on the practical settings that would let AI-driven manufacturing take root, from reliable and affordable power to skills, planning approvals and incentives for firms to invest in automation. On this reading, the risk is not that Australia rejects AI, but that it moves too slowly and watches investment, talent and factories head to the United States, parts of Asia and the Gulf states that have moved aggressively to court both chipmakers and manufacturers.
The government’s position, articulated repeatedly by Labor ministers over recent months, is that Australia is already投 committing serious money and attention to the area, and that a responsible rollout beats a reckless one. Ministers have pointed to work on AI safety, on sovereign capability and on lifting workforce skills as evidence that the country is building the foundations properly rather than chasing headlines. Labor figures have also been sharply critical of what they characterise as tech-industry hype, warning that inflated claims about AI can mislead the public and distort investment decisions. From that vantage point, Tehan’s warning reads as an opposition doing its job, prosecuting a gap between ambition and delivery, without necessarily grappling with how hard the delivery actually is.
Independent analysts tend to sit somewhere in between. Many accept that AI and automation will reshape advanced manufacturing globally, and that Australia’s high labour costs make productivity-boosting technology especially attractive. But they also caution that AI is not a substitute for the things Australian manufacturers have long said they need, namely cheaper and more stable energy, deeper pools of engineering talent, and a domestic market large enough to justify capital investment. On that logic, AI is a multiplier of a healthy industrial base, not a shortcut around a weak one.
What it means for Australia
For Australia, the stakes in this argument are unusually concrete. Manufacturing accounts for a modest share of the economy compared with its post-war peak, and successive governments have promised to reverse that decline without much to show for it. If Tehan is right that AI is now the decisive ingredient, then the policy questions become immediate: whether the grid can supply the power that both factories and data centres will demand, whether regional communities will accept the large facilities that increasingly follow AI investment, and whether the training system can produce enough people who can build, run and maintain automated plants.
Those questions are already playing out in specific places. Regional centres have been positioning themselves for data-centre investment, energy operators are wrestling with forecasts of surging demand, and universities and employers are warning of skills gaps that could throttle any AI-led revival before it starts. Tehan’s comments give those local debates a national political frame, and they hand the government a challenge to show that its industrial plan has a credible AI dimension rather than a bolted-on one.
There is also a sovereignty angle that both sides quietly share. A manufacturing base that depends entirely on imported AI systems, foreign chips and offshore data infrastructure is exposed in ways that matter for national security as much as economics. That concern has driven recent interest in sovereign AI capability and local computing infrastructure, and it strengthens the argument that Australia cannot afford to be a passive consumer of technology built elsewhere.
What’s next
Expect AI to feature more prominently whenever manufacturing, energy and industry policy are debated between now and the next election. Tehan has staked out a position that lets the Coalition tie together several of its favoured themes, energy reliability, cost of living and economic sovereignty, under a single, forward-looking banner. The government, for its part, will want to demonstrate that its existing investments in safety, skills and sovereign capability translate into real factories, real jobs and real output rather than announcements.
The deeper test will be whether either side can move beyond slogans to the unglamorous work of getting power, planning, capital and skills to line up at once. AI may well be the catalyst Tehan describes, but the manufacturing revival he wants will rise or fall on the fundamentals that have frustrated Australian industry policy for a generation. On that, at least, his critics and supporters can probably agree.
Sources: Sky News Australia.
