AIIA releases report showing the economic value of the cloud industry

The Australian Information Industry Association (AIIA) has released a report detailing the economic contributions of cloud computing to Australia. The report highlights the vital role of cloud technologies in driving productivity, economic growth and innovation, while urging policymakers to ensure a balanced regulatory environment that fosters competition without stifling innovation.

“This report underscores the cloud sector’s vital contribution to Australia’s GDP, employment and productivity,” said Simon Bush, CEO of the AIIA. “Over the past 16 years, we have witnessed over 300% growth in the cloud sector’s GDP contribution, reaching $9–10 billion in 2022–23. Looking ahead, the sector is poised to contribute $68–81 billion annually to the economy by 2028–29. However, for the sector to realise its full potential, we must ensure that regulatory frameworks encourage innovation rather than restrict it.”

“This new report clearly demonstrates the significant and growing contributions of the cloud industry on the Australian economy,” said Sean Kennedy, Partner at DT Economics. “Cloud will continue to play a crucial role in propelling Australia’s digital advancement, promoting innovation and enhancing productivity, especially as local businesses embrace the use of emerging technologies such as artificial intelligence. The report outlines 10 essential principles that, if implemented by the government, will ensure that cloud services will continue to deliver economic benefits and employment opportunities, drive innovation and contribute to Australia’s economy.”

Economic contributions of cloud computing

The report highlights the economic activity driven by both global hyperscalers and local cloud providers, with many technology companies leveraging platform as a service (PaaS) and infrastructure as a service (IaaS) to power their businesses.

Between 2007 and 2023, the cloud industry’s GDP contribution rose from $2 billion to $9–10 billion, an increase of over 300% at a compound annual growth rate of 10%. This represents approximately 0.4% of GDP. Beyond direct impacts, the industry generates significant indirect and induced economic effects through its extensive supply chain and employee spending.

Cloud computing catalyses productivity gains of an estimated 0.2–1% of GDP annually, underscoring its critical role in enhancing innovation and efficiency across industries.

Employment opportunities with cloud

The sector supported 47,000–56,000 jobs in 2022–23 (approximately 0.5% of employment across Australia). This is projected to grow to 71,000–84,000 jobs by 2028–29.

This will also facilitate regional job creation, as more cloud storage facilities are built in both urban and regional areas across Australia.

Harnessing key benefits and productivity impacts through cloud adoption

Cloud adoption enables organisations to unlock the benefits of digital transformation, including enhanced market access opportunities, enhanced capabilities, cost savings, improved operational resilience, reduced cybersecurity risks, and reduced energy and carbon emissions.

By providing scalable, flexible and cost-effective IT solutions, cloud computing also supports the integration of emerging technologies such as artificial intelligence (AI) and machine learning (ML) across Australia’s public and private sectors.

Advocating for balanced regulatory principles

The report calls for the adoption of 10 regulatory principles to ensure competition without compromising innovation. These principles emphasise proportional targeting of market failures, learning from international regulatory experiences and prioritising consumer-focused outcomes. They are:

1. Clear strategic direction
2. Targeting and proportionality
3. Learnings from other countries
4. Account for local conditions
5. Positive outcomes
6. Focus on competition
7. Consumer focus
8. Investment and innovation
9. Regulatory flexibility balanced with legal certainty
10. Appeal rights

In addition to the findings of the report, the AIIA cautions against introducing ex-ante competition regulations targeting digital platforms, including the cloud services sector.

“Australia has at times focused on regulating technology rather than supporting innovation,” Bush said. “We must strike a balance to safeguard citizens and customers while fostering creativity, investment and growth. Poorly designed regulations risk dampening the sector’s potential and undermining Australia’s position as a leader in the digital economy.

“Australia’s cloud sector is not just a backbone of the digital economy but a driver of national productivity and prosperity,” he added. “We need forward-thinking regulation that empowers, not encumbers, the sector to remain at the forefront of global innovation.”

To download a copy of the report, ‘Securing Australia’s Cloud potential: Economic value and regulatory principles’, click here.

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