The nation was at the "cusp of a data centre boom", Oxford Economics head of economics Harry Murphy Cruise told a conference in Sydney on Monday.
AI adoption is being led by the US, where about 30 per cent of firms have a paid subscription to market leaders OpenAI or Anthropic to use ChatGPT or Claude.
"We expect AI adoption in Australia to increase, jumping to around 50 per cent over the next decade and then topping out at around 80 per cent by 2025," Mr Murphy Cruise said.
Other countries in the region, such as Japan, China and India, are also chasing AI, albeit at a slightly slower rate than the outlook for Australia.
That's because their economies have more manual labour or blue-collar type work, which means adoption is a little harder, given AI is less useful for some tasks than others.
Oxford Economics has looked at occupations in Australia and crunched the likely outcomes for job automation by AI.
The hardest hit are graphic design, web design and illustration, followed by data entry and other keyboard-type jobs and telemarketing.
"AI does that particularly well," Mr Murphy Cruise said.
Occupations such as concreters and surgeons, and even electricians, are less exposed.
"AI, at least at the moment, isn't going to be doing your heart surgery," Mr Murphy Cruise said.
Oxford Economics expects that by 2060, AI will be able to replace about 15 per cent of current tasks and occupations.
"That said, it doesn't mean that aggregate employment is going to be lower, because AI delivers benefits as well," Mr Murphy Cruise said.
"We're forecasting AI to deliver some pretty substantial productivity benefits around the world."
For Australia, that means increasing productivity by about 2.5 per cent by 2035 and 4.5 per cent by 2060.
"And those productivity gains then translate into, hopefully, employment gains," Mr Murphy Cruise said.
This is because increased productivity means companies can pay workers more or cut prices, which lifts household spending power.
Companies could also bank the profits, but that would expose them to increased competition from firms that take the first two options.
Australia's investment in data centres to power AI was expected to reach $60 billion by 2030, from $20 billion in 2026, Oxford Economics' head of impact Michael Brennan said.
"Whenever you build a data centre, you're going to involve a whole supply chain of telecommunications, maintenance professional services, and engineering," he said.
That means jobs - from the construction phase all the way through to ongoing management and maintenance.
Data centres could contribute $78 billion to the economy in terms of investment by 2030, and about 80,000 to 100,000 jobs a year on average.
"So this infrastructure build-out is going to have a pretty sizeable impact on the economy," Mr Brennan said.
Electricity usage by the centres is projected to reach between five per cent and 12 per cent within 10 years.
Oxford Economics head of energy Alex Hooper said data centre builders were increasingly being asked to cut the construction timeline from six years to one.
However, building energy infrastructure could easily take much longer.
"So there's a little bit of a mismatch" that governments need to respond to, Ms Hooper said.
5°C