ANDREW CARSWELL: Macquarie Group investing $5 billion in a US dump shows Australia has a serious problem

There is not much to get you excited in Ellendale, North Dakota, unless you love the hypnotic dance of tumbleweeds.

Its greatest claim to fame is the cheerful title of “pheasant capital of North Dakota”. Its main street seems to collect boarded-up businesses.

Seems a strange place for Australia’s own Macquarie Group to invest $5 billion in data centre infrastructure.

But in many ways, wonderfully emblematic of Australia’s troublesome and seemingly systemic problem of attracting and retaining investment; particularly the investment required to lift its high-tech capabilities, break the back of its productivity malaise, and put the economy back on a path to sustained growth.

Why battle with Australia’s increasingly uncompetitive tax regime, its rigid industrial relations rules, and its myriad of regulatory hurdles, when the people — and pheasants — of North Dakota will welcome your capital with open arms?

This is the economic challenge that should be front-of-mind for Treasurer Jim Chalmers as he approaches his productivity roundtable in August; seeking to find consensus from business and unions to address lagging productivity, which is mired at 60-year lows.

The pursuit is more than commendable, and if successful, could help restore some of the economic credibility the Albanese Government traded away in its first term by prioritising union power over business productivity, and inadvertently driving up the cost of doing business rather than making businesses more competitive with global peers.

But before you tackle productivity, there needs to be a conversation about investment. Because if you get investment moving — the right type of investment — productivity will splutter into gear. It’s cart and horse type of stuff.

Australia has an investment problem. That’s the simple diagnosis. Private non-mining investment continues to haemorrhage, companies are preferring foreign projects in preference to local opportunities, and on the OECD’s latest investment report, we rank third last for the size of our investment gap.

Solve that problem first.

Fundamentally, that means finding an answer to a simple question: why North Dakota and not North Sydney, North Hobart or even North Adelaide?

Why is our leading investment bank pouring big capital into data centres in the arse-end capital of the world, rather than its own patch?

The examples don’t stop there.

Why is NVIDIA, Google, Amazon, Microsoft and Australian firm NextDC spending a combined US$30b building digital infrastructure in Malaysia and not Australia?

Why are major corporate giants Adani, Blackstone, LG, and Alibaba dotting data centres and tech hubs across south-east Asia and not even turning one eye towards our shores?

In 2025 alone, Google, Amazon, Microsoft, and NVIDIA will collectively pour US$584b into digital and AI infrastructure. With that kind of global investment on the table, where’s Australia’s slice?

And no, the Prime Minister’s $7b announcement with Amazon Web Services in Seattle pre “Trump Dump”, in front of a rightly sceptical press pack, wasn’t our slice of the digital infrastructure boom. It was largely a continuation of AWS’s existing spend in Australia. Not a single, confirmed new data centre in sight.

That funding profile is merely tip-of-the-iceberg kind of stuff, compared to the investment sitting offshore ready for domestic deployment.

It is now abundantly clear that Australia is missing out on a monstrous new wave of investment flowing into data centres, high-tech infrastructure, fibre optics, high-performance computing campuses and AI super-clusters, in preference to nations that have competitive tax settings, incentives, and government co-investment.

Given that innovation, AI, and automation are central to driving productivity growth, this emerging picture of missed opportunity in tech infrastructure is deeply concerning. It’s awfully hard to chart a credible path to productivity reform when the nation lacks the foundational hardware needed to support the very technologies that enable it.

Australia is barely in this race.

This is the unfortunate problem with the Federal Government’s Jekyll and Hyde approach to economic management; the feisty, anti-business posture of its first term, and its sudden realisation in its second term that business must, in fact, be the engine of economic growth.

The damage has been done. It’s awfully difficult to jam the toothpaste back in the tube once it’s been gleefully stomped on.

The Government has unwittingly harmed Australia’s investment prospects by its intimidatory policy settings that have given business no confidence to invest, and now is desperate to nurse this crucial relationship back to health, one roundtable at a time.

Nowhere is this strange dichotomy more prominent than the mining sector.

To Australia’s comparative advantage, when innovation and technology development succeed in mining, it overflows into other key sectors such as energy, defence, agriculture and decarbonisation, translating to broader productivity gains across the economy.

Driving productivity gains through innovation starts with mining, and the investment that strengthens the industry.

But mining investment has been dramatically hampered by archaic industrial relations changes, slow environmental approvals, high energy prices and the ever-present threat of higher taxes to pay for record government spending.

Strange way to get productivity moving.

Unleash the shackles that are holding investment back, target that investment at enabling high-tech infrastructure and innovation.

And productivity will take care of itself.

Andrew Carswell has clients in the mining sector