"The key for Australia to become a leader and not a follower is to understand that many services are increasingly a co-product of competitive service providers (usually from the private sector) and government regulators," the paper reads.

"The United States Patriot Act brazenly declares the US Government's right to access anything it wants from any Cloud infrastructure over which it can claim jurisdiction. That creates a demand for Cloud computing services that are not subject to such capricious hazards."

Another factor in making Australia more attractive to overseas purchasers was the potential to put in place regulation which exempted foreign Cloud service users from domestic regulations.

"Firstly, we could pioneer a careful separation between the regulation of local supply and export so as to exempt foreign purchasers of Australian Cloud services from any regulatory requirements that exist in Australia solely to protect Australian users," the report reads.