Australia’s Productivity Commission pushes back on tough AI laws
The Productivity Commission is warning the Australian government against rushing into strict AI regulations. It says plans for “mandatory guardrails” on AI tools should pause until legal gaps are clearly identified.
The government is considering an AI Act to set rules based on AI risk levels, including potential bans on high-risk tech. AI will be a key topic at the upcoming productivity round table later this month. 
Two days ago, former industry minister Ed Husic backed creating a dedicated AI Act. The commission, however, feels heavy-handed rules could stifle growth.
It warned that tight AI laws might slow down Australia’s chance to cash in on $116 billion in economic gains over the next decade. The boost to productivity could rival the impact of the internet and smartphones 20 years ago.
Productivity Commission commissioner Stephen King wrote:
“Adding economy-wide regulations that specifically target AI could see Australia fall behind the curve, limiting a potentially enormous growth opportunity.”
“The Australian government should only apply the proposed ‘mandatory guardrails for high-risk AI’ in circumstances that lead to harms that cannot be mitigated by existing regulatory frameworks and where new technology-neutral regulation is not possible.”
Unions are taking the opposite stance, demanding not only an AI Act but also protections against job losses.
AI could lift Australia’s labor productivity growth by about 4.3% annually over the next decade, far above the 0.9% average. But the commission notes there will be “painful transitions” with potential job displacements, citing global estimates of 9 million jobs lost.
Treasurer Jim Chalmers called AI “the most transformative technology in human history” and said the government aims to regulate “as much as necessary” but “as little as possible” to support the AI industry.
Chalmers said:
“We’re optimistic about the role AI can play in strengthening our economy and lifting living standards for more Australians at the same time as we’re realistic about the risks.”
“AI will be a key concern of the economic reform round table I’m convening this month because it has major implications for economic resilience, productivity and budget sustainability.”
The AI sector faces growing skepticism from the public and investors who say government delays on AI regulation have led to a “wait-and-see” approach. The last major update from government was in January, when mandatory guardrails were said to be in “final stages.”
Australia’s AI regulation debate heats up ahead of the productivity round table, with the balancing act between risk and growth front and center.
