The Australian Government has released its National AI Plan which it has pitched as a whole-of-nation roadmap to support AI development, adoption and safe use. The Plan is framed around three broad objectives:
- Capturing opportunities: build digital and physical infrastructure, support local capability and attract global partnerships and investment.
- Spreading the benefits: the Government's goal is to ensure that all Australians share in the advantages of AI by a workforce uplift and education agenda to build skills in the use of AI.
- Keeping Australians safe: commitment to legal, regulatory and ethical frameworks to protect rights and build trust in the use of AI, including the establishment of an AI Safety Institute.
These objectives are commendable and logical, but there are no meaningful details about how these objectives will be assessed and no measures or markers have been set against which progress can be judged. In recent years, there have been several rounds of consultation and various guidance materials on AI adoption issued by the Government, so it is not unreasonable to question whether the Government will stay the course with this Plan and can deliver progress on these stated objectives.
We've considered the Plan and identified some key issues arising out of the Plan's stated actions for achieving the first and third objectives, and the legal, regulatory and commercial implications that arise for organisations looking to capitalise on AI opportunities in Australia.
The reality of “capturing opportunities”
The success (or otherwise) of AI infrastructure is linked to Australia's other infrastructure challenges
The Plan acknowledges that to realise the opportunities of AI, Australia will require reliable and extensive digital and computing infrastructure, including data centres. Development and construction of data centres to underpin the provision of AI will require Australia's plentiful and secure electricity supply and likely significant amounts of water. While acknowledging that Australia has significant opportunities in renewable energy, and indeed has made progress in delivering major renewable energy projects, challenges around planning and environment approvals along with access to resources and labour to ensure timely project builds and delivery remain. These challenges may impact how quickly and confidently developers of large-scale data-centres can secure the long-term availability of power and water required for the provision of AI.
While the Plan does not propose any reforms or solutions to existing bottlenecks or issues in regulatory processes or in ensuring appropriate infrastructure availability for the deployment of AI – be they around network investment, land and planning approvals, environmental and sustainability reviews and approvals, the Government is currently developing a set of national data centre principles which will provide details in relation to sustainability and the approach to approvals processes for data centres. These will likely be the subject of further political and policy debate and further clarity is required for organisations around the challenges of AI infrastructure and regulation.
Foreign direct investment is welcome, with caveats
Foreign direct investment is described as critical to Australia's AI ambitions for economic security, job creation and national resilience. However, the Foreign Investment Review Board, Department of Home Affair's Hosting Certification Framework and other processes (potentially including ACCC's mandatory merger clearance regime) can create uncertainty to and slow down investment and development processes. Significant AI-related infrastructure, compute, cloud, or data-processing assets will likely trigger scrutiny, whether on national security grounds, because they comprise critical infrastructure assets, or because of they are part of the supply chain for other sensitive sectors.
The Plan observes that large investments in AI deployment have already been made in Australia and that global partnership is a priority, but it does not reconcile these observations with the obstacles faced by those investing in AI in Australia or address how Australia will strike a balance between attracting foreign investment and maintaining sovereignty over AI infrastructure.
Australia as the Indo-Pacific’s AI hub
A particularly interesting aspect of the Plan is the Government's view that Australia is well-placed to become the leading destination for data centre investment and the partner of choice for the Indo-Pacific on critical digital infrastructure.
It is true, as noted in the Plan, that Australia offers political stability, clear legal protections and proximity to growing economies. However, to ensure Australia's can be an AI hub in the region more work is needed to align with other nations in the Indo-Pacific on AI safety thresholds, intellectual property norms (particularly for use of data in training AI) and regimes for facilitating cross-border data flows.
Keeping Australians safe – regulation by evolution
The Plan indicates that the Government's current focus on AI regulation has replaced the mandatory guardrails for AI systems with a two-pronged approach involving:
- Uplifting and clarify existing technology-neutral laws, and
- Issuing more guidance to promote responsible practices.
This reflects a pragmatic approach to regulation, with a reaffirmation of the adequacy of existing frameworks (consumer protection, privacy, discrimination, online safety). For industry, this means no economy-wide AI law is coming soon. Instead, it is likely that the Government will incrementally amend existing regulation and legislation including the Privacy Act, the Australian Consumer Law, and possibly the Online Safety Act. We will also likely see more guidance provided to industry on the safe and responsible development and deployment of AI systems such as the Guidance for AI Adoption (see more here).
On balance, this more incremental and evolutionary approach is likely to assist and support wider implementation of AI across many areas. However, it does leave some areas of uncertainty, particularly around the use and handling of data and IP to both train AI models and the outputs of AI. The ongoing consultations between the Attorney-General's Department and members of the Copyright and Artificial Intelligence Reference Group around licensing models for copyright material used in AI training in Australia, and the outcomes of those consultations, will be watched with interest by developers and operators of AI systems, users and creative industries alike.
The ongoing uncertainty around privacy reform
The Plan describes a future "modern and clear Privacy Act" as foundational for AI safety and trust within Australia. However, reforms to the Privacy Act to update Australia's privacy regime have been slow moving with the first tranche of reforms introduced in 2024, and currently no clear timeframe on the second and more fulsome tranche of amendments to the Privacy Act.
While the regulator, the Office of the Australian Information Commissioner, has provided guidance notes on the development and deployment of AI by organisations in Australia in respect of the current regime, this is likely to change and require organisations to retrofit compliance measures once the Government moves to legislate the second tranche (and possibly further tranches) of privacy reforms. It is critical that clarity on the future of privacy law reform is provided in the near future to assist organisations in developing and deploying AI in a way that fosters safety and trust.
Australia’s role in establishing global norms around AI
The Plan emphasises Australia's participation to date in global norm-setting, and notes Australia is dedicated to advancing AI safety, ethical standards and trustworthy development. This commitment exists in other areas of regulation, such as the focus on online safety and the use of social media by children and teens, where Australia's social media 'ban' for persons under 16 years of age is being watched by the rest of the world as a potential model for other jurisdictions.
As noted earlier, Australia's pragmatic and evolutionary approach to AI regulation has the advantage of not overregulating AI or implementing regulation that is quickly rendered redundant by changing technology. However, given the difference in approach between Australia and some other jurisdictions, including in the EU, it is an open question about whether and to what extent Australia is able to exert influence in forums where AI standards are being set.
Conclusion
It is clear that National AI Plan is a strong statement of the Australian Government's ambition around AI and promoting the safe and responsible development and deployment of AI systems in organisations, but this must be the starting point for further policy development and implementation work to provide further assistance to business in the implementing and realising the benefits of AI, whilst providing appropriate safe guards and protections.
There is much still to be done in terms of identifying how regulatory gaps and uncertainty will be addressed, where infrastructure constraints will limit growth and how these will be overcome, and how Australia can be a leading contributor to establishing global norms in the implementation and use of AI systems.
We will see if 2026 is the year in which the Government provides and implements policies and legislation that are able to realise the ideas and ambition of the National AI Plan.
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This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
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