AI & Data: Australia's Productivity Future Needs Right Policies

Australia stands at a critical juncture, with data and emerging digital technologies like artificial intelligence (AI) offering a significant opportunity to revitalise productivity growth. Realising this potential, however, hinges on establishing the right policy framework. Strategic reforms in data access, AI regulation, and digital infrastructure could unlock billions in economic value for the nation.

These insights are drawn from the Productivity Commission’s recent report on Data and Digital Technologies, co-authored by Professor Stephen King of Monash University. This is the third of five reports designed to inform Australian policymakers ahead of an upcoming government reform roundtable. Key recommendations from the report include:

• Building upon existing regulations rather than introducing new ones.

• Enhancing privacy protections for consumers.

• Granting consumers greater access to data pertaining to them.

Building on Existing Regulation for AI

AI’s capacity to extract valuable insights from vast datasets almost instantly could transform the global economy, significantly boosting productivity by automating numerous routine tasks. Early projections suggest AI could lift productivity by 0.5% to 13% over the next decade, potentially surpassing the combined benefits seen from the internet and mobile phone revolutions between 2004 and 2014. Australian businesses are already leveraging AI, from autonomous mining trucks to fraud detection in banking, demonstrating its current impact across the economy.

However, poorly designed regulation risks stifling AI investment without improving outcomes. To mitigate this, the Productivity Commission advocates an outcomes-based approach to AI regulation. This strategy would leverage existing laws and regulatory structures to minimise harm and provide certainty for both consumers and businesses. New technology-specific regulations should be a last resort, and the government’s proposal for “mandatory guardrails” should be paused. The initial step should involve reviewing existing laws to ensure they adequately cover, or can be adapted to cover, potential issues arising from AI adoption. New regulatory changes should only be considered if clear gaps are identified. Urgent coordination and consistency are vital to provide businesses with the certainty needed for investment.

Reforming Privacy Protections

Data serves as the fundamental input for digital technology, yet Australia’s current data rules present challenges. Privacy laws have largely become a “tick-the-box” exercise. Consumers often agree to privacy policies without reading them; the Australian Competition and Consumer Commission (ACCC) estimates it would take an average consumer 46 hours per month to read every privacy policy they encounter. This results in superficial privacy protection for consumers and increased red tape for businesses.

The Productivity Commission proposes an outcomes-based alternative for businesses, where privacy obligations are met if identifiable data is used in the best interests of consumers. This shift would foster greater trust in privacy laws, encourage business innovation, potentially reduce compliance costs, and ensure meaningful consequences when businesses fail to uphold their privacy commitments.

Enhancing Access to Personal Data

While data about individuals and businesses drives growth in the digital economy, consumers often lack access to their own data. Businesses derive significant value from the data they collect, but this information is frequently unavailable to the individuals it pertains to, or is provided in inaccessible formats like PDFs, or in edited versions that withhold certain details.

Under appropriate conditions, empowering individuals and businesses with better access to and control over their data can stimulate competition and enable entrepreneurs and existing firms to develop innovative products and services. Analysis by the Productivity Commission suggests that an improved data-sharing regime could contribute up to A$10 billion annually to Australia’s economic output. The report recommends a measured approach to expanding data access, prioritising sectors where gains could be substantial. Examples include enabling farmers to integrate real-time data from machinery for optimised operations, and providing tenants on-demand access to their rental ledgers to verify payment history to new landlords or lenders.

Modernising Company Reporting

The Productivity Commission’s report also addresses related issues, such as the outdated nature of company financial reporting. While most major overseas countries have adopted digital reporting, allowing for quick, easy access to comparable financial data, Australia largely remains reliant on hard copy or PDF reports. Financial reports are crucial for transparency, accountability, and informing decisions made by investors, businesses, and regulators. Australia’s companies need to transition to digital financial reporting. The federal government should mandate that companies lodge their financial reports with the Australian Securities and Investments Commission (ASIC) in machine-readable format, simultaneously removing the requirement for hard copy or PDF submissions.

Data and digital technologies hold the promise of long-term societal benefit, but this transition will unfold over years and decades, necessitating support for individuals along the way. Without establishing these crucial foundations, Australia risks falling behind other nations in seizing the opportunities presented by the digital revolution. The Productivity Commission’s report outlines the essential groundwork to support Australia’s future productivity growth.