Productivity Commission Opposes Tough AI Laws as Treasurer Charts Middle Course
The Productivity Commission has recommended against introducing stringent artificial intelligence regulations in Australia, warning such measures could stifle innovation, Treasurer Jim Chalmers revealed Wednesday during a news conference addressing the nation's economic reform agenda.
The Commission's third draft report on data and digital technology, released overnight, takes a measured approach to AI governance that aligns with the government's strategy to maximize opportunities while managing risks, Chalmers said.
"Artificial intelligence is a game changer for our economy," Chalmers told reporters in Canberra. "It has the potential to support all of our major economic goals, making our economy more productive, stronger, lifting living standards over time."
The report comes as Australia grapples with mounting pressure to regulate AI amid global concerns about job displacement, privacy and safety. The Commission's position puts Australia at odds with the European Union, which has implemented comprehensive AI regulations, and positions the country closer to the United States' lighter-touch approach.
Chalmers said the Commission's findings were "largely consistent" with his own views on AI policy, which he outlined over the weekend. The government's approach rejects both the "let it rip" philosophy of unrestricted AI development and efforts to "turn back the clock" on technological advancement.
"We can chart a middle course that makes our workers and our people and our industries beneficiaries not victims of technological change," Chalmers said.
Economic Reform Push Intensifies
The AI report represents one pillar of a broader economic reform initiative as the government prepares for a major roundtable meeting in two weeks. Chalmers announced Wednesday he has engaged 75 CEOs and senior business leaders in what he termed a "boardroom blitz" this fortnight, while conducting 41 ministerial roundtables across specific policy areas.
The government has received approximately 900 submissions ahead of the economic reform roundtable, with participants set to receive issue briefs this week. Chalmers said he would make those briefs publicly available "in the next couple of days."
"Our goal is to unlock investment, unblock regulation, and unleash more productivity over time," Chalmers said, emphasizing the government's focus on addressing Australia's capital deepening challenges.
The reform push targets three key areas: productivity, economic resilience and budget sustainability. Chalmers will meet with state and territory treasurers next week as part of the consultation process.
Workers Voice Concerns About Job Displacement
Despite the optimistic framing around AI's potential, Chalmers acknowledged legitimate worker concerns about technological displacement during questioning from reporters.
"For a lot of them, they see the game changing and then being taken off the field and their jobs being given to computers," one journalist noted, asking what reassurance the government could provide.
Chalmers, who co-authored a book on technological change in 2017, said the government's responsibility was to show workers that AI "can be a force for good."
"That means listening to workers," he said. "It means empowering them with the skills that they need to get ahead as technological change gathers pace."
The Treasurer outlined three schools of thought on AI: those who want to "let it rip," those who "pretend that we can turn back the clock," and the government's preferred "sensible middle path which recognises the big economic upside of artificial intelligence without forgetting that our primary responsibility is to people and workers."
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Productivity Challenge at Center of Reform Agenda
Australia faces significant productivity challenges, with growth lagging behind historical averages. Chalmers said the country has made progress on inflation control, wage growth and unemployment, but acknowledged "our economy is not growing as strongly as we would like it to."
"Like most of the developed economies, we've got a productivity challenge," he said. "And the best way to lift living standards over time is to make our economy more productive."
The government's approach emphasizes skills development and worker inclusion rather than "scorched earth industrial relations or letting technology rip," Chalmers said.
The Treasurer explained his focus on productivity in accessible terms, noting that economic jargon often fails to connect with workers' daily experiences.
"The reason that I am obsessed with productivity in our economy is because it's the best way to lift living standards over time, and that means better wages so that people who work hard can provide for their loved ones and get ahead," he said.
Work From Home Debate Enters Productivity Discussion
The productivity focus extended to questions about Victoria's proposed legislation mandating two days of work-from-home rights for eligible workers, with reporters pressing Chalmers on whether such measures could undermine productivity goals.
Chalmers defended flexible work arrangements while avoiding direct criticism of the Victorian government's approach.
"I'm a big supporter of work from home," he said. "It helps families in particular balance their work responsibilities with their other responsibilities, and it's a good thing."
The Treasurer challenged assumptions that remote work necessarily hurts productivity, calling the relationship "contested" and dependent on industry, arrangements and individual workers.
"The experience has shown the more that we can make it easier for people to participate in the workforce to contribute their skills, the better, and work from home has a role to play there," he said.
Key Economic Data Expected Next Week
Chalmers flagged "a big week" ahead with the Reserve Bank of Australia meeting Tuesday, followed by wages data Wednesday and employment figures Thursday. He said the releases would demonstrate "the progress that Australians have made together" on inflation, real wage growth and maintaining low unemployment.
Consumer confidence data released Tuesday showed a rise to three-year highs, Chalmers noted, while interest rates have been cut twice this year.
However, he acknowledged ongoing challenges, including global economic uncertainty and "big persistent structural issues in our economy."
AI as Economic Enabler
The Productivity Commission report positions AI as a potential solution to Australia's economic challenges rather than merely a source of disruption. Chalmers emphasized treating AI "as an enabler, not an enemy" of economic growth.
"Every single part of our lives will be impacted over time by artificial intelligence," he said, calling for a balanced approach that maximizes benefits while managing risks.
The government's AI strategy involves extensive consultation with industry, unions and community groups, part of what Chalmers described as doing the work "together" rather than imposing top-down solutions.
Ministers Tim Ayres, Molino and Andrew Charlton joined Chalmers for Wednesday's meeting with Productivity Commission chair and regulators, with further announcements expected later in the day.
Broader Reform Context
The AI policy discussion occurs within a comprehensive economic reform framework addressing both short-term cyclical issues and long-term structural challenges. Chalmers said the government has developed "a big agenda" covering "demand side and supply side" economic factors.
The upcoming roundtable will bring together business leaders, union representatives and policy experts to forge consensus on reform directions, though Chalmers acknowledged "there's obviously not unanimity on every single idea."
"We are seeking broad consensus on reform directions," he said, emphasizing the search for "specific ideas, affordable ideas in the national interest."
The government's consultation process, including the CEO engagement and ministerial roundtables, represents one of the most extensive industry consultation efforts in recent years as Australia seeks to address persistent productivity challenges while navigating technological transformation.
The Productivity Commission's AI recommendations will form a key input into these discussions, potentially shaping Australia's approach to one of the most significant technological shifts in decades while the government balances innovation opportunities against worker protection and economic stability concerns.
An artificial intelligence expert is urging stronger regulation of AI technology in high-risk sectors, even as Australia's Productivity Commission projects the technology could deliver a $116 billion economic boost over the next decade.
Lisa Givens, Professor of Information Sciences at RMIT University, said AI regulation should not be viewed as opposing productivity gains, particularly in areas where people's health and safety are at stake.
"I don't think that we have to see AI regulation necessarily as in opposition to efficiencies or productivity work," Givens told ABC News Australia. "I think particularly in areas around high risk use of AI contexts where people's health and safety might be at risk, we do need to take a closer look and we should ensure that we have really tight regulations in those areas."
The comments come as organizations across Australia grapple with implementing AI while addressing safety and responsibility concerns. The Productivity Commission report recommends treating AI-specific regulation as a last resort, favoring a softer approach of checking gaps in current regulation.
Givens identified medical diagnostics and mental health chatbots as prime examples of high-risk AI applications requiring stricter oversight.
"The minute you're talking about diagnoses, you're talking about people's health immediately," she said. "I think that that's an area that would be potentially deemed as high risk."
She pointed to global concerns about AI chatbots being used for mental health issues, questioning whether sufficient guardrails exist to protect users of such technologies.
While acknowledging AI's potential benefits in healthcare—including more efficient cancer screening and document analysis—Givens emphasized the need for careful regulation when human welfare is involved.
The debate centers on whether existing regulations can adequately cover AI applications or if new, technology-specific rules are needed. Givens said the rapid pace of AI development complicates this approach.
"AI technologies are moving very, very quickly," she said. "And in some cases, because the technology is adaptive, but in ways that we don't quite always know what the outcome is going to be, there is a belief that in high-risk areas in particular, we do need to take a deeper dive."
The challenge involves balancing innovation with safety while allowing businesses to implement AI freely to boost productivity.
Creative industries face particular alarm over the report's recommendation to explore whether copyright law barriers hinder AI model development. Givens said concerns have persisted for at least two years about job losses and intellectual property protection.
"Many people that work in the creative industries are really not only just worried about future job loss and what it might mean for the creative industries, but copyright is something that definitely protects creative in terms of, you know, that's how they're going to pay the bills," she said.
The copyright debate centers on whether companies should freely access copyrighted materials for AI training datasets. Creative industry workers worldwide oppose this approach, Givens said.
"People in the creative industries worldwide are saying absolutely not," she said. "We need to actually look at our copyright laws and assess how do we protect people's creative rights in this new environment."
Several sectors already show evidence of AI-driven job displacement. Givens cited translation services as an example where AI tools are replacing human translators, with companies using AI for initial translation followed by human oversight for quality control.
"So there are some innovations like that that will definitely potentially increase productivity on the one side but could create job losses in another area," she said.
The pattern extends across industries where companies previously outsourced work to human professionals. AI tools now handle many tasks more quickly, efficiently and at lower cost than traditional methods.
Regarding the Productivity Commission's $116 billion economic forecast, Givens expressed caution about such projections.
"I'm not an economist, but at the end of the day, I think a lot of this is really about speculation," she said. "It's a matter of how can we actually integrate these things in ways that will boost productivity?"
She questioned what productivity gains would ultimately mean for workers and whether time saved through AI automation would result in job losses or free employees for more engaging work.
"Many people are looking to AI, particularly around some of the mundane tasks that people do," Givens said. "And there's no doubt in almost every sector, every workforce, we are sometimes buried in paperwork and things that really could be done by a machine."
The critical question, she said, involves how organizations use the time gained through AI efficiency.
"Is that going to simply mean job losses and better bottom line for businesses that might be hoping to boost their bottom line?" she asked. "Or is that going to mean that people are now free to do more interesting, in-depth work that really does require a human being?"
The Productivity Commission's approach favors applying existing regulations to AI rather than creating new technology-specific rules. This reflects an argument that current regulatory frameworks can adequately address AI applications without treating the technology differently.
However, Givens suggested this approach may prove insufficient given AI's adaptive nature and unpredictable outcomes, particularly in high-risk contexts where human safety is paramount.
The debate reflects broader tensions between fostering innovation and ensuring responsible AI deployment as the technology rapidly transforms multiple sectors of the Australian economy.
As organizations continue implementing AI tools across industries, the balance between regulation and innovation remains a central challenge for policymakers and businesses navigating this technological transformation.
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