Governance Institute wants simpler, smarter regulation for better Australian AI adoption

The Governance Institute of Australia has warned that regulatory confusion and capability gaps are hampering artificial intelligence (AI) adoption across Australian organisations.

It has submitted to the Productivity Commission's inquiry into harnessing data and digital technology, providing a number of suggestions that, if not followed, they say risks seeing Australia falling further behind its peers.

The organisation cited Department of Industry numbers suggesting 40 per cent of organisations are already using AI, whilst 38 per cent have no plans to start implementation.

Such patchy adoption is attributed to capability gaps and cost concerns facing Australian businesses, the institute said.

It claimed regulatory layering is stifling innovation, particularly with outdated and conflicting provisions across legislation such as the Corporations Act 2001 and the Privacy Act 1988.

Heavy focus on reporting requirements is pulling boards away from strategic focus and risk-taking that is central to driving growth, the organisation warned.

Government investment in AI capability lags countries like Canada and Singapore, despite estimates that AI could add up to $600 billion to Australia's national GDP annually by 2030, the Institute said, pointing to DoI's National AI Capability Plan.

In response, the Governance Institute has made 12 recommendations to address barriers to AI implementation and productivity growth.

These include establishing processes to effectively review and simplify regulatory burdens, especially for the small and medium enterprise (SME) and not-for-profit (NFP) community.

The institute says a Corporate Law Reform Body would modernise the Corporations Act with the aim of driving holistic reforms to the way corporations are governed.

Continuing to work with industry to develop an AI compliance roadmap drawing on existing laws and frameworks and investing in AI literacy and training across organisations is also advocated.

An outcomes-based approach to privacy reforms would better balance privacy protections and the need for innovation, with special Privacy Act carve-outs for small businesses, said the institute.

The national membership association represents governance and risk management professionals across Australia.