The Productivity Commission report Harnessing data and digital technology released today states
Data and digital technologies are the modern engines of economic growth. Australia needs to harness the consumer and productivity benefits of data and digital technology while managing and mitigating any downside risks. There is a role for government in setting the rules of the game to foster innovation and ensure that Australians reap the benefits of the data and digital opportunity.
Emerging technologies like artificial intelligence (AI) could transform the global economy and speed up productivity growth. The Productivity Commission considers that multifactor productivity gains above 2.3%, and labour productivity growth of about 4.3%, are likely over the next decade, although there is considerable uncertainty. But poorly designed regulation could stifle the adoption and development of AI. Australian governments should take an outcomes based approach to AI regulation – using our existing laws and regulatory structures to minimise harms (which the Australian Government has committed to do in its National AI Plan) and introducing technology specific regulations only as a last resort. Developing and training AI models is a global opportunity worth many billions of dollars. Currently, gaps in licensing markets – particularly for open web material – make AI training in Australia more difficult than in overseas jurisdictions. However, licensing markets are developing, and if courts overseas interpret copyright exceptions narrowly, Australia could become relatively more attractive for AI development. As such the PC considers it premature to make changes to Australia’s copyright laws.
Data access and use fuels productivity growth: giving people and businesses better access to data that relates to them can stimulate competition and allow businesses to develop innovative products and services. A mature data sharing regime could add up to $10 billion to Australia’s GDP. The Australian Government should rightsize the Consumer Data Right (CDR) with the immediate goal of making it work better for businesses and consumers in the sectors where it already exists. In the longer term, making the accreditation model, technical standards and designation process less onerous will help make the CDR a more effective data access and sharing platform that supports a broader range of use cases.
The benefits of data access and use can only be realised if Australians trust that data is handled safely and securely to protect their privacy. Some requirements in the Privacy Act constrain innovation without providing meaningful protection to individuals. And complying with the controls and processes baked into the Act can make consent and notification a ‘tick box’ exercise where businesses comply with the letter of the law but not its spirit. The Australian Government should amend the Privacy Act to introduce an overarching outcomes based privacy duty for regulated entities to deal with personal information in a manner that is fair and reasonable in the circumstances.
Financial reports provide essential information about a company’s financial performance, ensuring transparency and accountability while informing the decisions of investors, businesses and regulators. The Australian Government can further spark productivity by making digital financial reporting the default for publicly listed companies and other public interest entities while also removing the outdated requirement that reports be submitted in hard copy or PDF form. This would improve the efficiency of analysing reports, enhance integrity and risk detection, and could boost international capital market visibility for Australian companies.
The Commission's recommendations are -
Artificial intelligence
Recommendation 1.1 Productivity growth from AI should be enabled within existing legal foundations.
Gap analyses of current rules need to be expanded and completed Any regulatory responses to potential harms from using AI should be proportionate, risk based, outcomes based and technology neutral where possible.
The Australian Government should complete, publish and act on ongoing reviews into the potential gaps in the legal framework posed by AI as soon as possible.
Where relevant gap analyses have not begun, they should begin immediately.
All reviews of the legal gaps posed by AI should consider: • the uses of AI • the additional risk of harm posed by AI (compared to the status quo) in a specific use case • whether existing regulatory frameworks cover these risks potentially with improved guidance and enforcement; and if not, how to modify existing regulatory frameworks to mitigate the additional risks.
Recommendation 1.2 AI specific regulation should be a last resort
AI specific regulations should only be considered as a last resort and only for use cases of AI where: • existing regulatory frameworks cannot be sufficiently adapted to handle AI related harms • technology neutral regulations are not feasible or cannot adequately mitigate the risk of harm. This includes whole of economy regulation such as the EU AI Act and the Australian Government’s previous proposal to mandate guardrails for AI in high risk settings.
Copyright and AI
Recommendation 2.1 A review of Australian copyright settings and the impact of AI
The Australian Government should monitor the development of AI and its interaction with copyright holders over the next three years. It should monitor the following areas: • licensing markets for open web materials • the effect of AI on creative incomes generated by copyright royalties • how overseas courts set limits to AI related copyright exceptions, especially fair use. If after three years the monitoring program shows that these issues have not resolved, the government could establish an Independent Review of Australian copyright settings and the impact of AI. The Review’s scope could include, but not be limited to, consideration of whether: • copyright settings continue to be a barrier to the use of open material in AI training, and if so whether changes to copyright law could reduce these barriers • copyright continues to be the appropriate vehicle to incentivise creation of new works and if not, what alternatives could be pursued.
Data access
Recommendation 3.1 Rightsize the Consumer Data Right
The Australian Government should commit to reforms that will enable the Consumer Data Right (CDR) to better support data access for high value uses while minimising compliance costs.
In the short term, the government should continue to simplify the scheme by removing excessive restrictions and rules that are limiting its uptake and practical applications in the banking and energy sectors. To do this the government should: • within the next two years, enable consumers to share data with third parties and simplify the on boarding process for businesses • commit to more substantiative changes to the scheme (in parallel with related legislative reforms), including aligning the CDR’s privacy safeguards with the Privacy Act and enabling access to selected government held datasets through the scheme.
In addition to the above, the CDR framework should be significantly amended so that it has the flexibility to support a broader range of use cases beyond banking and energy, by making the accreditation model, technical standards and designation process less onerous.
Privacy regulation
Recommendation 4.1 An outcomes based privacy duty embedded in the Privacy Act
The Australian Government should amend the Privacy Act 1988 (Cth) to embed an outcomes based approach that enables regulated entities to fulfil their privacy obligations by meeting criteria that are targeted at outcomes, rather than controls based rules.
This should be achieved by introducing an overarching privacy duty for regulated entities to deal with personal information in a manner that is fair and reasonable in the circumstances.
The Privacy Act should be further amended to outline several non exhaustive factors for consideration to guide decision makers in determining what is fair and reasonable – including proportionality, necessity, and transparency. The existing Australian Privacy Principles should ultimately be phased out.
Implementation of the duty should be supported through non legislative means including documentation such as regulatory guidance, sector specific codes, templates, and guidelines.
The Office of the Australian Information Commissioner should be appropriately resourced to support the transition to an outcomes based privacy duty.
Digital financial reporting
Recommendation 5.1 Make digital financial reporting the default
The Australian Government should make the necessary amendments to the Corporations Act 2001 (Cth) and the Corporations Regulations 2001 (Cth) to make digital annual and half yearly financial reporting mandatory for disclosing entities. The requirement for financial reports to be submitted in hard copy or PDF form should be removed for these entities. The implementation of mandatory digital financial reporting should be phased, with the Treasury determining the appropriate timelines for this approach.
Setting requirements for report preparation
The existing International Financial Reporting Standards (Australia) (IFRS AU) taxonomy should be used for digital financial reporting. The Australian Securities and Investments Commission (ASIC) should continue to update the taxonomy annually. ASIC should be empowered to specify, from time to time, the format in which the reports must be prepared. At present, ASIC should specify inline eXtensible Business Reporting Language (iXBRL) as the required format.
Establishing infrastructure and procedures for report submission
ASIC, together with market operators such as the Australian Securities Exchange, should determine where and how digital financial reports are submitted. The arrangements should aim to minimise preparers’ reporting burden while keeping reports accessible to report users.
Supporting the provision of high quality, accessible digital financial data
ASIC should implement the measures necessary to ensure that digital financial reports contain high quality data. ASIC could (among other actions): • establish a data quality committee that would develop guidance and rules to improve data quality • integrate automated validation checks into the submission process • set guidelines around the use of taxonomy extensions and report format • maintain feedback loops with stakeholders. • To enable report users to harness the benefits of digital financial data, digital financial reports should be publicly and freely available, and easily downloadable.
