The interim response also indicates the Australian government's next steps for AI governance will focus on:

• Preventing harm through testing, transparency and accountability
• Clarifying and strengthening laws
• International work to support safe development and deployment of AI
• Maximizing the benefits of AI

Key takeaways

• The Government's immediate focus is to consider what mandatory AI safeguards are appropriate and how best to implement them as part of a risk-based regulatory approach to AI, informed by developments in other countries. This includes further consultation with industry to formulate an appropriate definition of "high-risk" AI in the Australian context.
• Once the concept of "high-risk" AI is appropriately defined, a key safety measure the Government will focus on is developing regulatory guardrails around testing, transparency and accountability for such "high-risk" AI applications.
• The use of low risk AI tools and applications is likely to be allowed to continue under existing legal frameworks without the need for bespoke AI regulation, to preserve the benefit and utility of those technologies.
• While considering mandatory guardrails for AI development and use, the Government indicates it is already working with industry to develop a voluntary AI Safety Standard and develop options for a voluntary labelling and watermarking scheme for AI-generated materials.
• The Government is also establishing a temporary expert advisory group to support the development of further guardrails for AI.

In more detail

Proposed actions

The Government will consider and consult on the introduction of new mandatory guardrails for the development and deployment of AI in high-risk settings. These guardrails are expected to focus on:

• Testing – the Government will consider imposing requirements relating to testing AI systems before and after release, measures of best practice for safety, auditing and performance monitoring, and security thresholds.
• Transparency – this would involve improving transparent communication to users when AI is used in systems or to generate content, and publicly reporting limitations of AI and the data which is used to train and test an AI model.
• Accountability – the Government suggests that developers or deployers of AI products should be trained in certain settings, and that there should be specific roles responsible for AI safety. 

The Government also intends to define what qualifies as "high-risk" AI in an Australian context, which will be important to enable businesses to understand their regulatory obligations once mandatory guardrails are in place.

In parallel with its consideration of mandatory guardrails for "high-risk" AI development and use, the Government indicates it is already working with industry to develop a voluntary AI Safety Standard implementing (non-binding) risk-based guardrails, which may help businesses to manage risks associated with AI deployments, whether or not in a high-risk setting.

In the immediate future, the Government also states that it will:

• Set up a temporary expert advisory group which will coordinate the development of AI guardrails.
• Task the National AI Centre with collaborating with industry to "produce a best-practice and up-to-date voluntary AI risk-based safety framework” for Australian businesses.
• Assess, in consultation with industry, the potential for a voluntary watermarking and labelling scheme for businesses to disclose the use of AI generated content in high-risk settings.

Other planned actions include:

• Considering options for strengthening existing laws to address risks and harms from AI, building on recent and already-proposed reforms on matters relevant to AI (e.g., privacy, online safety, misinformation) – potential reforms to Australia’s privacy laws include requiring non-government entities to conduct a privacy impact assessment for activities with high privacy risks to identify and manage, minimize or eliminate risks (which is already a requirement for government entities) and other amendments with a focus on increasing transparency and integrity of automated decision-making which uses personal information.
• Taking forward commitments made in the Bletchley Declaration, including supporting the development of a State of the Science report.
• Continuing to engage internationally, aiming to shape global AI governance opportunities, support Australian involvement in developing technical AI standards, and understand other jurisdictions' responses to AI.
• Considering opportunities to support the development and adoption of automation technologies such as AI and robots, building on existing investments in this area.

A principled approach leveraging existing requirements

The interim response indicates the Government will not follow the prescriptive approach set to be adopted by the EU that seeks to manage the lifecycle of AI via a comprehensive legislative approach under the AI Act, but will rather adopt a principles-based approach similar to that implemented in the UK and when defining the mandatory guardrails for high-risk AI applications, will look to leverage existing regulatory requirements wherever appropriate.

Implications

While the interim response does not include firm commitments to a legislative path forward for AI regulation, it does openly acknowledge that the current laws and regulations in Australia are not adequate to address the rapid moving nature of AI and its associated risks. The interim response does not provide firm timelines for the implementation of any proposed changes but indicates that there are a mix of short- and long-term developments on the horizon. The Government indicates that it will consult closely with industry, academia and the community on its proposed actions for AI. For this reason, all businesses with an interest in AI (whether developers, providers or users of AI solutions) should carefully consider the interim response and look for opportunities to have their say.

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With thanks to Nicola McGran (Summer Clerk) and Liz Grimwood-Taylor (Senior Knowledge Lawyer) for their assistance with this alert.