Australia’s fragmented approach to AI oversight—with responsibilities scattered across privacy commissioners, consumer watchdogs, online safety regulators, and sector-specific agencies—required coordination to keep pace with rapidly evolving AI capabilities and their potential to amplify existing harms while creating entirely new threats.
The Australian Government announced establishment of the AI Safety Institute backed by $29.9 million in funding, to monitor emerging AI capabilities, test advanced systems, and share intelligence across government while supporting regulators to ensure AI companies comply with Australian law. The setting up of the AI safety institute is part of the larger National AI Plan that the Australian government officially released on Tuesday.
The Institute will become operational in early 2026 as the centerpiece of the government’s strategy to keep Australians safe while capturing economic opportunities from AI adoption. The approach maintains existing legal frameworks as the foundation for addressing AI-related risks rather than introducing standalone AI legislation, with the Institute supporting portfolio agencies and regulators to adapt laws when necessary.
Dual Focus on Upstream Risks and Downstream Harms
The AI Safety Institute will focus on both upstream AI risks and downstream AI harms. Upstream risks involve model capabilities and the ways AI systems are built and trained that can create or amplify harm, requiring technical evaluation of frontier AI systems before deployment.
Downstream harms represent real-world effects people experience when AI systems are used, including bias in hiring algorithms, privacy breaches from data processing, discriminatory outcomes in automated decision-making, and emerging threats like AI-enabled crime and AI-facilitated abuse disproportionately impacting women and girls.
The Institute will generate and share technical insights on emerging AI capabilities, working across government and with international partners. It will develop advice, support bilateral and multilateral safety engagement, and publish safety research to inform industry and academia while engaging with unions, business, and researchers to ensure functions meet community needs.
Supporting Coordinated Regulatory Response
The Institute will support coordinated responses to downstream AI harms by engaging with portfolio agencies and regulators, monitoring and analyzing information across government to allow ministers and regulators to take informed, timely, and cohesive regulatory action.
Portfolio agencies and regulators remain best placed to assess AI uses and harms in specific sectors and adjust regulatory approaches when necessary. The Institute will support existing regulators to ensure AI companies are compliant with Australian law and uphold legal standards of fairness and transparency.
The government emphasized that Australia has strong existing, largely technology-neutral legal frameworks including sector-specific guidance and standards that can apply to AI. The approach promotes flexibility, uses regulators’ existing expertise, and targets emerging threats as understanding of AI’s strengths and limitations evolves.
Addressing Specific AI Harms
The government is taking targeted action against specific harms while continuing to assess suitability of existing laws. Consumer protections under Australian Consumer Law apply equally to AI-enabled goods and services, with Treasury’s review finding Australians enjoy the same strong protections for AI products as traditional goods.
The government addresses AI-related risks through enforceable industry codes under the Online Safety Act 2021, criminalizing non-consensual deepfake material while considering further restrictions on “nudify” apps and reforms to tackle algorithmic bias.
The Attorney-General’s Department engages stakeholders through the Copyright and AI Reference Group to consult on possible updates to copyright laws as they relate to AI, with the government ruling out a text and data mining exception to provide certainty to Australian creators and media workers.
Healthcare AI regulation is under review through the Safe and Responsible AI in Healthcare Legislation and Regulation Review, while the Therapeutic Goods Administration oversees AI used in medical device software following its review on strengthening regulation of medical device software including artificial intelligence.
Also read: CPA Australia Warns: AI Adoption Accelerates Cyber Risks for Australian Businesses
National Security and Crisis Response
The Department of Home Affairs, National Intelligence Community, and law enforcement agencies continue efforts to proactively mitigate serious risks posed by AI. Home Affairs coordinates cross-government efforts on cybersecurity and critical infrastructure protection while overseeing the Protective Security Policy Framework detailing policy requirements for authorizing AI technology systems for non-corporate Commonwealth entities.
AI is likely to exacerbate existing national security risks and create new, unknown threats. The government is preparing for potential AI-related incidents through the Australian Government Crisis Management Framework, which provides overarching policy for managing potential crises.
The government will consider how AI-related harms are managed under the framework to ensure ongoing clarity regarding roles and responsibilities across government to support coordinated and effective action.
International Engagement
The Institute will collaborate with domestic and international partners including the National AI Centre and the International Network of AI Safety Institutes to support global conversations on understanding and addressing AI risks.
Australia is a signatory to the Bletchley Declaration, Seoul Declaration, and Paris Statement emphasizing inclusive international cooperation on AI governance. Participation in the UN Global Digital Compact, Hiroshima AI Process, and Global Partnership on AI supports conversations on advancing safe, secure, and trustworthy adoption.
The government is developing an Australian Government Strategy for International Engagement and Regional Leadership on Artificial Intelligence to align foreign and domestic policy settings while establishing priorities for bilateral partnerships and engagement in international forums.
