Tell Me in 2 Minutes
The Australian Government’s National AI Plan released on 2 December 2025 confirms that it will take a ‘light touch’ approach to regulating AI (relying on existing laws rather than introducing Mandatory Guardrails). Although this does reduce the compliance burden on companies, they will still need to establish responsible AI Governance and (where an AI deployment impacts the workforce) undertake suitable consultation with the workplace and HR, WHS and data governance strategies.
The plan is anchored in three ‘goals’ (Capturing the Opportunity; Spreading the Benefits; and Keeping Australia Safe). In addition to the light touch regulatory approach, the Commonwealth Government:
- is focused on data centres as important national infrastructure and will increase the focus on promoting investment (including through co-ordinating approvals) and environmental sustainability;
- is actively considering Australia’s sovereign AI capabilities (including how Australia can best harness existing data sets to train AI models (subject, of course, to the recent clarification that the Australian Government will not introduce a broad text and data mining exception to the Copyright Act 1968 (Cth)); and
- expects increased transparency and consultation on the deployment of AI tools in the workplace.
Key Takeaways
We have summarised the key elements of the 9 actions from the National AI Plan in the following chart and provided a brief snapshot of key takeaways for organisations in the table below.
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Key takeaways
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What this practically means
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Example
uses 2
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AI Regulation
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Although it does not explicitly rule out an AI Act, the Plan indicates that Australia will rely upon existing laws (and regulator action) to regulate AI. This is broadly similar to the approach taken by the United Kingdom and is in direct contrast to the regulatory approaches taken by Europe, South Korea and Japan. It also means the Mandatory Guardrails previously consulted on by the Australian government will not progress. To implement this ‘light touch’ approach:
Practical Tip: The Implementation Practises have replaced the 2024 Voluntary AI Safety Standards. They apply to both developers and deployers and provide an approach to AI Governance that is broadly aligned to ISO 42001 and the NIST AI RMF. |
Australian organisations now have clarity about how AI will be regulated – and it is a green light to invest based on existing laws (within the bounds of responsible AI Governance and existing laws).
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Data Centres, Renewable Energy and Sustainability
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Australia is already well positioned for data centre investment, and the Government intends to ensure that Australia cements its position as a leading destination for data centre investment in the APAC region by effectively recasting data centres as strategic national infrastructure. Notably, the Government has proposed to work with States and Territories to:
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Data Centre Approvals and Sustainability: Commonwealth, State and Territory approval processes for data centres will be increasingly coordinated. However, this will take time. In the interim, sustainability measures should be front of mind when approaching data centre investment. Practical Tip: See KWM’s Data Centres – APAC Regulatory Guide for an in-depth exploration of Data Centre investment in the APAC Region. Renewable Energy: The energy demands of data centres is already putting strain on the generation needs of the broader network and the push for increased AI capability (especially if sovereign AI models come online) will only exacerbate that strain. The Government’s focus on bringing new renewable energy online will create significant new opportunities not just for data centres but energy developers and retailers to continue to develop new projects to sustain the increased demand. Practical Tip: See KWM’s Insights on Data Centres: Energy Considerations for an in-depth exploration of the opportunities in powering data centres. |
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Sovereign AI
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The vast majority of AI models are built and trained overseas. This raises questions over the level of Australia’s (over)dependence on global supply chains, data security risks and the appropriateness of AI models for Australian use cases. The Australian Government has recognised this risk and is seeking to bolster sovereign AI capabilities within Australia by:
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Practical Tip: See KWM’s AI in Government series for more detail on the Commonwealth Government approaching to AI adoption and governance |
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Employment
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The government has acknowledged that AI has the potential to make significant changes to Australia labour market. The Government is expecting:
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The AI policy, regulatory, commercial and investment landscape is moving so rapidly, so we doubt that the plan represents a ‘final’ position, and we can expect further evolution of the policy over time.
However, the plan does provide some welcome policy clarity about how Government is approaching AI and should provide some confidence for businesses and investors. We expect businesses and investors will also want to keep a focus on the net productivity gains resulting from AI adoption. While productivity gains are a common character in the delivery of many of the Plan’s goals, we anticipate the attention will shortly turn to understanding the value, and risks of, those gains.
Insights by our specialists to guide you through the risks and opportunities of the fast-paced AI and GenAI landscape.
