The path ahead for artificial intelligence (AI) regulation in Australia remains highly uncertain. Amid an evolving range of international approaches, the Australian Government is yet to provide a clear direction for AI regulation. This report highlights the importance of regulatory certainty as an enabler of AI-driven productivity. It suggests that Australia should act decisively to reduce regulatory ambiguity if it is to seize the productivity benefits of AI.

The report outlines five principal channels for productivity gains: labour-improving tools, automation, firm-level reorganisation, sectoral reallocation and knowledge creation. It identifies that:

• AI’s productivity potential is real, but contingent on investment
• the payoff from AI will depend on regulatory quality and stability
• not all regulatory approaches support productivity equally. 

There are distinct trade-offs between the three regulatory models that are emerging globally:

• deliberately permissive approach to regulation
• prescriptive approach focused on AI-specific regulation
• pragmatic approach that prefers technology-neutral regulation.