The Australian federal government has made a significant pivot in its approach to regulating artificial intelligence, quietly shelving a promised independent advisory body in favour of an internal oversight model.
From External Advice to Internal Control
Plans for a permanent, external AI advisory council, which had $21.6 million allocated in the 2024-25 budget, have been officially dumped. The body was intended to include community and business representatives, extending the work of a temporary expert group established in early 2024.
Instead, the government will rely on its own staff, existing laws, and a newly announced AI Safety Institute to oversee the nation's technological shift. A spokesperson for Industry Minister Tim Ayres stated the original proposal was "superseded by a more dynamic and responsible approach."
The New In-House Model and Funding Shifts
Announced as part of the National AI plan in December 2025, the $29.9 million AI Safety Institute will sit within the Department of Industry. Its mandate is to guide the government on AI opportunities and dangers, but unlike the scrapped body, it will not operate independently.
The government has confirmed it will use existing legal mechanisms rather than creating new AI-specific legislation. In Senate estimates, the Department of Industry said it would employ "existing mechanisms and targeted consultations," alongside the safety institute, to manage risks.
Concurrently, the government has committed major funding to its own AI capabilities. The December mid-year economic outlook allocated $225 million over four years to the internal GovAI system, with most funds directed to the Department of Finance.
Criticism and Concerns Over Regulatory Gaps
The shift has drawn criticism from experts and the opposition. University of NSW AI professor Toby Walsh warned that while a safety institute and existing laws could help, the setup may not be fully fit-for-purpose.
"Existing regulators and internal bodies may not have the right expertise or resources," Professor Walsh told the ABC, noting the European Union's move to adopt comprehensive new AI laws. He expressed concern about repeating the mistakes made with social media, potentially "on steroids."
Opposition industry spokesperson Alex Hawke called the axing of the advisory body a "kick in the teeth for the Australian business community," arguing it was meant to bridge government and industry.
The Department of Industry, when contacted for comment, referred to previous ministerial speeches and Senate estimates answers.
