The digital economy could turbocharge our productivity, but we need to get the settings right
- Written by: Stephen King, Professor of Economics, Monash University
Data and new digital technologies such as artificial intelligence present an opportunity to get Australia back on the path to productivity growth.
But we can only seize this opportunity with the right policy framework. Australia can unlock billions in economic value through strategic reforms to data access, artificial intelligence regulation, and digital infrastructure.
The Productivity Commission has released a report on Data and Digital Technologies[1], of which I am a co-author, to guide Australian policymakers to develop this framework. This is the third of five reports due ahead of the government’s reform roundtable later this month.
Our key recommendations include:
- building on existing regulation rather than adding new rules
- improving privacy protections for consumers
- giving consumers more access to data about them.
Building on the regulation we already have
Artificial intelligence (AI) can extract useful insights from massive datasets in a fraction of a second. It could transform the global economy and speed up productivity growth by automating huge numbers of routine tasks.
Early estimates suggest AI could boost productivity by 0.5%[2] to 13%[3] over the next decade. That is potentially more than the combined productivity benefits from the 2004-14 internet and mobile phone revolutions.
Australian businesses are already embracing AI technology. From autonomous mining trucks[4] to fraud detection in banking[5], AI is boosting productivity across our economy.
But poorly designed regulation could stifle investment in AI without improving outcomes. To avoid this, the Productivity Commission recommends an outcomes-based approach to AI regulation. This would build on our existing laws and regulatory structures to minimise harms and create certainty for consumers and businesses.
New technology-specific regulations should only be introduced as a last resort. The government’s proposal for “mandatory guardrails[6]” should be paused.
The first step is to review our existing laws, checking that any potential issues from adopting AI are covered or can be covered by those laws. Regulatory changes should only be considered if clear gaps are identified.
We urgently need coordination and consistency to give businesses the certainty they need to invest.
Tick-the-box privacy protections
Data is the feedstock for digital technology. But there are problems with our current data rules.
First, privacy laws have become a “tick-the-box” process. You log in online and want a service, so you tick the relevant box. The Australian Competition and Consumer Commission found[7] it would take an average consumer 46 hours per month to read every privacy policy they encounter.
So consumers get faux privacy protection while the privacy laws just get bigger and bigger, burying business in red tape.
The government should introduce an outcomes-based alternative for business. This means that a business would meet its privacy obligations so long as it used any identifiable data in the best interests of consumers.
Focusing on the consumers’ interests would increase trust in our privacy laws, allow business to innovate, potentially lower compliance costs, and provide for real consequences when a business fails to meet its privacy obligations.
Access to personal data
Second, while data about individuals and businesses underpins growth and value in the digital economy, one group is missing out. You!
While businesses can create value from the data they gather about consumers[9], that data is often unavailable to the consumers themselves. And where it is available, it is often in a hard-to-use form, such as a PDF, or in an edited version where the business keeps some data to itself.
Under the right conditions, giving people and businesses better access and control over the data about them can stimulate competition. It can allow entrepreneurs and existing firms to develop innovative products and services.
Productivity Commission analysis suggests that a better data-sharing regime could add up to A$10 billion to Australia’s annual economic output.
Our new, measured approach would help to guide expanded data access, starting with sectors where gains could be significant, for example:
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enabling farmers to combine real-time data feeds from their machinery and equipment to optimise their operations
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giving tenants on-demand access to their rental ledgers which they can share to prove on‑time payments to new landlords or lenders.
Company reporting is stuck in the 1900s
The Productivity Commission’s report also considers a range of related issues. For example, company financial reporting should become digital by default.
Financial reports provide essential information about a company’s financial performance. They ensure companies are transparent and accountable, while informing the decisions of investors, businesses and regulators.
Most major overseas countries have digital reporting, allowing quick, easy access to comparable financial data. But Australia still has hard copy or PDF reports.
Our companies need to leave the 1900s and move to digital financial reporting. The federal government should require companies to lodge their financial reports with the Australian Securities and Investments Commission[10] in machine-readable form and remove the requirement to submit them in hard copy or PDF format.
Data and digital technologies can make us all better off over time, but the transition is measured in years and decades, and there will be people who need support along the way.
Without the proper foundations, Australia will see other countries seizing the data and digital opportunities while we are left behind. The Productivity Commission report lays out these foundations to support our productivity growth.
References
- ^ Data and Digital Technologies (www.pc.gov.au)
- ^ 0.5% (www.nber.org)
- ^ 13% (www.frbsf.org)
- ^ autonomous mining trucks (www.bbc.com)
- ^ fraud detection in banking (www.itnews.com.au)
- ^ mandatory guardrails (consult.industry.gov.au)
- ^ found (www.accc.gov.au)
- ^ Jevanto Productions/Shutterstock (www.shutterstock.com)
- ^ data they gather about consumers (www.businessnewsdaily.com)
- ^ Australian Securities and Investments Commission (www.asic.gov.au)
