Australia is getting its first major inquiry into AI. It's starting in South Australia

South Australia is launching a royal commission into artificial intelligence, with the state government seeking to shape how the rapidly developing technology is used and regulated.

Premier Peter Malinauskas says AI presents major opportunities, but warns unchecked development could pose risks to society and the future of work.

"We can choose to allow this industry to come to our country and evolve in a way that is unregulated and unchecked," he said.

"Or we can choose to set the agenda … to ensure that we use AI in a way that puts people first."

The inquiry is expected to begin in October and deliver its final report by 1 July 2027. It's expected to focus on the economic and social opportunities the technology provides for the state.

With artificial intelligence already changing workplaces, education, healthcare and government, experts told SBS News that the royal commission will be forced to address a sweeping range of issues.

But why is South Australia launching its own state-based royal commission, what will it investigate, and what can it realistically achieve?

Why is South Australia holding an AI royal commission?

Malinauskas says Australia is at a "fork in the road" over how AI should be developed and governed.

The premier told the media on Monday that he wants South Australia to establish safeguards around the technology while positioning the state to benefit from its economic opportunities.

The announcement follows his recent trip to the United States, where he met with major technology companies including OpenAI, Anthropic and Apple.

During the trip, Malinauskas visited OpenAI's headquarters in San Francisco and signed a memorandum of understanding with the company's co-founder and president Greg Brockman.

Anton van den Hengel, chief scientist at the Australian Institute for Machine Learning, told SBS News that South Australia was well-placed to benefit from the technology because of its existing AI research and startup ecosystem.

The South Australian government has backed AI since 2018, he said, while the state had strong research, technical and research translation capabilities, as well as a "brilliant set of start-ups".

"For a long time, Australia's geography has been limitation rather than opportunity. One of the many benefits of AI is that that's no longer the case. We're very well placed to participate in the upside of AI."

He said the royal commission would offer a chance "to make sure that we all benefit from the opportunities".

Professor Toby Walsh, chief scientist at the University of New South Wales' AI Institute, welcomed the idea of a thorough examination of Australia's approach to AI.

But he questioned how much a state government can achieve when AI companies and technologies operate nationally and globally.

He said Australia had an opportunity to learn from its experience with social media, where governments were slower to respond to the technology's effects.

"It is something that we should have done in advance for social media, something that we, perhaps, can do a bit more in advance for artificial intelligence."

"It would be about considering: how does Australia get the benefits, not just avoid the downsides?" he said.

What could the inquiry examine?

The future of work is likely to be one of the major issues addressed by the royal commission.

The SA premier warned AI could result in a rapid reduction in demand for some jobs.

Walsh said while it was difficult to predict the scale of the disruption, he did not think comparisons with previous industrial revolutions were exaggerated.

The difference, he said, was the rapid speed at which the latest technological revolution was unfolding, describing it as “almost overnight”, while previous industrial revolutions took decades to develop, giving workers more time to adapt.

Walsh said it was possible more jobs could ultimately be created than destroyed, but workers would need new skills to adapt to changing industries.

The challenge for governments, he said, would be supporting people through that transition, emphasising that it could involve changes to education and training, as well as helping people already in the workforce develop new skills.

The royal commission is also expected to examine AI's relationship with energy and water use as the infrastructure supporting the technology expands.

Walsh said the scale of the data centres being planned was not widely understood, and governments would need to consider how to build the infrastructure required for AI sustainably.

He pointed to one proposed data centre in NSW which he said could consume around five per cent of Australia's electricity generation.

"We're building data centres quicker than we're building renewables," he said.

AI infrastructure also has other environmental impacts, including water use, land requirements and noise pollution.

The federal government has promised future data centres will use new renewable energy, but Walsh said there was a significant challenge in putting that into practice.

The royal commission is also expected to examine the impact and opportunities of AI in health and education, two areas Walsh told SBS News have enormous potential.

"I think AI presents a great opportunity in helping us live healthier, longer lives and providing quality education to everyone," he said.

But those opportunities also come with significant risks.

Walsh said AI needed to be introduced into those sectors "with great care", even where the potential benefits were substantial.

Can South Australia actually regulate AI?

One of the biggest questions surrounding the inquiry is how much a state government can achieve when AI companies and technologies operate nationally and globally.

Walsh expects the federal government will ultimately need to take responsibility for regulating AI, but he believes South Australia's inquiry could help advance the national debate, and suggested the move could reflect frustration with the pace of the federal response.

He pointed to the state's previous role in the debate around social media regulation, saying a South Australian inquiry could similarly help "kick start" action at the federal level.

But van den Hengel warned governments need to be careful not to regulate themselves out of participating in the technology.

While he agreed that the pace of change was concerning, he argued countries that simply focused on regulation risked losing their ability to shape how AI develops.

"The dangerous thing for Australia is that by regulating that, we'll let ourselves be bystanders in the AI race," he said.

"The more you make it difficult for AI companies to prosper in your economy, the less control you get, because you wind up just importing other people's AI."

What's the scope of South Australia's inquiry?

AI's potential impact stretches across almost every part of society.

Walsh said that breadth presented a challenge for a royal commission working to a relatively tight time frame.

"I think it's going to be critically important the terms of reference are well thought out," he said.

"If the commission is going to get back quickly with some focused recommendations, it's going to have to have some very carefully crafted terms of reference."

The terms of reference set out the key areas of investigation of a royal commission. They're expected to be announced in the next four to six weeks.

Three royal commissioners will also be appointed in the coming weeks.

For Walsh, the fundamental challenge for Australia is finding a way to embrace the opportunities presented by AI while preparing for the risks that come with it.

For the latest from SBS News, download our app and subscribe to our newsletter.