Artificial intelligence is reshaping industries, transforming how businesses operate, and redefining the future of work. But as AI adoption accelerates, so does the need for thoughtful, fit-for-purpose regulation. KPMG’s AI regulation and productivity report explores how Australia can design a regulatory framework that supports innovation, builds public trust, and drives long-term productivity growth.
This report is part of KPMG’s broader contribution to Australia’s economic reform dialogue, offering insights to help government, industry, and the community navigate the opportunities and risks of AI.
About this report
KPMG’s AI regulation and productivity report offers actionable insights for policymakers, business leaders, and regulators seeking to harness the full potential of artificial intelligence.
Download the report to read more.
AI and productivity: a critical connection
Australia is currently facing a period of subdued productivity growth, with labour productivity falling to levels last seen in 2019. As AI emerges as a general-purpose technology with the potential to boost efficiency and output, the regulatory environment becomes a key determinant of whether these gains can be realised.
KPMG’s economic modelling shows a clear link between regulation and productivity. Countries with overly restrictive rules tend to experience slower growth, while those with balanced, proportionate frameworks see stronger performance. The report introduces the concept of the ‘Goldilocks point’ – a regulatory sweet spot that avoids both overreach and under-regulation.
Inside the report: policy, modelling and recommendations
The AI regulation and productivity report provides a comprehensive analysis of the intersection between AI policy and economic performance. Key areas explored include:
The report also highlights the distributional impacts of regulation, noting that smaller firms are more vulnerable to compliance costs. A one-size-fits-all approach may hinder AI adoption among SMEs, limiting the broader economic benefits of AI.
Why AI regulation matters for Australia’s future
Designing effective AI regulation is not just a technical exercise – it’s a strategic imperative. The right policy settings can:
- boost national productivity by enabling responsible AI adoption across sectors
- build public trust by ensuring transparency, fairness, and accountability in AI systems
- support innovation by reducing unnecessary compliance burdens and encouraging investment
- align with global standards to minimise trade friction and regulatory complexity.
Australia’s current lack of formal AI legislation presents a unique opportunity to lead with a forward-looking, principles-based framework. By learning from international best practice and tailoring regulation to local conditions, Australia can position itself as a global leader in trusted AI.
Get in touch
- Brendan Rynne
- John Munnelly
- Brian Tran
