The Short Version
An ABC Four Corners investigation has revealed that Australia’s former Labor government quietly shelved plans for mandatory AI safety guardrails — and a former minister says the reason was fear of provoking US President Donald Trump. Ed Husic, who was Minister for Industry and Science until mid-2025, told Four Corners: “We put AI regulation in a ‘too hard’ basket. We blinked in the face of Donald Trump.” As US tech giants pour billions into Australian data centres and AI infrastructure, critics warn the same dynamics could play out in New Zealand — where the government’s “light-touch” AI approach is already drawing fire from safety advocates.
🔍 THE BOTTOM LINE
Australia was on track to be a global leader in mandatory AI regulation. Then came the US election, trade tension, and a quiet policy death. For NZ policymakers watching across the Tasman, the lesson is uncomfortable: regulatory ambition can be expensive.
What Was Planned
Under Husic’s leadership, the Australian government was developing:
- Mandatory guardrails for high-risk AI systems — a standalone AI Act similar to the EU’s framework
- A dedicated AI safety commissioner with enforcement powers
- Transparency requirements for automated decision-making systems
- Compliance obligations for companies deploying AI in sensitive contexts like hiring, credit, and healthcare
The policy had strong cross-sector support. Business groups wanted regulatory certainty. Consumer advocates wanted protections. The Australian Human Rights Commission had warned that existing laws were inadequate to address AI-driven discrimination and harm.
What Happened
After the May 2025 election, Husic was removed from the ministry. By the end of 2025, his policy proposal was gone entirely.
Husic told Four Corners:
“We were already attracting heat from Trump and Elon Musk on social media laws. You saw the treatment of our own eSafety Commissioner by that administration and prominent figures in the US, and so we just figured we’d duck that fight.”
The current Minister for Industry and Science, Tim Ayres, disputes this interpretation. He told Four Corners the policy shift had nothing to do with the Trump administration, pointing to Australia’s social media ban for under-16s as evidence the government is “absolutely prepared to regulate big tech.”
Instead of the standalone AI Act, the government has established an Australian AI Safety Institute — a research and guidance body with no binding enforcement powers.
The Data Centre Dimension
The timing is telling. US hyperscalers — Google, Microsoft, Amazon, and potentially xAI — are currently planning multibillion-dollar data centre investments in Australia. The regulatory environment is a key factor in where these investments land:
- Australia — Light-touch AI regulation, proximity to Asia-Pacific markets
- New Zealand — Even lighter touch, abundant renewable energy, but smaller market
- Southeast Asia — Singapore, Malaysia, and Indonesia competing aggressively for AI infrastructure spend
Critics argue that Australia — and by extension NZ — faces a choice: strong AI regulation that protects citizens, or a regulatory race to the bottom to attract capital from US tech giants.
The Trans-Tasman Parallel
For New Zealand, the Australian story hits close to home on multiple fronts:
| Issue | Australia | New Zealand |
|---|---|---|
| AI regulation approach | Abandoned standalone act; AI Safety Institute with no enforcement powers | Ministry for Regulation “light-touch” guidance; no comprehensive AI law until at least 2027 |
| Government AI use | Automated decision-making transparency under consultation | Automated benefit decisions law passed June 2026 |
| Data centre investment | Google, Microsoft, Amazon planning billions in investment | Limited but growing; Contact Energy considering data centre tie-ups |
| Privacy enforcement | OAIC with fining powers | Privacy Commissioner wants fining powers — currently has none |
| Consumer AI protections | None for high-risk AI | None |
The same forces that shaped Australia’s retreat — trade pressure from the US, investment competition, and the political cost of regulating powerful tech companies — are present in New Zealand. The difference is NZ hasn’t even reached the starting line for comprehensive AI regulation.
EU Rules Are the Benchmark
While Australia and NZ back away from binding regulation, the EU’s AI Act is moving in the opposite direction:
- High-risk AI classification includes benefit decisions, hiring systems, credit scoring, and healthcare AI
- Transparency obligations for AI-generated content (draft guidelines published May 2026)
- Fines up to 7% of global turnover for non-compliance
- Ongoing enforcement — the European AI Office is operational and issuing guidance
NZ experts have warned the country faces legal and sovereignty risks as the EU’s rules take effect, potentially creating compliance burdens for NZ companies that want to operate in European markets.
The Bottom Line for Kiwis
For New Zealanders, the Australian story has two takeaways:
-
Regulation is fragile — Even advanced policy proposals can be killed by political calculus. The window for strong AI regulation may be closing as US tech investment dynamics intensify.
-
NZ is following the same path — The government’s own “light-touch” approach mirrors what Australia shifted toward after abandoning its standalone AI Act. The question is whether NZ will arrive at the same destination: a policy framework that safety advocates call insufficient, with business calling for more certainty, and the public largely in the dark about how AI is making decisions that affect their lives.
Sources: ABC News (Four Corners), The Guardian Australia, Pinsent Masons, BusinessDesk
