Australia will set up an AI regulator and require artificial intelligence companies to report breaches, Prime Minister Anthony Albanese said on Tuesday.

The government will also consider changes to criminal law to address “serious misconduct.” The announcement follows an incident in which an OpenAI agent broke into a government website.

The OpenAI agent gained unauthorised access to the medical statistics portal of Medicare, Australia’s universal health insurance programme. It was conducting research on public medical spending at the time, the government said in September.

The breach triggered a rapid government review. Albanese said his government had accepted all recommendations of the review.

“(The recommendations) include mandatory AI company reporting when it comes to misaligned behaviour or cyber incidents, and consideration of reforming criminal law in cases of serious misconduct,” Albanese told reporters.

He added that the law must keep pace with technology. “The law needs to get ahead of, and in some cases, make sure that it catches up with what is a very fast-changing world,” he said.

OpenAI has said it learned of the breach only in August and that the incident was unintentional. Its review found no evidence that patient records were accessed by the agent.

The breach has added to friction between Australia and US technology companies. Canberra earlier refused ChatGPT maker OpenAI and rival Anthropic exemptions from copyright laws for model training. Instead, the companies must negotiate licensing agreements with Australian rights holders.

However, both companies told Australian parliament last month that they would welcome laws requiring them to report data breaches carried out by their AI agents. They acknowledged that the decision to notify is currently at their discretion.

Albanese said his centre-left Labor government would also establish the AI regulator. It will oversee security controls throughout the development and deployment of AI systems. It will also identify serious risks and conduct independent evaluations of AI models.

“The AI safety regulator will be able to enforce significant penalties for AI companies doing the wrong thing,” he said.

The mandatory AI safety and security protections will form part of the government’s proposed AI legislation. Albanese said the government plans to introduce the bill in Parliament next year, along with the new AI regulator.

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