Physical AI is next

There is another reason Australia could occupy this niche.

Recent incidents involving frontier AI agents – for instance, models attempting to evade shutdown or copy themselves during safety testing have shown frontier models taking unauthorised actions (Opens in new window) during cybersecurity evaluations. It is tempting to describe this as AI “going rogue”. A more accurate interpretation may be human hubris.

The deeper problem is that AI capabilities can advance faster than the safety and governance infrastructure surrounding them.

Physical AI raises the stakes. A software agent crossing a digital boundary can compromise digital systems. An autonomous machine operating in a mine, hospital, warehouse or home can cause real-world harm.

Safety cannot be treated simply as a brake on innovation. For autonomous systems, safety itself becomes a technological capability required for deployment.

Australia has an opportunity here. Its experience regulating mining, healthcare, aviation, workplace safety and autonomous operations could support specialised capabilities in testing, certification, human-machine interaction and safety assurance.

Government does not need to decide how every robot should work. But it can establish performance-based standards, liability rules, testing infrastructure and regulatory sandboxes for safe experimentation and deployment. These capabilities could serve not only the domestic market but also become exportable services and expertise.

Rather than simply subsidising domestic production, government can help create the testing infrastructure, standards, regulatory institutions and industry-research connections through which deployment generates capability.

As AI acquires a body, Australia should aim to become one of the places where robots learn how to work in the real world.