Darcy Allen joins Amy-Rose Goodey on The House is Digital for a conversation on technology policy, regulation and the systems shaping Australia’s digital future.
As an Associate Professor of Economics at RMIT University, Darcy explores how governments respond to emerging technologies, why regulation must evolve alongside innovation, and the importance of creating an environment where experimentation can thrive.
The discussion examines AI, digital identity, regulatory sandboxes, competition policy, space technology and the intersection of emerging technologies driving Australia’s next phase of economic growth.
A thought-provoking conversation on innovation, policy and building a more competitive digital economy.
speaker-1: Thank you very much. I’m excited to be here.
speaker-0: I would love to deep dive with you today. Now you are well known professor. Okay. You’ve written a lot of papers. You are well across the you were across the digital economy before the digital economy was a thing. That’s what I remember. And you sparked my interest then, ⁓ even prior to the rebrand from Blockchain Australia to the Digital Economy Council of Australia. You’ve been at the forefront, you’ve been studying the evolution of Australia becoming digital. We are often described as a country that experiments with ⁓ technology policy. What does this look like? Are there anything that we’ve seen recently that that that really exposes that in its fullest form?
speaker-1: So I think that Australia thinks it’s thinks it’s an important jurisdiction, right? But I think it it thinks it’s important for the wrong reason. So we it’s not necessarily because a lot of these tech companies want our want our market share, for instance, or they love Australians or how we are, but we do have this reputation for coming up with new tech policies and then other jurisdictions looking at us and going, Well, Australia did it. So we’re going to do that as well. We’ve done this a few times. ⁓ the most recent ones, the under 16 social media ban is an example, it is now going across the world. But we tend to be the ones that invent the policy, or we’re a relatively fast follower. Now, to a lot of the audience here, focused on crypto, that’s not clear. It’s felt quite slow in crypto, but it’s not necessarily the case across the rest of the digital economy. So even this year alone in Australia, we’re going to see a whole bunch of different policies implemented or decided on or tinkered with around competition policy. ⁓ we’re going to see it, I think, with some AI laws coming through, but probably not the ones that people think they are. ⁓ we’re going to see it with the news media bargaining code. The list goes on and on. And I think we can get really caught up in the weeds of particular technology policy debates. And Decca has done a fantastic job at this. Debating what the draft exposure legislation is and whether the definition is correct or not correct or whatever it happens to be. But sometimes I think we do need to zoom out and go: each of these individual tech policy decisions creates this stance of how we treat the future. So, how does Australia respond when a new technology comes up or a new industry comes up? Are we welcome to that industry? Because It’s not intuitive or rational to do it at the time. So the problem is a new technology comes along. It’s really easy for us to observe the harms that that technology might have, right? We see that, well, that technology might take out that industry. Or maybe some people could be scammed by this technology or whatever it happens to be, right? Those harms are really tangible. But it’s very hard to see what the benefits of that industry will be. And not just terms in terms of economic growth and jobs or whatever it happens to be, but the way that it changes our economy. When the iPhone came along or the smartphone came along, we didn’t realize we’d be standing on the street ordering an Uber and then we could get food delivered to our house instantly. That was not what we envisaged. And if we’d regulated the tech really heavily at the start, we never would have figured out how to do that. So There’s all these individual decisions we make that look relatively rational at the time because an industry is being harmed or some people are being harmed. But we need to step back and go: the only way that Australia grows, the only way it gets more productive, the only way we get more prosperous is technological change. I’m an economist. In the long run, that is all that matters. And the way that you get that is you enable people to experiment. Try new technologies and try and get the barriers out of the way of them trying those technologies. So Australia’s been good at this sometimes and it’s been bad at other times. ⁓ I’m concerned about a bunch of the policies that are happening in the years.
speaker-0: Yeah, can we talk about that? Because I’ve done a little bit of background and there’s something that I’m not quite across, but I think it’s important, the way that we engage globally with big tech, which is the news media bargaining code. I yes, and I’m thank you. Thank you for appreciating when looking into this, and I’m not an expert, it is it doesn’t seem intuitive. It’s not logical. Can you
speaker-1: Yes, rolls off the tongue. Used to be longer, by the way. Anyway.
speaker-0: What’s your perspective?
speaker-1: Of course. So ⁓ this is a policy that started in around 2021. It had a longer name than what you’ve just said that I don’t need to repeat. ⁓ we are still deciding the details now. But basically the logic behind the policy was this. And to be clear, I don’t think it’s very logical, but I’ll explain the idea behind it. ⁓ digital platforms were coming along. Think social media, Facebook, search like Google. ⁓ they were linking to news content. So they were linking to domestic Australian news. Now What that meant is there were more eyeballs on the advertising on the digital platforms than there were to the actual news sites themselves. And that was seen to be breaking the business model of those news sites. So they were earning less money and it looked like they weren’t going to be sustainable to continue producing news. What happened then, and the logic behind the policy, is that the government will force the big tech platforms to pay or bargain with the news publishers to send them money. And tens of millions of dollars have been transferred under under this scheme over the last four years or so. ⁓ And we’re getting a new new version of that now. ⁓ where even if you don’t link to media, even if you don’t link to news content, you can still be caught in the scheme because Facebook in 2021 pulled their news content content in Australia, and that sent everyone off into a tailspin, which is for good reason. So there’s a few things here with this policy that I think are really quite concerning from a broader perspective. The first one is I am very skeptical when we try and solve a failing business model, for instance, the news, by punishing the new player that comes in and produces a product that people want. Right. It’s not the claim that consumers aren’t doing well here, right? Consumers are using these other sites for news aggregation and so on. So this idea that we sort of we punish the people coming in to prop up the underlying business model. And that and that’s saying nothing of whether the underlying business model is viable or not. So that’s that’s one thing. And it reminds me, for instance, I was involved in the ride sharing debates in 2014-15. So when Uber comes along, should we compensate taxi drivers and should we charge Uber riders? The same thing. So a new player comes in, looks like it’s taking away some of the business of the un ⁓ another group, and it’s politically popular to Take the money off one group and hand it to another one. So I think that’s really troubling. So I think there’s a general principle there about how we view new new incumbents. I think this will continue to expand. So it’s not clear to me why AI platforms wouldn’t end up within this regime as well. If big AI platforms are coming into Australia, are they going to get caught up in this scheme as well? ⁓ now one thing is we can agree with the policy objective. The objective might be that news media is a public good. It’s in the public interest. And we need some way to fund news media. Journalism is good for the country. We need that. I don’t think the sol. Yes. I am not convinced the solution is to tax w a specific group of companies that people might not like very much, rather than just doing a general tax and paying for the news, which I think is a bad idea in its own, separately. But this is a
speaker-0: Journalism.
speaker-1: politically popular thing that happens. We can take the money away from those big multinational players and give it to our domestic media. ⁓ so yeah, th I think this is a worrying precedent and we’ll see what happens and whether it expands.
speaker-0: You say precedent. what would the consequence be? I mean, as what about the smaller players, the smaller news providers, like someone who decides to start a magazine, does it impact on them?
speaker-1: not as much. But what happens is because the policy isn’t particularly coherent, logically coherent, now the proposals include that rather than a big tech company coming in and bargaining all of their money to say the big players like News Corp, that they should spread the money around. So they’re trying to come up with ratios of how to give the money out to across the industry. And I just think the whole scheme is a bit contorted in that sense. It started with this idea that news media, the business model’s failing. There’s some companies with a lot of cash that are politically popular to attack. And this is where we are after four or five years. So this isn’t being debated very much, right? There’s not that much conversation about this. And it’s just one example. But what I think it shows you is how do we treat new companies coming in? How how do we treat when new business models are layered on top of old ones? Do we try and wind it Back to save the underlying business models? ⁓ or do we understand that fundamentally all innovation does have a destructive effect on other industries? This is the famous economist Joseph Schumpeter said there’s a gale of creative destruction. And the word destruction is there for a reason. ⁓ when we move forward, industries slowly go away ⁓ and on sometimes rapidly go away. And It’s interesting to think from an Australian perspective, what stance do we take when that happens? Do you try and stop the destruction from happening? Or do you understand that it’s hard? But we need to move forward. We knew we need to continue.
speaker-0: Yeah. It could be seen as taxing innovation as well. So when you come in ⁓ and you have a fantastic product, it solves a problem. And at the time Uber was successful because it was solving a problem, right? And so as an Australian and you have a revolutionary idea and you are about to become a unicorn, do you need to factor in the fact that you might take business away from, you know, ⁓ an old system? into, you know, your your profits.
speaker-1: That’s exactly right. So it’s either whether you are an Australian, you want to be an Australian unicorn and you’re Australian born and bred and that’s fantastic. It’s also all of the other companies looking to enter Australia and make our markets more competitive are looking and going, Am I gonna get caught up in that? Yeah. So if I am a large AI platform and I’m looking at Australia, I have search and I have links to news. If I enter the country, am I going to
speaker-0: That was a chat GPT question recently. Do they fall under this news bargaining?
speaker-1: Yes. So and they’re just the examples we can see right now. Yeah. The the challenge with understanding and moving to a digital economy is that we miss all of the things that we can’t see and you will never see them because you don’t know they didn’t come here. That business model didn’t get developed. And that’s that’s what I’m con that’s what I’m concerned about most of the time. And back to what I mentioned earlier, the harms are really tangible. It’s sad that the business models of some news production are failing. And you can count the number of journalists that it’s impacting, perhaps. That doesn’t mean that we shouldn’t move forward.
speaker-0: Yeah, look, ⁓ another and maybe perhaps diving too deep into ⁓ you know, the theoretical side, but a lot of the the content, the reporting and the data is likely to come from AI agents within media companies that will extract events from from what what’s happening around the world and that will be proliferated across different platforms. The monetization of that, Obviously that’s a that’s a big opportunity. But does that mean because this is exponential, because if you can share news and share data at a rate that has never been shared before, then the cost of doing business in Australia as a Facebook or a a big tech company is huge because there’s even more proliferation of me. I just think it’s exponential the issue there. But anyway, I’m just thinking down the rabbit hole.
speaker-1: No, it but it’s the exact right way to think, right? It’s very easy to just think about the products we know today and the products we use today. ⁓ it was extremely hard to conceive four years ago that search would be massively disrupted by a whole range of AI platforms. That was that was seen as one of these industries with a huge dominant player. And here we are a few years later. And I I do most of my search on AI platforms. ⁓ so it can change very, very quickly. And that’s the thing about digital markets. And and we’ve we’ve seen it in social media too. We I mean, very quickly. We went from MySpace to Facebook to all these other ones. And I expect that it will be different in two years’ time.
speaker-0: Is there as the digital economy evolves, obviously there’s an intersection, multiple verticals coming up and and there’s like you say, there’s going to be technologies that we can’t envision we can’t predict. They’re coming from overseas, they’re coming from markets that have a very different landscape to us. So obviously the ideas that come out of those countries are going to be different, but they’ll benefit us. Does that d does the way that we think about policy, the the that we think about regulation need adjustment? Does that need to be experimental? Does that need to be innovative, enable to keep up with innovation itself?
speaker-1: So we’re gonna answer that indirectly. So, particularly with the digital economy. Now, there’s this, I think there’s this misunderstanding that a digital economy is just an industrial economy, but there’s more computers and digital around. Right. Complete wrong way to think about a digital economy. And crypto and blockchain are the clearest ones here. What it means is a new institutional digital stack of things. So we’ll have digital identity. We’ll have digital money, we’ll have digital contracting, we’ll have that’s that’s the bones of an economy, right? They’re the tools that we use to coordinate and build businesses. Regulators aren’t very good at dealing with institutional innovations. So, innovations in how do we form identity, how do we what is this new type of organization? In our view, it’s gotta be a company, it’s gotta be a partnership, or it’s gotta be a a Soul Trader or whatever whatever you want to have. We have these defined sets of institutions. And this wave of tech we’re seeing at the moment means that regulators just really struggle to even conceive of what this is. They try and put it in this box of, but if your decentralized organization doesn’t have a director, then who do we send a letter to to tell them that they’ve done the wrong thing? Who what door do we knock on to enforce our laws? It’s really hard to conceive of of what a new digital economy looks like. And I think regulators struggle with it. And there are options there. So we can do things like sandboxes.
speaker-0: I was gonna get to that actually, yeah. As a policy laboratory. Yes.
speaker-1: Yes. I don’t think we conceive of sandboxes broadly enough, is my problem. I think sandboxes are still a technology where the regulator will be there watching you when they relax a few rules, but you have to get out in a certain amount of time. ⁓ at the margin, a sandbox is kind of like a special economic zone or a special jurisdiction where you relax a whole bunch of laws. You have a completely different set of rules that enables you to really experiment. ⁓ so we’re seeing we’ve got a sandbox review in Australia at the moment that I know DEC has submitted to. ⁓ so again, just review and topic after topic that’s happening that will define what happens in our digital economy over the next decade or five years.
speaker-0: years ago, my thought of a sandbox was an experimental zone where and and in fintech it’s it’s regulatory sandbox because that’s where fintechs innovate. Well that’s the that’s what has been the case for a number of years. But in other tech industries there are different types of sandbox and in my experience there’s much more bandwidth and freedom to innovate within them. I know that there’s a review of of the sandbox some conversations I’ve had is that ⁓ sandboxes or experimental zones ⁓ within a regulator might not be as fruitful as a partnership with a regulator or ⁓ you know an independent sandbox with direct ties ⁓ and visibility ⁓ and transparency with the regulator. Is is that
speaker-1: Yes. ⁓ the It’s hard because typically there are some proposals in the US to do sandboxes that are kind of more cross a whole bunch of different regulators. Which we might get there here. We’ve typically had them just within one regulator. ⁓ I’m not sure what the answer to that question is. I think if we had a sort of federalism in Australia that where the states were actually differentiated, you would have a scenario that You would have a significantly different set of laws in one state. Rather than thinking of it as a within a particular regulator, you would have it you can just do the competition at higher levels. And we see this more in the US, right? And we’ve seen this with crypto laws and policy and tech policies. You see the tech companies move state to state too. And that’s not a temporary thing. ⁓ the benefits of a sandbox, there are a few benefits of them. One of them is that you can the regulators learn about the tech. That’s a that’s always seen as this big challenge. The regulators want to come, they want people to come in so they can observe how the technology works. So there is that learning aspect for the regulators. What we’ve found in Australia is very few people use the sandbox. And I think it’s narrow. I think people have to think a lot to be able to get in there. And then it’s not clear how you get out. You’ve just revealed all of your knowledge about what you’re doing. ⁓ the other option, and we see this, you leave the country. You go to a different jurisdiction where the rules are more friendly for the type of innovation that you’re doing. And that’s where that regulatory stance matters. Because even if the jurisdiction doesn’t have clear rules, if they have shown that they are willing to come up with rules quickly, then people will navigate towards that that jurisdiction.
speaker-0: Yeah, okay. Well that that makes sense. And that also I think has been recognized within the government and that ⁓ review of the sandbox that ASIC is doing at the moment. And even with some of the commentary coming out of ASIC around innovation, the culture from from my view has changed as well within ASIC. So I’m quite hopeful that the review will be fruitful for us ⁓ as as a digital asset industry and as the digital economy. I do I do want to talk to you as well about th the way Australia in comparison to other jurisdiction writes rules around technology. How do we compare? Because some actually it’s it’s just that that phrase that the tech industry throws out. We’re a a fast follower or we we’re on the sidelines. And I think I’ve said it in another episode as well. We sit on the sidelines and we wait to see what everyone else is doing. But how does that is that what everyone else does?
speaker-1: Have a lot less visibility into other jurisdictions, but I’ll I’ll tell you some things that I think are interesting in Australia and the way that we do it. ⁓ we’re very focused on consultations at the moment. Sometimes those consultations only go for a day, like it was in the under-16 social media band. They happen very quickly, and then they kind of get rushed into parliament. So there’s this big focus on consultations, ⁓ which consultations are good, but You can also go around in circles again and again. And that’s what we’ve seen in crypto. We’re seeing consultation after inquiry after consultation. And then another government wants to do it and so on and so forth. The other thing that we’re doing in tech policy and some of the other topics that we mentioned before is we’re delegating more power to outside of parliament. So we’re delegating more power to commissioners like the e-safety commissioner or to ⁓ the department. To make particular rules. Now, the idea behind this, in theory, is that it means that the regulators and the commissioners can move faster. So if you’re in a situation where you’re trying to define what social media is, well, there’s new platforms all the time, right? Maybe you can’t go through parliament every time, so you need to send it off to a commissioner. What that means, though, is that you end up passing legislation where it’s not entirely clear what the implications of those are, because you haven’t written all of the rules down and passed them through Parliament. You’ve you’ve you’ve passed some legislation and then you’ve delegated a whole bunch of powers to say such and such has the capacity to regulate this area. And I think we’re seeing it more and more in tech. We’re gonna see it in competition policy as well. ⁓ that worries me. So you can be adaptable. That that that is true. But if you have an environment where there’s a kind of tech lash and it’s easy to hate on a particular tech company at some point in time, then it’s much faster to do that too. So you c you end up a little bit more populist in that sense.
speaker-0: So what you’re saying is that the delegation of power might be on one particular person to make a decision that can basically change the rules for a whole industry.
speaker-1: ⁓ effectively, yes. So and it might have to be together with a minister, there’s various arrangements that you could you can create. But ⁓ the parliament delegates the power through subordinate legislation, and maybe there’s disallowance, we can get into all th those complex details and we don’t want to do that. But it’s this idea that they need to adapt, we need to fa we need to move quickly, but that can also have consequences that tech policy almost becomes more populist in a way. that something happens and then before you know it’s quickly changed and it’s not necessarily the best thing, you don’t get the parliamentary oversight. You don’t get the political debate in an inquiry, for instance.
speaker-0: Yeah, that’s a really you know scary thought, particularly if there is ⁓ an innovation. ⁓ actually, if we were to think about the innovation that has happened post-FTX, ⁓ there’s been a lot that’s happened in digital assets, and we know that ⁓ FTX was one player in the scheme of things. But if we had a system, I guess, where That particular moment in time determined the outcome of innovation for a whole industry. So if you said from that one event and if the power remained with one person to make the final decision, could perhaps a whole industry have been shut down? Like obviously there’s been evolution, but if it was if the power had been handed to a minister after a particular event that prohibited the activities of a particular industry. That’s to me, in hindsight, if that had have happened, that would have paused all the innovation that we’ve seen.
speaker-1: Yeah, so sometimes in tech policy we need it to speed up and other times we need it to slow down and realize this is just a particular news cycle of something that’s happened right now. And maybe we need to think through that a little bit, little bit more clearly. Now, there’s no perfect solution to this. Regulating tech is hard. The transition to a digital economy is hard. There’s there is no doubt about that. I feel sorry for the regulators sometimes trying to figure all this out because they’re often trying to interpret the rules and that is their job. And we’re all yelling at them, going, but that doesn’t make any sense. So it’s complicated and it’s hard, but we need to try and land on the right side of a bunch of these debates that’s happening this year.
speaker-0: Yeah, and I guess it it really we’re not really going to see the consequence of some of these until we see some some failures. ⁓ or some new business models emerge that don’t quite fit in the new boxes. Exactly. Within policy and experimental, perhaps policy. Does the technologies within the digital economy, including AI, Have a place in the future. And some people, and this might be out there, Darcy, some have theorized about what an ⁓ shadow AI for government and you know, or using government to help make decisions be more efficient, faster, analyze the the data that we have. Could government leverage from AI? ⁓ at at this very moment to speed things up and to keep up with the evolution of tech?
speaker-1: Yeah, it’s a it’s a very difficult question. Some of the first people who reached out to me when AI started kicking off were MPs saying, How do we integrate this into government? How do we get this to make us more efficient? We’ve long talked about government service delivery. ⁓ there are big problems there. I think we still have a hangover from Robodebt in Australia. So ⁓ that could kick us back for quite a long period of time. So on take AI policy. We went through a period where we were going to pass specific AI policy. So the AI Act of 2025 that never existed, but there was a world that that was going to happen last year. There were some movements that meant that it didn’t. And there’s various bodies now that may develop rules. ⁓ some of those rules would have been quite bad, these guardrails, in my view. They would have shut down a whole bunch of innovation. I’m happy they didn’t happen. But AI policy now, I think, is a very different thing to what. People think AI policy is. So people think AI policy is how are we going to regulate the foundation models to ensure they are explainable and so on. I think a whole bunch of AI policy is what are all the barriers to getting AI into the economy? So we are a very heavy professional services environment, which are very heavily regulated professions. So you take law, financial planning, a whole bunch of these areas. They’re heavily regulated. There are all these barriers in those industries to put in automated advice, for instance. ⁓ if you’ve got bespoke financial advice, you might require a human to look look at that, right? And that’s just an example. So I think what’s going to catch or a big challenge for AI in Australia, and this will be a bigger challenge in government than it is in the private sector, even, is where are all of the barriers to automation that won’t let us adjust? won’t let us reconfigure and some industries shrink and some expand and so on. I think there’s going to be all these barriers in AI. ⁓ and I think they’re on the adoption side. So there’ll be this distraction around how do we regulate a particular model. I think it’s that when it hits the ground of an organizational rules or professional rules or a within government, there are a whole bunch of rules as well. So ⁓ Yeah, I understand your question that maybe we’ll be able to solve some of these challenges, but unfortunately I think we’re a long way away.
speaker-0: Yeah, look, I I think the integration of technology in into government systems and platforms, we know has been slow. And I I I agree, I don’t think we’re gonna see it anytime soon. ⁓ but there’s still a great need for it. ⁓ as I use some government systems and I wonder what year I’m in. Yes, because it’s twenty twenty six, not two thousand and three.
speaker-1: I think a whole bunch of it will be digitizing parts of government that enable machines to plug into them. So the innovation happens on the outside, but the machines can plug in. So if you’re trying to get a planning approval through at the moment, you just couldn’t be able to do that. You might have to change the way that you actually change you have the planning approval system to make it more digitized so that you can you can integrate like that. But ⁓ I’m I’m hopeful this happens. ⁓ but I think it will. I think it will take a bunch of time. One area that I am really optimistic about though is I don’t think we can use AI as some kind of shadow government, but I do think it’s enables people to get up to speed on issues much more quickly. So I am just amazed how quickly you can navigate the policy space now, even in areas that you don’t know with a huge amount of expertise. You can go away and do a deep research query and get a pretty good idea of what’s happened in the last 20 years in that policy in Australia. That’s really beneficial for governments as well. I think for for staffers, for people in public servants in departments, if they want to learn about tech, never been easier to do. So maybe that’s optimistic.
speaker-0: Yeah, look, I and they’re already using AI. My question around the AI in government as well. There has been in in some of the interviews that we’ve done the sovereignty aspect of it. So we do, as every nation would, you know, we we aim to be sovereign. we at the moment we are using international, global providers, even within government, I believe, which, you know, ⁓ perhaps it should be Australian owned and developed. ⁓ just keep everything ⁓ onshore to, you know, mitigate that risk. Do you w when it comes to building AI tools though, I mean it’s it sounds like a chicken and an egg situation. And I’m just pondering it now in this conversation. We need this sovereign capability. We need the technology. but we also need this regulatory clarity ⁓ around a lot of different digital technologies, actually, to be able to build and to be able to innovate and to be able to provide this the solutions locally. So, how do you ⁓ in your in your own mind, when you look at, you know, we need these solutions and ⁓ I don’t know if you agree, but that That sovereignty well
speaker-1: I think the market will demand sovereign. So I think ⁓ I do think there will be a bunch of companies that just want that ⁓ taking out of account that the government might could possibly require it or might require it, and I’m sure they do for certain government services. I think from a risk mitigation perspective, there will be a bunch of companies that want to have sovereign they want their data onshore in Australia. ⁓ so I think there are market solutions to this if we can build data centers.
speaker-0: Yeah. That’s the other thing.
speaker-1: So there’s a lot of activity at the moment going on to build data centers in Australia. We’re starting to see more positive things. ⁓ the challenge with Australia when we try and build any infrastructure, whether it’s a mine or a data center, is you’ve got a lot of layers of approvals that you need, and they’re all at different levels of government. So you range from your state planning approval to put a data center in a particular area, for instance, for zoning and noise and all this stuff, but you go all the way up to you might get hit by ⁓ the Environmental Protection and Biodiversity Act and all the implications from that. So the way that the solutions in other areas have been along the lines of a one-stop shop or this idea that you could have one area of government you go into that will streamline the approvals so you don’t have to go to every regulator. There are proposals for that in Australia. ⁓ stories that I’ve seen recently, it sounds like Victoria is going quite well doing some of these. I think we need more of that. Australia is an amazing location to build data centers. ⁓ even if it’s not for the sovereign reasons that you mention, but we also need cheap energy to do that as well. And that’s a whole different policy area. So it’s ⁓ it’s all very tied up. Australia could have amazing advantages in a bunch of these areas. ⁓ one of the examples I like to bring up is our space industry. So talking about digital economy, ⁓ we have an emerging space industry in Australia shooting rockets up into the into space, mainly to do low Earth orbit satellites and a whole bunch of things. Australia, amazing place for the space industry. We have space, we have a we can get into a lot of orbits. We have a talented workforce. We are democratically stable. There’s a whole bunch of reasons you’d want to launch from Australia. ⁓ There was a launch pad in South Australia that got held back for a few years in regulatory approvals. And my favorite part of the regulatory approval in the end was that they had to employ a whale watcher for half an hour before launch. And if a whale swam past, they had to abort the launch because it might affect the whale. The vibrations might affect the whale. Now, whatever you think about whale welfare and so on, I find it hard to see that people will look at Australia in that circumstance and think this is a serious place that we could regularly launch rockets from.
speaker-0: Why?
speaker-1: Now, there are a bunch of other regulatory issues, but we talk about when you’re taking a stance on something about tech. There are some times when you have to step back a bit. This was written in the EPBC Act approval. ⁓ so it’s just it’s just one example. There was another, there’s another company in Queensland that was they had an Australian-built rocket sitting in their hangar for a very long time. And they were talking Yes, ⁓ Gilmore Space. Yeah. Yes. they’ve launched
speaker-0: Interesting. One on the gold coast?
speaker-1: Some rockets now. I don’t know how it went, but they were sitting there going, We are waiting on approvals. Yeah. This is this is taking too much time. ⁓ I don’t think Australia can afford to do that. I think we have all these benefits, but we could we could squander them by not letting this experimentation happen.
speaker-0: I’m fascinated by space tech, ⁓ Darcy. It sounds like you are too. I know that in South Australia, you know ⁓ space laser technology. We had ⁓ and I think it’s still operating. The best space laser technology was in South Australia for space junk ⁓ entering the orbit. ⁓ and then that got me into space law. And who owns space? Who knows who owns space? And at the moment there’s no one owns space, and so. Who gets to own which part? And at the moment, ⁓ it seems like Elon Musk must own most of it, really.
speaker-1: It’s an amazingly competitive industry. So I ⁓ one of the most incredible things about the space industry is how it turned private. So a few decades ago, you talked about public, you talked about governments launching into space. And then there was this big movement towards private companies doing space. And it’s not just SpaceX, there are a bunch of them. ⁓ there’s New Zealand ones that they took kind of that hacker culture of maybe we can build cheap rockets and launch them into space. ⁓ and that set the industry off. And it took away a lot of those the expenses that organizations like NASA had. ⁓ so some of these companies, they said, Well, what if we just what if we just shoot a phone, launch a phone into space and just see if it works? Like how much of a phone works when you put it into space? Turns out more than we realized. ⁓
speaker-0: Yeah, well there’s a whole bunch of telco satellites up there as well. Yes.
speaker-1: Yeah, yeah. and for Australia this is really important, having all of that low Earth orbit satellite infrastructure because it means we get more connectivity. We’re a big country. We want that connectivity. It’s important for all of our other industries like agriculture and and so on.
speaker-0: Can you tell there’s a lot to unpack in your life. What are you working on right at this moment?
speaker-1: ⁓ I am working on how do we work through all of these tech policies that are coming out this year. ⁓ I don’t think there’s enough people working in that space. I ⁓ I think because everyone gets caught up in their own particular industry, they don’t see all the other policies that’s happening at the same time. I’m always writing books as well. So I’m writing another book on crypto at the moment. ⁓ But our book that came out recently was called Institutional Acceleration. And it made this argument that rather than just looking at individual tech, all the interesting things are when you put multiple techs together. Yes. And this is rapidly changing the structure of our economy. And that’s where we were talking about space in that as well. ⁓ that it’s not just space, it’s what when you get that connectivity and then you’ve got better imagery, and then you can create property rights over the imagery, and then so all these the combinations of different tech from quantum to all the way through. ⁓ so I’m both working on the the theory side of what’s going on at that frontier, what’s the industry doing, but also how can they do it in practice in Australia and what are those barriers to it. I’m worried about a bunch of the tech policies that are happening, but I’m also optimistic about Australia. I think it can be I think it can be an amazing jurisdiction and an innovative jurisdiction. I have three young children. I would love them to live a better life than we do now. ⁓ and I think the only way we get there is More tech, more innovation, and speed up that transition to a digital economy.
speaker-0: Well, it sounds like your kids are going to be pardon pun launched into a very different world that that we are in right now. So I think even though we’ve got some of the hiccups and we’ve we’ve got to get through this particular stage of ambiguity across the board. And in your book, you know, you’re talking about essentially, you know, the tech stack of of the digital economy, the intersection of all the technologies. Is it possible, even at a tiny percent To predict possible technologies emerging from the intersection of some like we we probably a few years ago couldn’t predict something easy like AI agents, right? We would just, ⁓ AI, you know, maybe it will answer some of our questions for us. But we never envisaged the intersection of digital assets and ⁓ AI as being AI agents who can make payments for you ⁓ with your digital wallets, for example. Have you have you come across any and maybe you can’t share because it’s a great new invention that you’ve come up with because you wrote this book. But is it a way to predict when you’re looking at all the technologies of what could emerge in the next ten years?
speaker-1: I am very skeptical of predictions. I think I would be constantly wrong if I was trying to do them. So I try not to do it too much. ⁓ But it’s useful to think through to realize how we should respond to tech. The point is that as we get more, it actually gets worse over time. So innovation is combinatorial. Basically, we take the building blocks that we have and then we combine them into new things. What we think is happening right now is that we have more building blocks than we’ve ever had before. So it is very unusual in my mind that we have massive advances at the same time in AI, crypto and blockchains, quantum, space tech at the same time.
speaker-0: Med tech, yes and buy on it. Yes.
speaker-1: We keep hearing these stories that the economy is less innovative or something like that. But it’s just hard to believe that we’re not on the cusp of a huge number of I I I do struggle to believe that that’s not gonna change really rapidly. It doesn’t easily fit into existing statistics. It doesn’t fit into productivity very well. I think there is way more AI productivity happening than we are possibly picking up because people are doing it secretly in the shadows. ⁓ but yeah, I don’t. My prediction is that it will start to accelerate. So innovation will start to accelerate rather than slow down. I I just don’t believe that we’re coming to a halt right now with everything that’s happening.
speaker-0: No, and I’m I’m it’s thrilling really to it’s a scary roller coaster ride. Because you it’s fun because it’s scary. ⁓ but also there’s a lot of things that need fixing. And I think the combination of technology is going to be really helpful. I mean AI and solving different problems, ⁓ you know, medicine maybe perhaps.
speaker-1: So if an AI develops a new drug that solves something major tomorrow, we won’t be able to legally use it in Australia. How many years will it take for that drug to be improved? So th that’s what I mean by so I’m less I’m less worried about that we won’t end up with the inventions. I’m more worried that we’ll get really delayed in when we can use them. And yes, there are risks to that. There are absolutely risks. There’s no doubt about that. But it’s the same thing whether you’re talking about can AI
speaker-0: The approved.
speaker-1: disrupt this profession and make people get better financial advice or tax advice or legal advice or whatever, that delay costs us prosperity in health. That’s a different thing. That’s actually a medical, a genuine health and medical problem. So thinking away just from the invention through to the how does it end up in people’s lives, I think is increasingly important because we’re a heavily regulated country, right? That in some ways that’s a big benefit. Some people some organizations like that in Australia. ⁓ that it’s stable and there are all these rules means it’s hard to change. It means it’s hard to adapt those rules.
speaker-0: A lot to think about, Darcy. Thank you for coming on the show. It’s been an absolute pleasure.
speaker-1: Thank you very much.
speaker-0: Digital, where policy meets innovation. Stay curious, stay inspired, and be part of the movement Building Australia’s Next Economy. The future is happening now. See you in the next episode.
speaker-1: ⁓