Australia: a Government Overview

Government Practice in Australia: Key Trends and Developments

Governments at all levels in Australia continue to play a significant role in shaping economic outcomes, regulating business and delivering public services. Public sector agencies must balance policy objectives against impacts on business, society and individuals, while maintaining integrity and public accountability and always acting lawfully. Government participation in markets and commerce also continues to expand, including through procurement, service delivery and public sector employment, increasing the need to achieve both value for money and high standards of governance.

Governments are carrying out these functions in an increasingly dynamic domestic and global environment shaped by geopolitical risk, energy transition and rapid technological change. These pressures are affecting the “business” of government at a time of heightened public scrutiny and constrained budgets. Even so, Australian governments continue to pursue major reforms to respond to this pace of change.

Artificial Intelligence and Privacy Reform: Opportunities and Uncertainty

Artificial intelligence (AI) is becoming a practical test of the ability of governments to deliver more efficient and accessible public services while maintaining public trust, accountability and legal compliance.

The Australian government’s APS AI Plan reflects an intention to expand safe and responsible AI use across public service, including through GovAI. Many agencies are piloting AI tools, including chat functions and internal productivity uses, and are beginning to consider more structured operational and service delivery applications. This shift raises questions about the interaction of AI and automated decision-making with administrative law, procurement, privacy, cybersecurity, intellectual property and record-keeping.

Privacy reform adds a further layer of complexity. From 10 December 2026, entities using personal information in automated decision-making that may significantly affect rights or interests will need to include additional information in their privacy policies about the kinds of personal information used and the kinds of decisions made. The Office of the Australian Information Commissioner has also identified privacy policy compliance as an area of regulatory focus.

For agencies and service providers, the immediate task is to identify where AI or automation is being used, whether it affects rights or interests, and whether privacy policies, privacy impact assessment processes, procurement settings and security controls remain fit for purpose.

Increased Focus on Integrity, Transparency and Accountability

A major trend in the government sector is the increasing focus on integrity, transparency and accountability. Governments have long been subject to extensive accountability mechanisms, including freedom of information, audit, merits review, judicial review and parliamentary scrutiny. In recent years, that framework has been reinforced by anti-corruption commissions, public interest disclosure and whistle-blower protections, and the increasing use of Royal Commissions.

At the federal level, the establishment of the National Anti-Corruption Commission (NACC) has sharpened scrutiny of public decision-making, procurement, conflicts of interest and the proper exercise of official power, while reinforcing the need for robust governance systems and a culture of integrity. The Freedom of Information Act 1982 (Cth) remains central to public transparency, although agencies continue to face practical challenges around resourcing and exemptions. The Public Interest Disclosure Act 2013 (Cth) is likewise critical in supporting the reporting of wrongdoing within the Commonwealth sector, particularly where agencies foster trust, protect disclosers from reprisal, and respond to disclosures in a fair, prompt and credible way.

Employment, Industrial Relations, and Workplace Health and Safety Trends

Government employers are experiencing significant challenges in attracting and retaining staff in the face of demographic shifts and budgetary pressure. Agencies are responding, where possible, through flexible work arrangements, enhanced training and additional leave benefits. Recent case law on flexible work requests, and legislation introduced in Victoria to enshrine a right to work from home for at least two days per week, mean flexible work will remain a significant issue for public sector employees.

Governments are also seeking to implement AI in ways that improve productivity while maintaining accountability and information security. These changes are increasing the focus on performance management, equitable treatment and psychosocial safety. They may also lead to more individual grievances and greater scrutiny from safety regulators, particularly as attention increases on psychosocial hazards arising from performance management, restructures and digital work systems. In particular, the New South Wales Parliament is considering legislation to introduce new work health and safety duties relating to digital work systems, and there are proposals at the national level to extend the Work Health and Safety (WHS) framework to risks posed by AI.

Finally, government employers need to continue to prioritise compliance with employment obligations, particularly in light of harsher penalties for payroll non-compliance and significant changes to the way superannuation contributions are made.

Significant Procurement Reforms supporting Australian Industry and Indigenous Businesses

The Commonwealth Procurement Rules underwent major revision in November 2025. The key change was the increase in the procurement threshold which triggers the requirement for open tender processes from AUD80,000 to AUD125,000. Importantly, key changes have been made in relation to who can participate in procurement processes. Commonwealth agencies must now give preference to Australian (and New Zealand) businesses for procurements below the threshold and only invite small and medium enterprises (SMEs) to participate in panel procurements below the threshold. The rules now require agencies to consider the ethical conduct of suppliers when making procurement decisions, which reinforces recent integrity measures.

A similar wave of procurement reform is occurring at the state and territory level. For example, the ACT Government Procurement Amendment Act 2025 streamlines low-value procurement processes and reduces administrative burdens for SMEs and Indigenous businesses contracting with the territory government. Similarly, the Queensland Procurement Policy 2026 seeks to simplify policy and tender documentation, increase opportunities for SMEs and Indigenous businesses, and improve transparency and accountability.

Managing Major Class Actions, Royal Commissions and Inquiries

Government decisions about public services, public resources and the regulation of businesses and individuals create significant class action risk given the breadth of their impact on the community. Governments must balance policy objectives, legal risk, public accountability and operational disruption. They must also comply with model litigant obligations, which require them to act fairly and consistently with the proper administration of justice while managing significant political, financial and reputational stakes.

Governments also face distinctive methods of inquiries through Royal Commissions and other statutory or parliamentary inquiries. Evidence in these forums may expose systemic failures, inter-governmental or inter-agency co-ordination problems, or tensions between legal risk, public interest and executive responsibility. Agencies must also manage legal privilege, public interest immunity, restrictions on disseminating classified information, and large-scale document production. These matters require close co-ordination with whole-of-government risk and insurance frameworks. Effective participation requires governance frameworks, co-ordinated legal and operational teams, disciplined records management, stakeholder management, careful witness preparation, and a whole-of-government strategy that balances candour, compliance, reputation and remediation.

Looking Ahead

Companies working in the government sector need to understand the unique and dynamic environment in which governments operate, and be able to respond to policy shifts and regulatory reform. This requires broad consideration and expertise across administrative law, public employment law, procurement and construction law, information law and dispute resolution, together with an understanding of how legal issues are managed by government agencies. Finally, law firms appointed to act for governments and their contractors must meet the same standards of integrity and ethical behaviour expected of government agencies.