The Imitation Game: NZ's approach to regulating AI

New Zealand's strategic approach to work on Artificial Intelligence ('AI') has been outlined in a Cabinet Paper published on 26 June by the Minister of Science, Innovation and Technology, Judith Collins. The Minister indicates the government's appetite to support an "increased uptake of AI in New Zealand" to boost productivity and economic activity, and to deliver better public services; but makes clear that a standalone AI Act is not on the horizon.

The key takeaway from the Cabinet Paper is that the Minister intends to take a "light-touch, proportionate and risk-based approach to AI regulation". We will only see regulatory intervention if the Government considers it necessary to "unlock innovation or address acute risks", and if such is considered necessary, it will be leveraged off existing regulatory mechanisms and draw heavily on international efforts rather than New Zealand doing the heavy lifting itself.

What is AI and how does New Zealand feel about it?

AI refers to computer systems that do tasks which seem like intelligent behaviour, such as finding patterns or categorising. This includes generative AI tools such as ChatGPT which we have previously explored, as well as other systems that interpret data or automate tasks.

The Minister identifies a high level of mistrust preventing beneficial diffusion of AI in New Zealand. This view is supported by the 2023 "Internet Insights" survey in which over half of the participants reported being extremely or very concerned that AI may be used for malicious purposes, be unregulated, and have unintended consequences causing harm to people. A 2021 Qrious survey also identified a lack of understanding by businesses in relation to the legal and ethical implications of AI.

The sense of unease at the speed in which AI is developing has led to louder demands for its regulation across the globe. The Minister notes that New Zealand businesses are slower than our global counterparts to adopt AI out of uncertainty of future regulatory environments; therefore, by outlining her plans, the Minister seeks to give businesses and the public sector greater confidence to "safely develop, innovate with, and use" AI.

Regulation on the way…as and when needed?

New Zealand's existing regulatory frameworks such as the Privacy Act 2020, the Human Rights Act 1990 and the Fair Trading Act 1986 were not designed with AI in mind; however, they will certainly apply to any businesses looking to deploy or promote AI-enabled products or services.

The Minister considers these existing regulatory frameworks to be "largely principles-based and technology neutral". As such, the Minister has indicated that rather than creating a standalone AI Act, these frameworks are able to be updated and amended to enable AI innovation or to address AI harms in New Zealand.

This light touch approach will not calm the current anxieties for businesses as to what the parameters of what is/isn't acceptable AI use in New Zealand. However, by officially stating governmental support for AI and outlining New Zealand's regulatory approach, the Minister suggests that New Zealand should feel empowered to experiment with the technology. This ad hoc approach is intended to prevent overly broad regulation on 'predicted uses' or 'speculated harms', and instead favours agility - with other options floated to address risk and build trust, such as voluntary guidance, industry codes, technical standards and audit requirements.

Not world-leading, but world-leveraging

The Minister confirms that New Zealand is likely to leverage the larger countries' groundwork, while adding our unique touch, to develop AI regulations tailored to New Zealand.

As we reported earlier this year, the European Parliament formally endorsed the Artificial Intelligence Act ('AI Act'). Since then, the European Council has formally adopted the AI Act, and on 12 July it was published in the Official Journal or the European Union marking the final step in its legislative journey. Officially coming into force on 1 August 2024, the AI Act is set to become the first comprehensive regulation on AI by a major regulator anywhere. Similar to the EU's General Data Protection Regulation ('GDPR'), the AI Act is signalled to become a global standard. New Zealand will be closely watching how it is implemented and received so as to draw influence from it.

Further, the Minister recommends that the Government promote the OECD AI Principles that New Zealand already adheres to. As a form of "soft-law" these principles are to serve as a key direction for responsible AI adoption in New Zealand.

Across government agencies

The Government's Chief Digital Officer (a role currently held by the Department of Internal Affairs' chief executive) is responsible for developing a work programme and stewarding an "open and co-ordinated approach" to the adoption of AI across public service agencies. The work programme is set to capitalise on AI's potential to improve public services and to support "agencies to trial and scale up their use of AI and build needed AI skills". It is likely that this work programme will leverage the Interim Generative AI guidance for the public service that already exists.

It's important to note that not all agencies and businesses will be as equipped to implement and roll out AI. The Minister acknowledges that "AI could have disproportionate impacts on some population groups", but rather than addressing such impacts upfront at a national level, the Minister states that agencies are expected to undertake analysis of such impacts as applicable.

Further, the Minister omits any nation-wide coordination on how the interests of Māori in AI development and implementation will be addressed by the Crown. This will push the obligations onto individual agencies to "undertake public engagement and consultation, including with iwi and Māori, as relevant for their activities".
Agencies are expected to provide input on the work programme by the end of August 2024, and the Minister expects to be invited to report back to the Cabinet Economic Policy Committee with an integrated cross-portfolio work programme on AI by September 2024.

Support from the Privacy Commissioner

While the Privacy Commissioner has expressed his support of the government's proactive approach and agrees there is no need for specific-AI law yet, he states that New Zealand will need quick progress to advance a shared understanding of urgent issues around AI - especially considering organisations are making decisions about AI now without clear guidance on responsible risk management.

Similar to the public concern that AI development and adoption is outpacing regulation, the Privacy Commissioner is calling for immediate progress on how existing regulatory frameworks apply to AI (which will inform whether these need strengthening), as he is concerned it will take too long to develop a shared national approach on AI as set out by the Minister. Helpfully, the Office of the Privacy Commissioner released guidance on AI and the Information Privacy Principles in the Privacy Act 2020 last year which sets out the legal requirements on how you collect, use, and share personal information and as a starting point, applies to everyone using AI tools in New Zealand.

What does this mean for NZ businesses?

As we have previously reported, the challenge for regulators will be striking the right balance between providing protection that gives businesses confidence to develop, innovate with and use AI, while ensuring regulation is not overly intrusive.

AI is no longer an imaginative frontier that we will have to face 'one day' - it is never too early to start thinking about compliance, especially if your business is already using AI. For advice on how to safely implement AI into your business, talk to our experts Hayden Wilson, Campbell Featherstone, Hayley Miller, Güneş Haksever or Ashleigh Ooi.

This article was written by Melissa Tahere, a Solicitor, and Güneş Haksever, a Senior Associate in our Technology, Media and Telecommunications team.

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