Australia is taking a closer look at how artificial intelligence could reshape its economy, workforce and public services, with South Australia becoming the first state to launch a major royal commission into the technology.

South Australian Premier Peter Malinauskas announced the inquiry on Monday, arguing that Australia faces a critical choice: allow AI to develop with limited oversight or establish safeguards while ensuring the country remains competitive in the global technology race.

The royal commission is expected to begin in October, with its final report due by 1 July 2027. Its terms of reference are expected to be released within the next four to six weeks.

One of the biggest issues likely to dominate the inquiry is employment.

AI is already changing how businesses operate, with increasingly capable systems taking on tasks previously performed by people. Experts say the speed of this transformation could make it harder for workers and education systems to adapt.

University of New South Wales AI Institute chief scientist Toby Walsh said the current technological shift could happen far faster than previous industrial revolutions. While AI could eventually create new employment opportunities, he said governments would need to help workers develop the skills required for changing industries.

That could mean significant changes to education, vocational training and workplace reskilling.

The inquiry is also expected to examine AI’s environmental footprint. The rapid expansion of data centres is increasing demand for electricity, water and land, raising questions about whether Australia’s infrastructure can support the technology sustainably.

Health and education will be another major area of interest. AI could improve access to healthcare and education, but experts caution that its introduction into these sensitive sectors must be carefully managed.

The inquiry also highlights a broader tension facing governments: how to regulate AI without pushing investment and innovation elsewhere.

Australian Institute for Machine Learning chief scientist Anton van den Hengel warned that excessive regulation could leave Australia dependent on AI developed overseas, reducing its ability to influence the technology’s direction.

South Australia’s inquiry therefore goes beyond regulation. It could become a test of whether governments can protect workers and communities while still encouraging innovation.

Although AI companies operate across national and international borders, experts believe the inquiry could help push Australia towards a more coordinated national approach.

The central question is no longer whether AI will transform Australia, but how the country chooses to manage that transformation.