Australian Regulators Warn AI Fuels Catastrophic Risks and Scams

Australian regulators warned a federal parliamentary inquiry that uncontrolled artificial intelligence is fueling sophisticated scams and creating catastrophic risks for children and consumers. Julie Inman Grant, the eSafety Commissioner, reported a 75 percent increase in AI-generated child sexual exploitation and abuse material between 2024 and 2025, noting a particular rise in schools. She urged the government to regulate AI proactively to avoid repeating past failures with social media, though she noted a regulatory gap regarding non-sexual deepfakes used to defame educators.

Chris Savundra of the Australian Securities and Investments Commission highlighted AI-driven threats to the finance sector, including credit scoring issues, the rise of big fakes used to defraud consumers, and a growing reliance on AI for financial advice among young people. In response to these threats, the government introduced proposed digital duty of care laws to shift the responsibility for online safety from users to platforms.

To combat immediate harms, the eSafety Commissioner's office worked with the National Home Safety Education Council to roll out school-based reporting systems and pressured several nudify services to exit the Australian market or tighten restrictions. Meanwhile, the CSIRO testified that while AI computing capacity requires resource-heavy data centers, such infrastructure is necessary to advance national research.