Global: Australian Government Removes Data Localization Rules for Digital Identity Scheme

The Australian federal government has responded to sustained lobbying from the technology and banking sectors by removing regulations that would have required data from the nation’s digital identity scheme to be stored exclusively within Australia.

The Australian Government Digital Identity System (AGDIS), which is set to expand following the enactment of landmark legislation earlier this year, will no longer mandate data localization, according to reports from InnovationAus. This decision contrasts with recommendations from One Nation Senator Malcolm Roberts, who proposed amendments to ensure identity data remained within the country.

Instead, the Albanese government has released draft rules through the Department of Finance that reflect a different approach. This change comes after significant lobbying from major technology and banking industry players, who argued that such restrictions would impose considerable operational and financial burdens, hindering the efficiency and scalability of the digital identity framework.

A spokesperson for the government told InnovationAus that the current rules apply only to government agencies, which do not store personal information offshore, making the provision unnecessary. According to the Australian hosting certification framework, government entities will retain the autonomy to choose the hosting arrangements that best meet their needs.

In a related development, the Albanese government recently announced a commitment of at least $2 billion over the next decade to enhance Australia’s cyber capabilities. This investment includes a strategic partnership between the Australian Signals Directorate (ASD) and Amazon Web Services (AWS) to establish a Top Secret (TS) Cloud for the Australian government.

Additionally, a 2021 report by the Information Technology & Innovation Foundation (ITIF) found that restricting data flows has a significant negative impact on a nation’s economy, reducing trade volumes, lowering productivity, and increasing prices for industries reliant on data. The report urged countries such as Australia, Canada, Chile, Japan, Singapore, New Zealand, the United States, and the United Kingdom to collaborate on alternatives to data localization.

The AGDIS aims to streamline access to various government and private sector services, creating a unified digital identity for citizens and businesses across Australia.