Wheels in motion: Australia's road to regulating automated vehicles

The automotive industry in Australia is undergoing a significant transformation, with reforms paving the way for the widespread adoption of automated vehicles.

These changes will impact, and create investment opportunities for, domestic and international operators in the automotive industry, from vehicle importation and infrastructure development to software sales, AI adoption and data analytics.

In this article, we unpack the recent Australian Government consultation paper, which seeks public opinion on the development of a holistic framework for automated vehicles.

What are automated vehicles?

Fully automated vehicles (AV) (sometimes also called autonomous vehicles, self-driving vehicles or driverless vehicles) are vehicles that are capable of driving on a sustained basis without human input or attention, enabled by an automated driving system made up of hardware and software. While AVs for use on public roads are not yet available commercially in Australia, the Australian Government is preparing for AVs to enter the Australian market as soon as 2026. As such, it has been working since 2016 to develop an end-to-end regulatory framework designed to ensure AVs operate safely and efficiently on the roads.

On 22 April 2024, the Australian Government released a consultation paper for the development of a national Automated Vehicle Safety Law (AVSL). The paper proposes establishing a new regulator to monitor and enforce compliance with the AVSL and regulations to ensure that:

• automatic driving systems are safe when first supplied in Australia;
  
  
• the safety of automatic driving systems is maintained when used on the road; and
  
  
• people that use and interact with AVs understand their roles and responsibilities.

Key proposed regulations

At a high level, the proposed regulations will create new regulatory obligations for entities operating in the automotive industry, as well as their executive officers. While the requirements are still subject to consultation, they will likely affect not only an entity's safety procedures, but also its corporate structuring, marketing activities and data handling.

Such obligations will in turn need to be reflected contractually in arrangements with suppliers and customers. Key proposed regulations under consultation include:

1. Safety of automatic driving systems when entering the Australian market

One key difference between conventional vehicles and vehicles with an automatic driving system (ADS) is that every ADS will need an Automated Driving System Entity (ADSE) to be responsible for its safe operation. The ADSE must have an Australian presence to ensure accountability of their activities within Australia.

The paper considers three options for this corporate presence requirement:

• ADSEs must be an Australian registered company with its centre of operations in Australia;
  
  
• ADSEs must be an Australian registered company; or
  
  
• ADSEs must, at a minimum, be a foreign company registered to carry on business in Australia.

An entity may need to satisfy other requirements to be certified as an ADSE, including in relation to document access and control, financial capacity and data recording and sharing capability.

2. Keeping automatic driving systems safe when on the road

The consultation paper proposes that ADSEs will be subject to both a general safety duty to ensure the safe operation of the relevant ADS as well as some specific, prescriptive safety duties. Notably, ADSEs will be responsible for the safe operation of an ADS even where another person or entity has performed authorised repairs, maintenance, or modifications on the ADS.

Executive officers of ADSEs will be expected to undertake due diligence under the AVSL and to make reasonable efforts to ensure the ADSE complies with its safety duties. ADSEs will be required to report certain information (e.g. systematic issues) to help a newly formed regulator understand AV safety risks, and to monitor the ADSE's compliance with its duties under the AVSL.

There may also be new offences for misleading marketing of AVs (e.g. misrepresentations about a vehicle's capability or the use of misleading terms such as "driverless" to describe non-ADS vehicles) under the AVSL.

3. Regulating human interaction with automatic driving systems

The consultation paper also proposes to place certain obligations on AV users and introduce third party interference offences.

Obligations will be placed on occupants and users of AVs, including with respect to licensing requirements, drug and alcohol restrictions, fallback ready users and secondary activities (such as working, resting and consuming entertainment and social media).

Third-party interference offences will be established under state and territory laws to prevent unauthorised physical or software changes to AVs. Prohibited actions may include:

• deliberate engagement of an ADS that has been disabled by an ADSE;
  
  
• an unauthorised person performing repairs, maintenance or modifications on an ADS;
  
  
• action intended to impair ADS operation or impact ADS safety (for example, hacking ADS software); and
  
  
• maintenance or repair of non-ADS components affecting ADS safety.

Key takeaways

Companies planning to introduce or import AVs to the Australian market, or otherwise deal with a potential ADSE, should note the potential changes to Australian legal framework for AVs and prepare for the introduction of the AVSL. Some key steps include:

1. Assess whether the company may be an ADSE or a party dealing with an ADSE, and map the company's business plan with the corresponding obligations.
   
   
2. If the company will assume the role as an ADSE, review the company's corporate structure. This should be considered holistically with other issues such as Foreign Investment Review Board (FIRB) approval, taxation and insurance requirements.
   
   
3. Identify local providers to perform services in relation to the ADS.
   
   
4. Implement appropriate contractual safeguards. If the company is providing goods and services to an ADSE, prepare for flow down obligations from the ADSE for its compliance with the AVSL.
   
   
5. Consider the influence, control and professional responsibility of executive officers. This necessitates considerations not only under the AVSL and also interactions with their duties under the Corporations Act.
   
   
6. Ensure that any contemplated marketing or promotional activities relating to AVs are not misleading and deceptive, particular with respect to ADS capabilities. This will need to be considered in tandem with other requirements under the Australian Consumer Law.
   
   
7. As ADSEs will be required to maintain, store and make available certain data, review the company's privacy policy, privacy notices and data collection and storage procedures to ensure they are fit to meet new reporting obligations and are compliant with the Privacy Act.

Consultation on the proposed reform is open until 11 June 2024.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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