TLDR: The New South Wales (NSW) Audit Office has called for government agencies to implement additional, agency-specific artificial intelligence (AI) policies. This recommendation comes after an audit revealed that while 357 AI tools are in use across 21 of 26 major state departments, the existing whole-of-government framework is often insufficient for advanced AI adoption. Less than half of the audited agencies currently have formal AI policies, highlighting a critical need for tailored governance to ensure responsible and effective AI deployment.
Sydney, NSW – November 3, 2025 – A recent audit by the New South Wales (NSW) Audit Office has underscored the urgent need for government agencies to develop their own bespoke artificial intelligence (AI) policies, supplementing the existing whole-of-government framework. The audit, detailed in a report, expressed significant concern that the overarching state-wide principles are proving ‘inadequately detailed for some departments and agencies in more advanced phases of AI adoption.’
The findings reveal a widespread proliferation of AI within the NSW government, with a staggering 357 different AI tools identified across 21 of the state’s 26 largest departments and agencies. These tools are being utilized for a diverse range of functions, including workflow enhancement, customer interaction, fraud detection, cyber security support, compliance monitoring, capability development, and supporting service delivery.
Despite the extensive use of AI, the audit found that less than half of the 21 largest departments and agencies had implemented formal AI policies or integrated the emerging technology into their existing frameworks. While some agencies noted their policies were under review and others relied solely on the statewide AI ethics policy, the Audit Office emphasized that ‘An agency-level policy is required to deal with elements that go beyond the NSW government’s ethical principles.’ The report further stressed that ‘There is no one-size-fits-all governance model,’ advocating for tailored approaches to manage the unique complexities of AI deployment within individual agencies.
To enhance government accountability, the report also encouraged the establishment of central inventories to document the purpose, uses, and limitations of AI technology. Promisingly, 15 of the 21 audited agencies reported that they were already engaged in this practice at the time of the review.
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The audit’s recommendations highlight a pivotal moment for NSW government agencies as they navigate the ethical and operational challenges posed by rapidly advancing AI technologies, aiming to ensure responsible, effective, and accountable use across the public sector.
