Productivity Commission: “Data as an opportunity rather than a threat”

The Productivity Commission recently released its final report into Data Availability and Use, recommending wholesale changes to the Australian legal framework for the handling of publicly and privately held data assets.  The proposed changes represent a dramatic shift from viewing digital data as a proprietary resource to be tightly controlled and protected, to viewing it as a shared asset to be widely exploited for the common good.

In a nutshell, what do the changes mean?

For data holders: Organisations will be required to share the consumer data they have collected with other organisations and with consumers themselves. Whilst the reforms may meet initial resistance due to a perception that forced sharing will erode the value of an organisation’s data assets, data holders should also look for the silver lining as they gain unprecedented access to relevant data held by other organisations. This data rich environment will provide significant opportunity for increased competition and innovation.

For consumers:  Consumers will have greater access to, and visibility of, the data generated by and about them, potentially enabling them to derive significant value from the data collected.

Why is change necessary?

The Productivity Commission makes a strong case for change. It argues that:

  • With advances in technology, digital data about consumers is being generated and collected by business and government at an unprecedented rate. Data generated by use of social media platforms, apps and loyalty programs which track habits and preferences, and data generated by the ‘Internet of Things’ (including via internet enabled household appliances, vehicles, wearable devices and utility ‘smart meters’) is growing exponentially.
  • At the same time, digital data is becoming increasingly valuable as new low-cost analytic tools provide the capability to better match up sources of data, identify patterns within that data and translate the data into useful information to inform decision making.
  • If properly harnessed, such data has the potential to unlock tremendous community benefits, facilitating medical and scientific research break-throughs and enabling government and businesses to develop policy, infrastructure and product offerings which are customised to consumer needs and which are delivered more efficiently and cost effectively.
  • Unfortunately, these opportunities are currently being stifled in Australia by a web of outdated and unnecessarily restrictive laws, red tape and a culture of risk aversion, which prevent data from being used or shared beyond the purposes for which it was originally collected. Without rapid change, Australia’s data assets will remain underutilised and we will increasingly lag behind other developed countries in productivity and innovation.

What changes are proposed?

There are two key aspects to the Productivity Commission’s proposed reforms:

1 –  New infrastructure to facilitate data sharing

  • The introduction of new legislation – the Data Sharing and Release Act – to override much existing legislation and sit alongside other legislation.
  • The establishment of a new Office of the National Data Custodian (NDC) to administer and oversee the regime. Significantly, the NDC would have:
    • the power to nominate certain datasets as “National Interest Datasets”, enabling the data to be linked, shared and released where it is in the public interest to do so; and
    • the responsibility for accrediting certain independent public sector agencies as Accredited Release Authorities (ARAs) for different industry sectors.
  • In turn, ARAs would be tasked with:
    • determining whether a dataset they are responsible for should be shared or released;
    • assisting data holders to improve the quality and organisation of datasets to be released; and
    • approving certain “trusted users” (i.e. individuals or entities who satisfy data governance requirements and have signed appropriate undertakings) to access sensitive data.

2 –  A Comprehensive Right for Consumers

To gain a ‘social licence’ for the wider sharing and use of consumer data, the Productivity Commission argues that consumers should be able to share in the value derived from their data. It proposes that consumers (including small and medium sized businesses) be afforded a new ‘Comprehensive Right’, which would include:

  • Rights to access and correct data – these rights would extend existing Privacy Law rights, applying to a much wider range of data and including a right to obtain data in machine-readable form.
  • Right to trade data – consumers could instruct that their data be provided to nominated third parties, enabling them to secure better deals. Some examples:

Consumers could obtain better health insurance deals based on data provided by a Fitbit device.

Data from energy smart meters could be provided to competing energy suppliers to secure customised plans, or to solar panel suppliers to facilitate a bespoke solar solution.

  • Right to know who data has been shared with – consumers would have greater insight into use of their data, with data collectors being required to publish a list of all third parties to whom consumer data has been disclosed in the last 12 months.

Consumers may be charged a nominal fee for exercising the rights outlined above, provided that the fee is transparent (e.g. on the data holder’s web page) and reviewable by the ACCC.

The Comprehensive Right would apply to “all data that a competing or complementary service provider would need or reasonably expect to obtain in order to provide a competing offering”, with the precise scope to be agreed by industry participants and ARAs, and subject to approval by the ACCC. However, to preserve commercial incentives to add value to data, the Comprehensive Right would not apply to “imputed data” – being data that has been created by a data holder through the application of insights or analysis (for example, a health insurer’s assessment of a consumer’s health risk based on their purchasing habits).

When will the changes take place?

The Commission recommends an ambitious timeframe for reform implementation, with some initiatives to be commenced this year and the DSR Act to be in effect by December 2018. We recommend that data holders familiarise themselves with the Commission’s recommendations to enable them to make informed contributions to public consultations on the implementation process.

If you have any queries or would like further information regarding this article, please contact:

Simon McDonald
Partner
M: 0402 843 198
E: smcdonald@pageseager.com.au

Kimberley Lloyd
Special Counsel
M: 0414 341 471
E: klloyd@pageseager.com.au

Published: 16 June 2017

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