Councils were told to have an AI framework by 30 June 2026. What a council that missed it does now

On 28 January 2026 the Audit Office of NSW published Local Government 2025. Its AI findings were blunt: "Only 11% currently have a strategy for AI adoption." "Fewer than half of the councils have implemented formal AI policies." And, of the councils that are using AI, "most have yet to fully integrate the specific and unique risks posed by AI into their existing governance frameworks, such as risk management, procurement, IT, and monitoring and reporting systems."

The report also recorded the gap above councils: "The OLG has not established a mandatory framework or minimum requirements for councils in relation to the adoption and responsible use of AI."

What the report asked for, by 30 June 2026

Two recommendations carried the same date. Recommendation 1: "By 30 June 2026, the Department of Planning, Housing and Infrastructure (the Department), should work with relevant State agencies to: set a mandatory framework to guide councils in the responsible implementation of AI, drawing on existing frameworks established by other levels of government." Recommendation 2: "By 30 June 2026, councils should review their readiness for increased use of AI by: reviewing and ensuring that fit-for-purpose governance arrangements are in place before deploying AI; considering the benefits of developing an AI strategy that can be integrated into a broader organisational plan to ensure that AI initiatives are coordinated and aligned with councils' strategic priorities and objectives."

The report page carries no formal response from the Department or the Office of Local Government to those recommendations, so we do not quote one. The date has passed. For a council on the wrong side of it, the useful question is not what was missed but what order to do things in now.

The sequence

First, inventory what is already running. The report's point is that AI use is ahead of AI governance, and no policy can be written honestly for tools nobody has listed. That means the assistants inside the productivity suite, the models inside planning, rates and customer-service systems, and anything staff adopted on their own.

Second, adopt a policy aligned to the frameworks the recommendation points at. Councils are not among the entities listed in NSW circular DCS-2026-02, but the NSW AI Assessment Framework it mandates for agencies is exactly the kind of "existing framework established by other levels of government" the Audit Office named, and the Commonwealth's Voluntary AI Safety Standard with its ten guardrails is the other. Aligning to both now means a council is not rewriting its policy when a mandatory local-government framework lands.

Third, assess the high-risk uses first: anything that informs a decision about a resident, a rate, a development application or an enforcement action. Fourth, keep evidence of all of it, because the next audit will ask not whether a policy exists but whether the council can show it was applied.

Where the products fit

AIG Sentinel does that sequence as software rather than as a project. It discovers the AI in use, builds the register entry for each use case, assesses it against the NSW AIAF pack (the one framework pack built today) and records each step on a tamper-evident evidence chain, so the fourth step is a by-product of the first three rather than a separate exercise. It is demo-available now, and it is built to align with the AIAF and the ten guardrails, not certified against them; neither issues a certificate.

Where a council has no roadmap at all, Orbit Roadmaps comes first. The Audit Office's second recommendation asks councils to consider an AI strategy integrated into a broader organisational plan, and Orbit turns a short brief into a phased, costed roadmap with a risk profile against each initiative, so governance has something to govern and the register starts with the use cases the council actually intends to run.

See AIG Sentinel and Orbit Roadmaps, or contact us to start with the inventory.

Sources

1. Local Government 2025. Audit Office of New South Wales. Published 28 January 2026. audit.nsw.gov.au
2. DCS-2026-02 Use of Artificial Intelligence by NSW Government Agencies. Department of Customer Service, NSW Government. Issued 30 July 2026, updated 1 September 2026. arp.nsw.gov.au
3. NSW Artificial Intelligence Assessment Framework. Digital NSW, Department of Customer Service. Accessed 5 October 2026. digital.nsw.gov.au
4. Voluntary AI Safety Standard (the 10 guardrails). National Artificial Intelligence Centre, Department of Industry, Science and Resources. Published 5 September 2024, updated 2 December 2025. industry.gov.au