The Institute will be an independent not-for-profit organisation founded to research the ethics of artificial intelligence (AI) and develop ethical AI-based systems.
The focus for the Institute will be to create a 'world where all systems behave ethically'.
This will be done not just through research, but also through practice, policy advocacy, public awareness and training people in ethical development and use of AI.
The Institute will use research findings to create open source ethical AI tools that can be adopted and adapted by business and government.
Leading the Institute as CEO will be Bill Simpson-Young, following a transition from Director of Engineering and Design at CSIRO’s Data61.
He will lead in partnership with Dr Tiberio Caetano, Co-founder and Chief Scientist at Ambiata, a wholly owned subsidiary of IAG, who will direct the Institute's research into ethical AI as Chief Scientist.
Mr Simpson-Young said artificial intelligence today poses a challenge and an opportunity to discover which design choices for AI will lead to positive outcomes for people and society.
"Artificial Intelligence learns from data and data reflects the past – at the Gradient Institute we want the future to be better than the past," Mr Simpson-Young said.
"By embedding ethics into AI, we believe we will be able to choose ways to avoid the mistakes of the past by creating better outcomes through ethically-aware machine learning.
"For example, in recruitment when automated systems use historical data to guide decision making they can bias against subgroups who have historically been underrepresented in certain occupations.
"By embedding ethics in the creation of AI we can mitigate these biases which are evident today in industries like retail, telecommunications and financial services."
IAG Chief Customer Officer Julie Batchsaid being lead partner of Gradient Institute reflected IAG's focus on embracing innovation to create better customer experiences.
"Leaning into the challenges and opportunities of AI requires considered thinking about fairness and equality," Ms Batch said.
"No government or business can do this alone.
"We need to work together across sector and we need to do this with urgency, which is why we're proud to be founding partners with two of Australia's strongest science and academic leaders - Data61 and the University of Sydney.
"Ethical AI will improve trust in how automated machines make decisions.
"IAG hopes to be an early adopter of the techniques and tools the Institute develops so we can provide better experiences for our customers.
"Establishing the Gradient Institute as an independent not-for-profit organisation is critical in bringing its purpose to life and we hope that other organisations will join us to contribute to this research."
CSIRO's Data61 CEO Adrian Turner said Gradient Institute was an important step, as AI and machine learning would impact society and every sector of Australia's economy.
"As AI becomes more widely adopted, it's critical to ensure technologies are developed with ethical considerations in mind," Mr Turner said.
"We need to get this right as a country, to reap the benefits of AI from productivity gains to new-to-the-world value.
"We are pleased to be a founding partner of Gradient Institute, which combines some of the country's greatest minds in AI.
"This is a great example of Data61's national network model, operating with porous organisational boundaries to help bring coherence and accelerated, national-scale outcomes for data-related research challenges, for the benefit of Australia."
The University of Sydney Deputy Vice Chancellor Professor Duncan Ivison said there was a need to build an ethical framework for AI that combined deep knowledge of the technological possibilities and limits of artificial intelligence, but also ensured it was primarily shaped by human needs and interests.
"Research intensive universities like the University of Sydney – who are able to draw on their deep intellectual resources across the sciences, engineering, humanities and social sciences – are well placed to work collaboratively with government, industry and community groups to achieve this approach," Professor Ivison said.
"We need to collaborate, critique each other and engage the community to tackle what is emerging as one of the great ethical challenges of our time."
For more information visit Gradient Institute.