Digital disruption has the potential to threaten 40 per cent of jobs over the next 10 to 15 years as automation and machine learning shake up the economy, according to a Productivity Commission report out today.

Key points: Machine intelligence and automation will gradually change economies

Machine intelligence and automation will gradually change economies Fears about humans being replaced by machines are overstated, according to the productivity commission

Fears about humans being replaced by machines are overstated, according to the productivity commission 3D printers are expected to have an impact

In research entitled Digital Disruption: What do governments need to do?, the Commission warned that governments and regulators need to prepare for changing times as "disruption" moves beyond Uber and Air BnB.

Productivity Commission chairman Peter Harris said developing disruptive technologies of machine intelligence and automation will gradually change economies.

"There's little doubt that in some sectors there will be dislocation of labour and dislocation of capital.

"It's not just a cost to employees, it will be a cost to certain businesses as well," Mr Harris told The World Today.

"Things like 3D printing are going to have an impact. Right now it's more of a niche product but over time, you're going to see this applied to manufacturing.

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However, Mr Harris said despite a new world of hyper-connected technology and big data, some of the early fears about humans being replaced by machines were overstated.

"The majority of jobs in our economies today are services kind of jobs and that requires some form of human interface. So simply saying that we have automated or can automate something doesn't mean to say it will be readily acceptable to consumers," Mr Harris said.

"You can't necessarily imagine that a doctor will be replaced by a robot to whom you will speak and get an analysis."

While smart technology will inevitably replace humans, especially in manufacturing, the Productivity Commission said Australia's social safety net, including a strong Medicare, could be critical.

"We do have an important social safety net and maintaining that will be essential for the purposes of people who will have their lives disrupted as a consequence of this," Mr Harris said.

The era of digital disruption will also be a challenge for governments and regulators, but the report recommends that new companies and businesses should not be given a heavy handed approach.

Mr Harris said the world isn't 'quite the Jetsons' yet. ( cinemafique.wordpress.com )

Peter Harris warned against regulatory models that use inflexible "black letter law" - law that is based on the time the legislation is written.

"Giving regulators the power to offer temporary periods of holiday from a regulatory impact to allow an idea to unfold while ensuring consumers are protected - that sort of initiative and flexible thinking is tremendously important for governments if they're going to allow creative ideas to unfold and to deliver benefits not just for consumers but for employees and investors in the future," Mr Harris said.

However Mr Harris takes a wry view on how disruption will change lives, reflecting on the 1960s cartoon series The Jetsons.

"No, not quite Jetsons yet although we do have our video phones," Mr Harris said.

"George communicating with Jane is now possible today. But rocket jetpacks - I'm afraid I'm still waiting for mine to be delivered."

Follow Peter Ryan on Twitter @peter_f_ryan and on his Main Street blog.