The government will spend almost half a million dollars researching the risks of artificial intelligence and the internet of things.

Two reports will be produced by the Australian Council of Learned Academies (ACOLA) to look at how Australia can maximise the benefits of the new technologies, but avoid negative impact on the economy and individuals.

General Manger of ACOLA, Dr Angus Henderson, said a lot of countries had been quicker off the mark with artificial intelligence, including near neighbours such as Singapore. He said Australia had plenty of AI and Internet of Things capability in the shape of companies such as Siemens, GE and CISCO which had big operations in the here.

The machine is in charge. How safe is the human operator? A new report will investigate. Cole Bennetts

Companies involved in pharmaceuticals such as MiniFab and StarPharma stood to make huge gains from the number crunching power of AI.

But there were a wide range of hazards. The Human Rights Commission was concerned about privacy breaches; the department of Prime Minister and Cabinet was worried about discrimination. Most agencies wanted algorithm-using technology that could be prevented from coming up with "too many false positives" in decision making.