Australia has been working toward comprehensive digital identity infrastructure for over a decade. We’re not there yet, but the progress made in 2024-2025 represents more tangible advancement than we’ve seen in previous years.

The conversation has shifted from whether we need digital identity infrastructure to how we implement it in a way that’s both secure and privacy-respecting. That’s progress, even if the implementation remains frustratingly fragmented.

Where Things Stand

myGovID has become the de facto digital identity for interacting with federal government services. Most Australians who deal with Centrelink, the ATO, or other federal agencies now use it. It works reasonably well, though the onboarding process remains clunky for people without straightforward identity documents.

The states have their own digital identity systems, with varying levels of maturity. NSW’s Service NSW app has gained genuine traction. Victoria’s system is improving. The smaller states are at various stages of implementation.

The lack of interoperability between federal and state systems remains a significant issue. You need different credentials for different government services, which defeats much of the purpose of digital identity.

The Private Sector Gap

Where digital identity in Australia really lags is in private sector adoption. Banks, telecommunications companies, and other private organisations still rely primarily on their own verification processes.

There are good reasons for this. Private companies are cautious about relying on government-operated infrastructure. They have existing systems that work. The liability questions around accepting government-issued digital identities aren’t fully resolved.

But this fragmentation means Australians still go through separate identity verification processes for banking, telecommunications, rental applications, and numerous other services. The promise of “verify once, use everywhere” remains largely unrealised.

Some private sector companies are building their own digital wallet solutions, but without broad interoperability or common standards, these risk becoming yet another set of proprietary systems rather than true digital identity infrastructure.

The Digital Wallet Question

The concept of digital wallets has gained momentum globally, with several countries implementing or piloting systems that allow citizens to hold verifiable credentials on their smartphones. Australia is watching and learning from these implementations.

The challenge is balancing convenience with privacy and security. A wallet controlled by a single government agency raises centralisation concerns. A purely decentralised approach raises questions about verification and recovery when credentials are lost.

The Australian approach seems to be evolving toward a federated model, where multiple organisations can issue verifiable credentials that can be held in wallets, without any single party having complete visibility. This is theoretically sound but practically complex.

What’s Actually Working

Despite the fragmentation, some things are working. The ability to access most federal government services digitally has improved significantly. myGovID authentication is more reliable than it was two years ago. The user experience, while not perfect, has improved.

At the state level, the ability to access digital driver’s licenses in NSW and other states represents real progress. It’s a small thing, but it demonstrates that government-issued digital credentials can work in practice.

Some private sector partnerships are emerging. A few banks are beginning to explore accepting government digital identity for customer onboarding. It’s early stages, but the conversations are happening.

The Privacy Debate

Privacy concerns around digital identity remain significant and legitimate. Australians are rightly cautious about government or private companies having comprehensive visibility into their activities.

The challenge is building systems that provide the benefits of digital identity without creating surveillance infrastructure. This requires careful technical architecture, strong governance frameworks, and ongoing public oversight.

The debate around voluntary versus mandatory digital identity continues. Most systems in Australia remain voluntary, but the reality is that opting out increasingly means being unable to access services efficiently.

Technical Challenges

Beyond policy and governance questions, there are genuine technical challenges. How do you ensure digital identity systems remain secure against evolving threats? How do you handle credential recovery when someone loses their device? How do you make systems accessible to people with varying levels of digital literacy?

The user experience challenges are significant. For digital identity to achieve broad adoption, it needs to be easier than existing alternatives. For many services, it’s currently harder.

Interoperability standards are improving but remain incomplete. Different systems use different technical approaches, making integration difficult.

International Context

Australia’s progress on digital identity sits somewhere in the middle internationally. We’re ahead of many countries but behind the leaders. Estonia, Singapore, and several Nordic countries have more mature digital identity infrastructure.

The European Union’s digital identity wallet initiative is being watched closely. If successful, it could provide a model for Australia. If it struggles with the complexity of multiple jurisdictions and privacy requirements, that’s also instructive.

The UK’s troubled digital identity programme offers lessons about what not to do. Large, centralised programmes tend to struggle. Incremental, federated approaches tend to work better.

What Happens Next

Over the next couple of years, we’ll likely see continued incremental progress. Federal and state government systems will improve and potentially begin to interoperate. Private sector adoption will grow slowly as liability questions get resolved and value propositions become clearer.

The pressure for better digital identity infrastructure will come from multiple directions. Businesses want easier customer onboarding. Governments want better service delivery and reduced fraud. Citizens want convenience and privacy.

The challenge is building systems that serve all these interests. That requires technical capability, policy coherence, and sustained political will. Australia has made progress on all three, but significant work remains.

For technology companies working in identity and verification, the Australian market presents opportunities but also complexity. The fragmented landscape means there’s room for platforms that can bridge different systems. But it also means navigating multiple regulatory frameworks and technical standards.

The vision of comprehensive digital identity infrastructure in Australia is clearer than it was five years ago. We know roughly what needs to be built and how. The question is execution - building systems that actually work, gaining public trust, and achieving the interoperability that makes digital identity genuinely useful.

We’re getting there. Slowly. But the direction is right, and the progress is real, even if it’s less dramatic than what was promised in earlier years. For a capability that will underpin significant aspects of digital life, taking time to get it right is probably appropriate.