Recently appointed Australian Statistician David Gruen said the government's Data Availability and Transparency Bill would give agencies and departments complete discretion over sharing information with other government organisations and external groups such as academics and think-tanks.

"Under the proposed legislation, there is no authority to compel custodians of public sector data (that is, agencies that hold and are responsible for their slices of public-sector data) to share data," Dr Gruen said in a speech to the Institute of Public Administration Australia on Wednesday.

"Further, if data custodians decide not to share data, this cannot be overturned by the National Data Commissioner."

Work on the draft legislation began following the release of a Productivity Commission report in 2017 that recommended the development of a framework for agencies to share and release data.

The government is increasingly combining personal information from different agencies such as the Taxation Office and the Australian Bureau of Statistics to form vast datasets that can provide powerful insights into how the government and broader society operates.

But public trust has been dented by incidents including the robodebt debacle in which cross-linked data was used to raise incorrect debts against welfare recipients.

In his speech, the chief statistician acknowledged there was a balance to be struck between facilitating beneficial research while providing adequate safeguards for data.

Dr Gruen said there was much to be gained by allowing researchers both within and outside government to have access to government data.

Sharing data with researchers had resulted in significant improvements in non-government school funding formula, the identification of five drugs associated with heart failure and improved methods to assess the impact of the COVID-19 virus outbreak on Australian businesses that are reliant on imports, he said.

"There is enormous public value to be unlocked by making data as available as possible to trusted users," Dr Gruen said. "But to do so comes with a crucial caveat. That caveat is that a high standard of appropriate safeguards must be in place."

Dr Gruen said that maintaining the public's trust in the government's use of data was "critical".

He said the Office of the National Data Commissioner had worked with the ABS to ensure principles around the safe sharing of information were embedded in the bill.

But Professor Greg Austin of the University of New South Wales is among those to raise concerns about data privacy standards.

Professor Austin considers the Australian Privacy Principles inadequate and has condemned a "growing bureaucratic mess" in the administration of data privacy.