The Australian government's top economic advisory body has backed down from a contentious proposal that would have allowed artificial intelligence companies to freely use copyrighted material to train their models.
Proposal Abandoned Amid Fierce Opposition
In its final report on harnessing the digital economy, the Productivity Commission has formally abandoned its interim suggestion for a new "fair dealing" exemption to copyright law. This exemption would have permitted tech firms to mine data, text, and other creative works to develop large language models (LLMs). The proposal faced a furious and sustained backlash from Australia's creative sectors.
Music industry bodies were among the most vocal critics, labelling the idea a move that would "legitimise digital piracy under guise of productivity". The proposal was effectively killed in October when Attorney General Michelle Rowland stated the government would not grant any such data mining exemption.
A "Wait-and-See" Approach Recommended
Instead of immediate reform, the commission now recommends the government wait three years before deciding whether to launch an independent review of Australian copyright settings and the impact of AI technology. The commission cited significant uncertainty in three key areas that make designing effective policy difficult now.
These areas include: how similar copyright exemptions are working in other countries; what effect AI training is having on incentives to create new Australian content; and whether voluntary licensing schemes for open web material will develop without government intervention.
Arguments For and Against the Exemption
The original argument for the exemption centred on economic productivity and local AI development. The commission had previously contended that Australian data is already being used by foreign AI companies. It argued that facilitating the use of local content would help build Australia-specific AI models, which could deliver greater benefits for the domestic economy.
Scott Farquhar, co-founder of Atlassian and chair of the Tech Council of Australia, supported this view, claiming that "fixing" copyright restrictions could "unlock billions of dollars of foreign investment into Australia".
However, creative industry leaders strongly welcomed the commission's U-turn. Annabelle Herd, CEO of the Australian Recording Industry Association (ARIA), said the findings reinforce that Australia's copyright system is "robust, fit for purpose, and should be allowed to do its job in protecting the value of Australian culture". She added, "This report clearly affirms that Australia does not need new copyright carve-outs or regulatory shortcuts to enable artificial intelligence."
Broader Context of Economic Reform
The report on data and digital technology is one of five "pillars" inquiries commissioned by Treasurer Jim Chalmers, aimed at delivering a practical plan for economic reform. Commission Chair Danielle Wood highlighted that national productivity growth has stalled since 2016. She stated that lifting productivity back to its historic average would mean full-time workers could be at least $14,000 a year better off by 2035.
In a statement, Treasurer Chalmers welcomed the suite of recommendations across the five reports but flagged that the government "might not be able to run with everything". He indicated the recommendations would be considered in the lead-up to the next budget and beyond.
