In a significant policy reversal that underscores the rising political and cultural sensitivities around artificial intelligence and intellectual property, Australia’s Productivity Commission has abandoned a controversial proposal that would have allowed tech companies to use Australian copyrighted material to train AI systems without permission or payment. The proposal — aimed at modernising copyright law to spur AI development — faced a fierce backlash from creators and rights-holders and has now been shelved in favour of a more cautious, wait-and-see approach.
The Proposal and Why It Sparked Outrage
Earlier in 2025, the Productivity Commission floated the idea of introducing a “fair dealing” copyright exception that would allow artificial intelligence developers to mine copyrighted books, music, films and other creative works as training data without securing licences from rights owners. Proponents argued it could give Australia a competitive edge in AI research and help develop locally tailored AI models rather than relying on overseas datasets.
Tech industry figures — including leaders in software and digital innovation — had suggested that reforming these restrictions could attract billions in foreign investment and help unlock economic value from data that is already being generated in Australia.
But critics were swift and vociferous. Representatives from the Australian Recording Industry Association, authors’ groups, screenwriters, musicians and other creative professionals warned the plan would amount to licensing creators’ works to tech giants without compensation. Some described the proposal as legitimising “digital piracy” under the guise of technological progress, threatening the incentives that sustain Australia’s cultural and creative sectors.
Political and Industry Backlash
The backlash spanned creative industries and aligned both public sentiment and political will against the exemption. Leading Australian creators and industry bodies mounted an advocacy campaign throughout 2025, asserting that allowing unfettered use of copyrighted material would undermine artists’ rights and economic livelihoods. Groups such as the Australian Society of Authors pressed for stronger licensing frameworks and insisted that any shift to copyright law preserve creators’ ability to negotiate compensation for the use of their works.
In October 2025, Attorney-General Michelle Rowland publicly shut down the idea of granting such a copyright exemption, aligning the government with creators and signalling that lawmakers would not countenance the technical carve-out proposed by the Productivity Commission.
Government Response and a Shift in Strategy
Following intense industry and public pressure, the Productivity Commission’s final report, released in December 2025, withdrew the fair-dealing exemption from its recommendations. Instead, the body recommended deferring any potential changes to Australia’s copyright framework for at least three years, allowing more time to observe how other countries’ AI and copyright policies evolve and whether market-led licensing solutions emerge organically.
The final report emphasised that Australia’s existing copyright system is robust and sufficient to protect creative output without introducing special exemptions for AI, while still encouraging innovation through other, non-legal means.
Creators Celebrate, Tech Sector Reflects
The decision was widely welcomed by creators. Annabelle Herd, CEO of the Australian Recording Industry Association, said the outcome reinforced the long-standing argument that Australia’s copyright laws are fit for purpose and should protect the value of local culture without new loopholes for generative AI.
Authors and screenwriters expressed relief that their creative rights would remain intact, and many have called for subsequent reforms to ensure creators are compensated when AI companies seek to license their work. The Australian Society of Authors has urged the government and industry to develop a mandatory code of conduct requiring transparency and fair payment for AI training data — a debate that may shape future policy discussions.
Meanwhile, some in the tech sector acknowledged the value of Australian content and intellectual property but conceded that broad legal carve-outs were too politically divisive to pursue at this stage. The focus for many companies has now shifted toward licensing negotiations, partnerships, and voluntary frameworks that respect creators’ rights while allowing access to data for specific applications.
Implications for AI and Intellectual Property Policy
Australia’s retreat from embracing a copyright exception for AI training positions the country differently from some other jurisdictions that are still exploring text and data mining exemptions and related reforms. It reflects a broader, global tension between innovation imperatives and intellectual property protection — with advocates on both sides warning of economic or cultural harm if their interests are sidelined.
By choosing to delay action rather than legislate now, Australian authorities are signalling caution and deference to creators’ rights, while leaving the door open to reconsideration in the future as global practices and legal frameworks around AI and copyright continue to crystallise.
Next Steps: Licensing and Regulation on the Horizon
With the exemption proposal shelved, attention is turning to mechanisms that could allow AI development without undermining creative industries — including enhanced licensing regimes, transparency requirements, and possibly new regulatory pathways that ensure artists are fairly compensated when their works are used in AI training. The government’s decision also dovetails with broader discussions around AI regulation and copyright policy present in other countries, suggesting Australia will continue navigating these issues in an international context.
The debate over how to balance AI innovation with creator protection is far from over, but for now, Australian copyrighted material will remain protected from unfettered use by AI systems — a victory for creators and a significant moment in the global conversation on AI, innovation and cultural rights.
7 years in the field, from local radio to digital newsrooms. Loves chasing the stories that matter to everyday Aussies – whether it’s climate, cost of living or the next big thing in tech.
