The Productivity Commission has abandoned a proposal to allow tech companies to mine copyrighted material to train artificial intelligence models, following a sharp reaction from the creative industries.
Instead, the government’s top economic advisory body recommended the government wait three years before deciding whether to establish an independent review of Australian copyright settings and the impact of disruptive new technology.
The Australian Recording Industry Association welcomed the Commission’s final report on harnessing the digital economy.
Annabelle Heard, Chief Executive Officer of Aria, said, “These findings reinforce what Australian creators and rights holders have consistently argued for in 2025: our copyright system is strong, fit for purpose, and should be allowed to do its job to protect the value of Australian culture”.
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“This report clearly confirms that Australia does not need new copyright carve-outs or regulatory shortcuts to enable artificial intelligence.”
In its interim report on the digital economy, the Commission floated the idea of introducing a “fair dealing” exemption to copyright rules, which would allow AI companies to mine data and text to develop their own large language models.
It argued that Australian data was already being used by foreign companies, and the use of local content would aid the development of Australia-specific AI models that would deliver productivity benefits for the economy.
Scott Farquhar, co-founder of software giant Atlassian and chair of the Tech Council of Australia, has claimed that “fixing” existing restrictions could “unlock billions of dollars of foreign investment into Australia”.
The creative industries’ furious reaction to the Commission’s idea also included music industry bodies, who said it would “legalise digital piracy under the guise of productivity”.
The attorney general, Michel Rowland, essentially killed the proposal in October after saying the government would not make any such exemptions to data mining rules.
Justifying its wait-and-see approach, the Commission cited uncertainty in three key areas, which “makes it difficult to formulate an effective policy response”.
These include how AI-related copyright exemptions are working overseas; what impact AI training was having on incentives to create new Australian content; And whether voluntary licensing for open web content would appear without government interference.
The Commission’s report on harnessing data and digital technology was one of five inquiries launched by the Treasurer, Jim Chalmers, to provide a practical plan for economic recovery.
Commission chair Daniel Wood said national productivity had stagnated since 2016.
According to the Commission, returning productivity growth to its historical average would mean that full-time workers’ incomes would be at least $14,000 a year better off by 2035.
“We need to increase productivity to ensure that future generations can live better and more prosperous lives than the generations that came before them,” Wood said.
In addition to advice on maximizing the opportunities of the digital economy “Five Pillars” Report It included 47 recommendations that included providing quality care more efficiently, building a skilled and adaptable workforce, creating a more dynamic economy, and achieving net zero at the lowest cost.
The Commission changed its controversial proposal for corporate tax reform, and included alternative ways to reduce company tax, which would have cost the budget billions in lost revenue but would have boosted investment and economic growth.
In a statement, Chalmers welcomed the recommendations, even as he said the government “cannot afford to keep up with everything”.
“We will take the time to consider them appropriately in the next budget and beyond.”
