Australia Abandons AI Copyright Proposal After Creative Industries Backlash

Australia's Productivity Commission has scrapped a controversial proposal to allow technology companies to use copyrighted material for training artificial intelligence models, bowing to strong opposition from the creative industries.

The decision, detailed in the commission's final report on harnessing the digital economy released Friday, comes after an interim suggestion that a "fair dealing" exemption to copyright laws could boost AI development using local data. Instead, the advisory body recommended that the government delay any independent review of copyright settings and AI's impact for three years.

The proposal had argued that Australian content was already being accessed by foreign AI firms and that local data could foster Australia-specific models, potentially driving economic productivity. However, creative sectors, including the Australian Recording Industry Association (ARIA), decried it as a form of legalized digital piracy that would undermine incentives for content creation.

ARIA Chief Executive Officer Annabelle Herd praised the final report, stating it affirms Australia's copyright system as "robust and fit for purpose" without needing exemptions for AI. "This report clearly affirms that Australia does not need new copyright carve-outs or regulatory shortcuts to enable artificial intelligence," she said.

Attorney General Michelle Rowland effectively ended the exemption idea in October, announcing the government would not pursue changes to data mining rules. The commission's reversal cites uncertainties in global AI copyright practices, the effects on local content incentives and the potential for voluntary licensing agreements without intervention.

Broader Economic Context

The report forms part of five inquiries commissioned by Treasurer Jim Chalmers to outline economic reforms under the banner of "five pillars." These cover efficient care delivery, workforce skills, economic dynamism, net zero goals and digital opportunities. The digital economy report includes 47 recommendations across these areas.

Productivity Commission Chair Danielle Wood highlighted stagnant national productivity since 2016. Restoring growth to historical averages could add at least $14,000 annually to full-time workers' incomes by 2035, she said. "We need to get productivity moving to ensure future generations can live better and more prosperous lives," Wood added.

Other reforms tweaked include corporate tax adjustments aimed at boosting investment, though alternatives could reduce budget revenue by billions while spurring growth.

Chalmers welcomed the recommendations in a statement, noting the government would review them ahead of the next budget. "We'll take the time to consider them properly," he said, acknowledging not all may be adopted.

Industry and Policy Reactions

Tech advocates, such as Atlassian co-founder Scott Farquhar, had supported easing restrictions, claiming it could attract billions in foreign investment. Farquhar, also chair of the Tech Council of Australia, argued current rules hinder innovation.

Creative groups remained vigilant. Music industry bodies warned the initial proposal would erode cultural value, with one labeling it a productivity guise for piracy.

The commission's wait-and-see stance reflects caution amid evolving global standards. Overseas experiments with AI exemptions are under scrutiny, as is AI's influence on Australian content production.

This development underscores tensions between technological advancement and intellectual property protection in Australia, a nation seeking to balance innovation with its vibrant arts sector. The delay allows time for evidence gathering on voluntary deals and international outcomes before any policy shifts.

The full report emphasizes digital technology's role in economic revival, urging investments in skills and infrastructure to capture AI benefits without compromising creators' rights.