The Productivity Commission has abandoned a proposal to allow tech companies to mine copyrighted material to train artificial intelligence models, after a fierce backlash 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 the disruptive new technology.
The Australian Recording Industry Association welcomed the commission’s final report on harnessing the digital economy.
Aria’s chief executive officer, Annabelle Herd, said “these findings reinforce what Australian creators and rights holders have consistently argued across 2025: our copyright system is robust, fit for purpose, and should be allowed to do its job in protecting the value of Australian culture”.
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“This report clearly affirms 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 granting a “fair dealing” exemption to copyright rules that would allow AI companies to mine data and text to develop their large language models.
It argued that Australian data was already being used by foreign companies, and that using local content would assist in the development of Australia-specific AI models that would deliver productivity benefits for the economy.
Scott Farquhar, the co-founder of software giant Atlassian and the chair of the Tech Council of Australia, has claimed that “fixing” the existing restrictions could “unlock billions of dollars of foreign investment into Australia”.
The furious response from creative industries to the commission’s idea included music industry bodies saying it would “legitimise digital piracy under guise of productivity”.
The attorney general, Michelle Rowland, essentially killed the proposal in October, after saying the government would not grant any such exemption to data mining rules.
Justifying its wait-and-see approach, the commission cited uncertainty in three key areas that “makes it difficult to design an effective policy response”.
These included how AI-related copyright exemptions were working overseas; what effect AI training was having on incentives to create new Australia content; and whether voluntary licensing for open web material would appear without government intervention.
The commission’s report on harnessing data and digital technology was one of five inquiries commissioned by the treasurer, Jim Chalmers, which were supposed to deliver a practical plan for economic reform.
Danielle Wood, the commission’s chair, said national productivity had stalled since 2016.
Lifting productivity growth back to its historic average would mean full-time workers would be at least $14,000 a year better off by 2035, according to the commission.
“We need to get productivity moving to ensure future generations can live better and more prosperous lives than those that came before them,” Wood said.
In addition to advice on maximising the opportunities of the digital economy, the “five pillars” reports included 47 recommendations that spanned delivering quality care more efficiently, building a skilled and adaptable workforce, creating a more dynamic economy, and achieving net zero at least cost.
The commission tweaked its controversial proposal for corporate tax reform, and included alternative approaches to lower company tax that cost the budget billions in lost revenue, but which boosted investment and economic growth.
In a statement, Chalmers welcomed the recommendations, even as he flagged the government “might not be able to run with everything”.
“We’ll take the time to consider them properly in the lead up to the next budget and beyond.”
