Productivity Commission recommends AI copyright exception

The Australian Government Productivity Commission (Commission) released an interim report on 5 August 2025 titled ‘harnessing data and digital technology’ (Report).  The Report  was in response to Treasurer Jim Chalmers’ request for the Commission to identify priority reforms related to “the Government’s productivity growth agenda“.^[1]  The Report stated that the Government’s focus should be on harnessing the productivity benefits of data and digital technology.^[2]  This article will summarise the key principles and recommendations produced by the Commission as they relate to the adoption of AI.

Background and purpose of the Commission’s Report

The Report produced by the Commission provides information and recommendations on how the Australian Government can harness the economic opportunity that exists in data and digital technology.^[3]  It proposes recommendations in the areas of:

• artificial intelligence (AI);
• data access;
• privacy regulation; and
• digital financial reporting.

The Report also proposes a possible exception surrounding the ‘fair dealing’ of text and data mining (TDM Exception), particularly in relation to copyright subsisting in works used to train AI models.

Proposed recommendations

As requested, several draft recommendations were proposed by the Commission in response to the pillars requested by Treasurer, Jim Chalmers.  These pillars are:

1. “Creating a more dynamic and resilient economy;
2. Building a skilled and adaptable workforce;
3. Harnessing data and digital technology;
4. Delivering quality care more efficiently; and
5. Investing in cheaper, cleaner energy and the net zero transformation.”^[4]

The Commission’s proposals in this Report relate to harnessing data and digital technology.  The purpose of the proposed reforms is to support enhanced data useability, improved digital technology, and reduced regulatory compliance costs.^[5]  In turn, it is expected that this will lead to higher productivity.^[6]

Artificial intelligence recommendations

The Report emphasises the importance of utilising AI to improve productivity.  It put forward the following draft recommendations related to AI:

• Draft recommendation 1.1: “Productivity growth from AI will be built on existing legal foundations.  Gap analyses of current rules need to be expanded and completed”.^[7]
• Draft recommendation 1.2: “AI-specific regulation should be a last resort“.^[8]
• Draft recommendation 1.3: “Pause steps to implement mandatory guardrails for high-risk AI”.^[9]

Data access

In relation to data access, the Commission put forward draft recommendation 2.1.^[10]  This involves establishing lower-cost and more flexible regulatory pathways to expand basic data access for individuals and businesses.^[11]  The Commission proposes that industry-led data access codes or standardised data transfers be implemented to facilitate this.^[12]

Privacy regulation

The Commission proposed the following draft recommendations to ensure privacy regulation:

• Draft recommendation 3.1: “An alternative compliance pathway for privacy”.^[13]
• Draft recommendation 3.2: “Do not implement a right to erasure”.^[14]

Digital financial reporting

The Commission proposed under draft recommendation 4.1 that digital financial reporting is made default and mandatory for disclosing entities.^[15] This would involve making amendments to the the Corporations Act 2001 (Cth) and Corporations Regulations 2001 (Cth).^[16]

Proposed text and data mining exception

Due to the copyright that subsists in data used to train AI models, the Report discusses the possibility of introducing a TDM Exception.  This expands the fair dealing regime under part three (3), division three (3) of the Copyright Act 1968 (Cth).^[17]  The purpose of this exception would be to improve the efficiency of AI model training by allowing easier access to copyright materials.^[18]

Whether a TDM Exception Exception would be an effective solution is a contentious topic within Australia given the risks that can accompany it.  For example, the Commission mentions that a TDM Exception may have limited effect given the large and available nature of most AI models, and the fact that many of these models are trained overseas.^[19]  However, the Commission raises several instances of successful TDM Exceptions from other countries.  The Report reaches the conclusion that a TDM Exception would be beneficial in ensuring that data is most adequately utilised to support productivity.  However, legislative criteria or regulatory guidance may be required to distinguish what is considered ‘fair’.^[20]

Following the Report, the Commission is allowing the submission of comments and feedback on how a TDM Exception may impact Australians, and how it may be effectively implemented to reduce risk.^[21]

Links and further references

Legislation

Copyright Act 1968 (Cth)

Corporations Act 2001 (Cth)

Corporations Regulations 2001 (Cth)

Other links

Productivity Commission, ‘Harnessing data and digital technology’ (Executive summary, August 2025)

Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025)

Hon Jim Chalmers MP, ‘Five pillars of productivity inquiries – Terms of reference (Web Page, 13 December 2024)

Further information about AI and copyright law

If you need advice on AI and copyright and how any proposed changes to the copyright regime may affect your business please, contact us for a confidential and obligation-free discussion:

Disclaimer

This article contains general commentary only.  You should not rely on the commentary as legal advice.  Specific legal advice should be obtained to ascertain how the law applies to your particular circumstance

[1] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025).

[2] Productivity Commission, ‘Harnessing data and digital technology’ (Executive summary, August 2025) p 1.

[3] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 5.

[4] Hon Jim Chalmers MP, ‘Five pillars of productivity inquiries – Terms of reference (Web Page, 13 December 2024).

[5] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 6.

[6] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 6.

[7] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 19.

[8] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 20.

[9] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 21.

[10] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 39.

[11] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 39.

[12] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 39.

[13] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 63.

[14] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 67.

[15] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 81.

[16] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 81.

[17] Copyright Act 1968 (Cth) pt III, div 3.

[18] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 9.

[19] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 28.

[20] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 27.

[21] Productivity Commission, ‘Harnessing data and digital technology’ (Interim report, August 2025) p 28.

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