Fresh perspective on privacy and AI law reform in Australian Productivity Commission interim data report

The Australian Productivity Commission released its interim report, “Harnessing data and digital technology” (Interim Report) late in the evening of 5 August 2025, suggesting significant policy reforms aimed at boosting productivity. Submissions are open until 15 September 2025. 

The Interim Report gives a fresh perspective on AI and privacy law reform, which has previously been proposed by the Government. Its draft recommendations include an alternative pathway for privacy compliance focused on outcomes, and that proposed AI-specific mandatory guardrails be put on hold pending a review to determine whether AI-specific regulation is required as a ‘last resort’. 

The Interim Report also seeks views on important issues in relation to copyright and AI, and particularly on the question of whether there is any need for Australia to have a fair dealing exception for data mining and AI, similar to those which exist in some other jurisdictions. 

This article provides a brief overview of the recommendations and key considerations.

Summary of recommendations

The report’s draft recommendations include that the Australian Government should: 

• complete a gap analysis of existing laws to see whether any gaps exist in relation to AI (1.1);
• only consider AI-specific recommendations as a last resort where use cases of AI cannot be effectively addressed by existing regulatory frameworks or technology-neutral measures (1.2);
• pause steps to mandate proposed guardrails for high-risk AI until the above has occurred (1.3);
• support new pathways to allow individuals and businesses to access and share data that relates to them, alongside efforts to improve existing pathways contained in the Consumer Data Right and My Health Record system (2.1);
• amend the Privacy Act 1988 (Cth) (Privacy Act) to enable entities to meet privacy obligations by meeting outcomes-based criteria rather than controls-based rules (3.1);
• not introduce a right of erasure to the Privacy Act, as it would give rise to a high compliance burden (3.2); and
• make digital financial reporting mandatory under the Corporations Act 2001 (Cth) and the Corporations Regulations 2001 (Cth) (4.1). 

Copyright and AI

In line with the recommendations above, the Interim Report emphasises that the problems posed by AI are not new. Rather, “AI could exacerbate” copyright violation by changing economic incentives.

In line with this approach, the Productivity Commission expressed the view that copyright issues posed by AI should be resolved through adapting existing copyright law frameworks rather than introducing AI-specific regulation.

Copyright enforcement

On the question of copyright enforcement, the report noted evidence of unlicensed use of copyright material to train AI, and concerns by creative industry representatives that existing laws do not in their view provide sufficient protection.

The report noted that the Attorney-General’s department is separately considering means to improve copyright awareness and make copyright more readily enforceable, and on that basis excluded copyright enforcement from the scope of the Interim Report recommendations. 

Views sought on data mining fair dealing defence

The Productivity Commission noted that other jurisdictions such as the European Union have text and data mining exceptions in their Copyright Laws, and seeks views on whether such an exception should be introduced in Australia. The exception would cover “not just AI model training but all forms of analytical techniques that use machine-read material to identify patterns, trends and other useful information.” 

Importantly, the Productivity Commission does not make any recommendation in relation to this point in its report, but does seek views as to whether a text and data mining exception should be implemented in the Copyright Act, and if so, whether it should be limited to non-commercial uses, and whether any additional criteria or regulatory guidance should be included. 

According to media reports, since the release of the report, the Minister for Industry and Innovation and Minister for Science, the Hon. Tim Ayers has indicated that the Government has no plans to introduce a text and data mining exception. 

What this means for your business

Regulation of privacy and artificial intelligence will have significant potential impacts on Australian businesses. 

The Productivity Commission consultation process provides an opportunity for technology, data, content (including media and entertainment) and other businesses to make submissions on proposals that would reduce the regulatory burden on Australian data and technology businesses and potentially also affect privacy, copyright and other rights. 

In particular, a text and data mining exception could have a significant impact on media organisations and creative industries, as well as AI developers, suppliers and users. 

It is likely that other regulators, including the ACCC, the ACMA, the OAIC and the e-Safety Commissioner, will also respond to the Productivity Commission’s draft recommendations. 

Key industry bodies are also highly likely to contribute their perspectives on these important issues. 

The effect of the Interim Report is to broaden the scope of the regulatory discussion in relation to AI and data in Australia and open up the possibility of a delayed and perhaps reduced regulatory response to AI which includes permissive as well as restrictive measures, as well as consideration of the possibility of changes to the Copyright Act.  

The Government will ultimately determine where the discussion ends. Submissions received by the Productivity Commission may well be influential.