The Productivity Commission of Australia has released its final report on Harnessing Data and Digital Technology on 19 December 2025, outlining a series of recommendations aimed at enhancing consumer and productivity benefits derived from data and digital technologies while addressing associated risks. Central to the Report is a cautionary stance regarding the implementation of AI-specific regulations, advocating instead for a careful analysis to determine if existing laws are sufficient. Notably, the Commission recommends against an immediate introduction of a text and data mining exception in copyright legislation, suggesting a three-year “wait and see” period to assess developments in this area. Additionally, a shift towards a simplified “fair and reasonable” test is proposed for the existing Privacy Act 1988 (Cth).
The Commission operates independently from the Australian Government, and its recommendations reflect its views rather than an official governmental stance. The government has publicly taken positions on certain issues without clarity on others, leaving stakeholders in anticipation of potential changes.
In its recommendations, the Commission emphasized that AI should continue to be governed under current regulatory frameworks, as many risks associated with AI are not fundamentally new and can be managed within existing laws. The Report suggests that any new regulations addressing AI-related risks should be technology neutral and implemented only if genuine gaps are identified through systematic analyses. This approach aims to avoid unnecessary laws that could negatively impact growth.
On the copyright front, the Commission has proposed a cautious approach, advising the government to monitor the implications of AI on copyright for three years. It notes that AI training often requires temporary reproductions of copyrighted material, which under current Australian law typically necessitates a license. The Report recognizes that many AI training operations occur outside Australia, where foreign copyright laws prevail. It raises concerns about the emerging licensing markets for high-value works and acknowledges uncertainty regarding the feasibility of licensing agreements for the vast amount of online content utilized by AI.
The Commission has highlighted significant uncertainties that need to be observed over the next three years, including how overseas copyright exceptions for text and data mining will function and their potential effects on Australian creators. If unresolved, the Commission recommends an independent review of Australia’s copyright settings in relation to AI. This initiative aims to strike a balance between incentivizing creators to produce new works while allowing broader access to support innovation and public benefit.
For businesses, this recommended monitoring period suggests short-term regulatory stability, as immediate changes to copyright laws affecting AI training are unlikely. However, the lack of clarity in current provisions is expected to create ongoing uncertainty. Notably, the government has indicated it does not plan to introduce a text and data mining exception and is consulting with the Copyright and Artificial Intelligence Reference Group on promoting legal avenues for the use of copyrighted material in AI.
In relation to data access, the Productivity Commission has called for reforms to enhance the Consumer Data Right (CDR). The recommendations include optimizing the current CDR regime for the banking and energy sectors to facilitate better data sharing with third parties and simplifying onboarding processes. Longer-term proposals suggest easing the accreditation burdens and technical standards to enable a broader application of the CDR. Currently, the CDR enables consumers to transfer their data between accredited providers on an opt-in basis, with strict privacy constraints.
Regarding privacy regulation, the Commission has recommended amending the Privacy Act to adopt an outcomes-based regulatory framework. This shift would require organizations to achieve specific privacy outcomes rather than merely comply with prescriptive controls. A pivotal change would involve introducing an overarching duty to handle personal information in a manner deemed “fair and reasonable.” The Commission proposes incorporating a non-exhaustive list of factors to guide assessments of fairness, thereby phasing out existing Australian Privacy Principles.
Last year, the government indicated plans to revise the Privacy Act framework, potentially alongside targeted measures addressing AI. Should the Commission’s recommendations be implemented, they could widen the gap between Australian and European Union privacy laws, affecting Australia’s prospects for obtaining an EU adequacy decision in the future.
Lastly, the Commission has recommended mandating digital financial reporting for all disclosing entities under the Corporations Act 2001 (Cth). This recommendation aims to replace the current requirement for hard-copy or PDF filings with digital reports, which can be processed more efficiently. The phased approach for digital reporting is expected to bolster productivity, reduce information-processing costs, and enhance data quality and reliability.
Overall, the recommendations from the Productivity Commission seek to create a more flexible and innovation-friendly environment for businesses, though stakeholder perspectives will likely vary on whether the right balance has been achieved. The Australian Government now faces the task of determining which, if any, of these recommendations will be enacted into law, with extensive consultations expected to precede any legislative changes.
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