Experts Warn AI Copyright Changes Could Breach Australia's Constitution and Trigger Compensation Claims

On Friday, in a federal parliamentary committee hearing, Nationals senator Ross Cadell put a question to officials from the attorney general's department. If Australia changed its copyright law to let AI companies train on music, books and journalism, could the government be accused of taking property without paying for it? The officials said they were "extremely alive" to the issue. When Cadell asked about the international side, and whether Australia could owe compensation to foreign rights holders, they did not answer directly.

The concern rests on section 51 of the constitution, which lets the commonwealth make laws about the acquisition of property "on just terms". It is the same legal point that drives the film The Castle. Coalition senators and the recording industry now argue that weakening copyright to benefit AI companies could count as that kind of acquisition. The argument is gaining ground as tech companies and rights holders lobby hard ahead of a federal government announcement on AI.

Labor is weighing copyright changes as part of a broader package covering datacentres, online safety, the workforce, energy and the economy. Prime Minister Anthony Albanese has promised "the strongest possible protection" and has said it would be "theft" if creatives were not paid for their work. Even so, creative industries are alarmed that AI companies have asked for weaker copyright rules so they can train on Australian material. Some firms have refused to make licensing deals under current law, saying it is too difficult. Anthropic has proposed an opt-out model, under which it could scrape content unless a rights holder applied digital protections signalling an objection.

Cadell, who sits on the federal parliamentary committee on AI, said an opt-out model "does raise a real question of whether the government is acquiring the intellectual property rights of others". He warned that Australia "could be liable for 'just terms' compensation for acquiring that property for every rights holder on Earth", and later described the possible result as "the biggest compensation rights case in history".

Anne Twomey, professor emerita of law at the University of Sydney and Australia's leading constitutional expert, was more cautious. She stressed that the issue is exceedingly complex and that no legislative proposal has been aired. She agreed there was "potentially" a concern, depending on how any law was drafted, if AI companies were given a new right to use copyrighted material and copyright holders' rights were diminished. The high court has heard numerous cases on copyright and acquisition of property, she noted, including cases about video games, cigarette plain packaging and cassette tapes, with varying outcomes. The court has also recognised a number of exceptions to section 51. "One would want to be quite confident before enacting the legislation about whether or not section 51 would apply," she said. She added that a change allowing AI companies to train in Australia on international data could potentially give global rights holders grounds to sue here.

The recording industry went further. Annabelle Herd, chief executive of the Australian Recording Industry Association, said any proposal to let AI companies scrape data was "clearly an acquisition of property". She said it was hard to imagine what compensation could make up for trading away creators' rights so AI companies can monetise them, and called it "a clear path to a constitutional challenge".

Chris Maund, chief executive of Mushroom Records, said current copyright law is working and AI companies should use existing licensing arrangements, pointing out that companies such as Spotify are already striking AI-related deals. He warned that a change would not apply only to Australian artists and owners: an AI company could train here and sidestep the copyright laws that apply elsewhere, which is why international creative industries are watching closely. He said international rights holder groups have been urging Labor not to weaken copyright law. He praised the government, and Albanese and Tony Burke in particular, for setting up Creative Music Australia, but said it "feels like they're out of step" with artists and copyright owners on this point. Guardian Australia has provided submissions to the Joint Select Committee as a member of the wider rights holder community.

Michaelia Cash, the shadow attorney general, said the government should not "sell out Australian creators and rights holders in the rush to entice AI investment". She said the Coalition welcomes AI's benefits and wants investment, but called compensation for rights holders "the prime minister's own test" and said the constitutional question is "a live issue" the Coalition will examine once it sees the government's proposal. A spokesperson for attorney general Michelle Rowland said the government is committed to supporting creatives and that any future copyright changes must deliver "meaningful control and fair compensation".

What to watch is the forthcoming federal AI announcement, and whether any copyright proposal is drafted to avoid exposure under section 51.