AI and copyright in Australia: the opt-out plan, the 'just terms' constitutional risk, and what it means for creators

By The Rundowns News Desk · Published 1 November 2026

The federal government is weighing changes to copyright law so AI companies can train their models on Australian music, books and journalism. Now a new objection has surfaced: Coalition senators, the recording industry and Australia's best-known constitutional law expert say a badly drafted change could count as the Commonwealth acquiring property, which the constitution says must be done "on just terms". That could mean compensation claims from rights holders here and overseas. Here's where the policy stands, what the constitutional argument actually is, and what to watch for.

What happened this week

At a hearing of Parliament's AI committee on Friday, Nationals senator Ross Cadell raised the constitutional concern with Attorney-General's Department officials, who said they were "extremely alive" to the issue, The Guardian reports. Officials didn't directly answer when he asked about liability to foreign rights holders. Cadell told The Guardian the government "could be liable for 'just terms' compensation for acquiring that property for every rights holder on Earth".

Professor Anne Twomey of the University of Sydney told The Guardian the question is "exceedingly complex", that no legislation has been released, and that the answer depends on drafting. She said creating a new right for AI companies while diminishing copyright holders' rights could "potentially" raise constitutional issues, and that "one would want to be quite confident before enacting the legislation".

The constitutional-risk claims in this section come from one outlet's reporting (The Guardian, 31 Oct 2026). The policy background below is confirmed by the government's own releases and the ABC.

What the government has already ruled out

In October 2025, Attorney-General Michelle Rowland ruled out a "text and data mining exception". That's the broad carve-out some tech companies wanted, which would have let AI developers use Australian creators' work for free and without permission. She told Parliament the government had "no plans to weaken copyright protections when it comes to AI". Law firm Allens notes that without such an exception, copying protected material without permission to train AI in Australia may amount to infringement in most cases.

Instead, the government asked its Copyright and AI Reference Group to look at three things:

• whether to create a new paid collective licensing scheme for AI, or keep voluntary licensing
• clarifying how copyright applies to AI-generated material
• cheaper enforcement, possibly through a small claims forum for lower-value infringements

The leaked opt-out options

In September, the ABC revealed confidential consultation slides from the Attorney-General's Department, titled "AI on Australian Terms". Both options in them would make AI training opt-out by default for openly available online material:

• Option one: AI companies could train on material whose owners hadn't opted out if they paid into a central body that would distribute money to registered copyright owners, or struck licences with Australian collecting societies.
• Option two: AI companies would get permission after striking deals with a minimum number of rights-holder companies for a minimum period. The slides said "no additional $ would be payable to creators or rights holders beyond deals negotiated to achieve quota".

The slides also mentioned penalties for ignoring opt-outs, protections for Indigenous cultural and intellectual property, transparency and audit requirements, and "best efforts" to avoid pirated material, according to the ABC. The Guardian reports that Anthropic had suggested an opt-out model, and the ABC reported OpenAI said current copyright settings stopped it building an AI training centre in Australia.

These were consultation options, not a decision. No bill has been released.

The "just terms" argument, in plain English

The Australian Constitution lets the Commonwealth make laws for "the acquisition of property on just terms" (section 51). In practice, that means if a federal law takes someone's property, it has to compensate them fairly. It's the same principle at the heart of the film The Castle.

Copyright is a form of property. The argument from critics goes like this: if a new law lets AI companies use copyrighted works that owners could previously control or charge for, the Commonwealth may have effectively taken something from those owners and handed it to someone else. If a court agreed, the owners could be entitled to compensation.

It isn't clear-cut. Twomey told The Guardian the High Court has heard several cases about copyright and acquisition of property, including ones about video games, cigarette plain packaging and cassette tapes, with "varying outcomes", and that the court recognises a number of exceptions. Whether any AI change would count as an acquisition is unconfirmed and can't be known until a bill exists.

Why it could reach beyond Australia

Twomey said a change that let AI companies train here on international material could give overseas rights holders grounds to sue in Australia (The Guardian). Mushroom Records chief executive Chris Maund made a related point: AI companies could train in Australia to "circumvent the copyright laws that apply outside of Australia", which is why international creative industries are watching closely.

Who's saying what

• The government: a spokesperson for the Attorney-General said any future copyright changes would "deliver meaningful control and fair compensation" (The Guardian and ABC).
• The Coalition: shadow attorney-general Michaelia Cash said the government shouldn't "sell out Australian creators" and that the just-terms question is "a live issue we will be examining" (The Guardian).
• The music industry: ARIA chief executive Annabelle Herd called any scraping permission "clearly an acquisition of property" and a "clear path to a constitutional challenge" (The Guardian).
• Creators' peak bodies: the Australian Copyright Council told the AI committee in October that any AI use of copyright material should be licensed, built on "credit, consent and remuneration" (committee transcript).
• AI companies: say licensing the "long tail" of small rights holders one by one is unrealistic, and want legal certainty before investing (ABC).

What it means for you

If you make things, whether writing, music, photos, video or code, nothing has changed in the law yet. Copyright still protects your work, and the government has said it won't create a free-for-all exception. But if an opt-out system arrives, protecting your work from AI training could depend on actively opting out. Keep an eye on what the government announces and how opting out would actually work.

What's next

• A government AI announcement is expected, covering data centres, online safety, workforce, energy and copyright, The Guardian reports. No date has been confirmed.
• Any bill would face scrutiny from the Coalition and crossbench, with the constitutional question now firmly on the table.
• A High Court challenge is possible if a law passes that rights holders say takes their property without just terms. ARIA has flagged it.

This article is general information, not legal advice. If you're worried about how your work is being used, talk to a copyright lawyer or the Australian Copyright Council.