Senators warn AI copyright shift may trigger massive compensation claims

Coalition senators and recording industry executives warned on Friday that proposed changes to Australian copyright law could expose the federal government to massive legal liability. The core of their concern is that granting AI companies permission to scrape copyrighted material might constitute an acquisition of property without just terms, a breach of Section 51 of the Australian Constitution.

Ross Cadell, a Nationals senator and member of the federal parliamentary committee on AI, raised the issue during a hearing with the attorney general’s department. He stated that an opt-out model, which allows scraping unless rights holders signal objection, could make the government liable for compensation to every rights holder globally. Cadell described the potential outcome as the biggest compensation rights case in history.

Anne Twomey, a professor emerita of law at the University of Sydney, agreed that the issue was complex. She noted that granting new rights to AI companies while diminishing the rights of copyright holders could potentially trigger constitutional questions. Twomey pointed out that the High Court has handled similar cases regarding copyright and property acquisition, including disputes over video games and cigarette packaging, with varying outcomes.

The Australian government is currently weighing copyright reforms as part of a broader suite of AI policies covering data centres, online safety, and energy. Prime Minister Anthony Albanese has promised the strongest possible protection for creators, calling it theft if they are not paid. However, some AI companies, including Anthropic, have proposed an opt-out system, arguing that existing licensing agreements are too difficult to manage.

Michaelia Cash, the shadow attorney general, argued that the government should not sacrifice Australian creators in a rush to attract AI investment. She emphasized that the constitutional question of property rights is a live issue that her party will examine closely. She noted that the government is committed to supporting creatives and ensuring fair compensation for any future changes.

Annabelle Herd, CEO of the Australian Recording Industry Association, called any proposal to allow scraping a clear acquisition of property. She questioned what kind of compensation could make up for the loss of rights to AI companies seeking to monetize themselves. Chris Maund, CEO of Mushroom Records, added that AI firms could train on data in Australia to circumvent stricter copyright laws elsewhere, drawing close attention from international creative industries.

Officials from the attorney general’s department admitted they were extremely alive to the constitutional issue. They did not directly answer questions about international implications or liability for compensation to foreign rights holders during the hearing. The government has pledged that any future copyright changes will deliver meaningful control and fair compensation for rights holders.