Australia’s AI Copyright Debate Faces a Section 51 Test

By Sophie Lindqvist

Nationals Senator Ross Cadell warned that letting AI companies scrape copyrighted material could expose the federal government to “the biggest compensation rights case in history.” His warning comes as Labor weighs copyright changes inside a broader AI policy package covering datacentres, online safety, workforce, energy and the economy.

A federal announcement on AI is looming, and tech companies and rights holders are already lobbying over its direction. Anthony Albanese has promised “the strongest possible protection” for creators and called unpaid use of their work “theft.” Creative industries are alarmed because AI companies have asked for weaker copyright rules to train on Australian music, books and journalism.

What does section 51 mean for AI training?

Section 51 of Australia’s constitution allows laws about “the acquisition of property on just terms.” Cadell told a federal parliamentary committee on AI that an opt-out model could place copyright holders’ intellectual property at risk of acquisition by the government.

University of Sydney professor emerita Anne Twomey said the concern was “potentially” constitutional, depending on how the legislation was drafted. The attorney general’s department described the issue as “extremely alive,” even though the government has not yet published a legislative proposal.

Cadell put the mechanism plainly: “If they go ahead with an opt-out model, it does raise a real question of whether the government is acquiring the intellectual property rights of others.” He added: “How we support property rights is core to this.”

Guardian Australia linked the debate to the property dispute in the movie The Castle. The comparison makes the drafting question more concrete: Parliament would decide whether an AI exception transfers rights or merely regulates access.

Twomey said the issue is exceedingly complex and noted that no legislative proposal has been aired. She listed High Court cases involving copyright and acquisition of property, including disputes about video games, cigarette plain packaging and cassette tapes, with varying outcomes.

She expected the federal government to be hyperaware of those precedents. “The high court has 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,” Twomey told Guardian Australia.

In plain terms, creators cannot be asked to surrender control without compensation. A change that resembles an acquisition of property would put section 51 directly in play.

Could foreign rights holders sue in Australia?

Twomey said any change allowing Australia to host AI companies training on international data could create grounds for global rights holders to bring legal action here. Her concern was that a new right for AI firms could diminish the rights of copyright holders at the same time.

Chris Maund, CEO of Mushroom Records, said Australia cannot make its copyright rules apply only at home. “The AI company could do their training here in Australia and circumvent the copyright laws that apply outside of Australia, and that’s why the international creative industries are watching this very closely,” he said.

International rights-holder groups have urged Labor not to weaken copyright law. Guardian Australia has also made submissions to the Joint Select Committee as a member of Australia’s wider rights-holder community.

Annabelle Herd, CEO of the Australian Recording Industry Association, called any proposal to allow AI companies to scrape data “clearly an acquisition of property.” She said compensation could not easily repair the loss of a right transferred to companies that could monetize it.

“It’s hard to imagine what kind of compensation would make up for the fact that they’re basically taking our right … and trading it away to the AI companies to then monetise themselves,” Herd said. She said that outcome “appears to be a clear path to a constitutional challenge.”

For rights holders, the practical danger is jurisdictional: a domestic exception could invite foreign claims while reducing local control. That asymmetry could reward companies that move training into Australia.

Cadell raised the concern in Friday’s hearing with the attorney general’s department. Officials said they were conscious of the constitutional issues, but did not directly answer his questions about international implications or liability for foreign rights holders.

Cadell also warned of “just terms” compensation for acquiring that property “for every rights holder on Earth.” The unresolved question is whether the Commonwealth itself would owe compensation.

What are rights holders asking Labor to protect?

Some AI companies have rejected making licensing agreements under current copyright law, saying the process is too difficult. Anthropic proposed an “opt-out” model that would allow scraping unless a rights holder deployed digital protections signaling an objection.

Maund said current copyright law is working and that AI companies should use existing licensing arrangements. He cited Spotify as a company already making AI-related deals.

Maund credited the government, particularly Albanese and Tony Burke, with supporting the music industry. He pointed to Creative Music Australia, which he said had benefited companies such as Mushroom Records and its artists. But he said the government remained “out of step with artists and copyright owners on this point.”

Michaelia Cash, the shadow attorney general, said the Coalition welcomed AI’s benefits and wanted investment. She said the government should not “sell out Australian creators and rights holders in the rush to entice AI investment.”

Cash tied compensation to Albanese’s promise. “That is the prime minister’s own test, and the government should be held to it,” she said. She added that the constitutional issue remained live: “The constitutional question of property rights and their acquisition on just terms is also a live issue we will be examining depending on what the government puts forward.”

The dividing line is consent: rights holders want a licensing market that pays them. Anthropic’s opt-out shifts the burden to object.

What has the government promised?

A spokesperson for Attorney General Michelle Rowland said the government was “committed to supporting” creatives. The spokesperson pledged that any future copyright changes would deliver “meaningful control and fair compensation” to rights holders.

The promise leaves a harder legal test than the policy slogan. Any new exception must give creators a real say and payment without diminishing the property rights that section 51 protects.

Cadell said AI has benefits, but warned that taking rights away would create a known loss rather than a speculative gain. “There’s lots of talk about what the benefits may be and what may happen. But if we take these rights away, we know what will happen,” he said. “I don’t want to hurt people for a ‘may.’”

The government’s pledge matters only if its final rules turn those principles into enforceable rights. Anything less would leave the section 51 dispute unresolved.

What will decide the next AI announcement?

Labor has yet to publish the legislative proposal that Twomey said needed careful assessment. The next federal announcement must show whether any opt-out or licensing change preserves “meaningful control and fair compensation” while avoiding an acquisition of property “on just terms.”