AI, IP and Data Centres: Australia makes a tentative play

What you need to know

• On 15 July 2026, the Prime Minister announced new approaches to Artificial Intelligence in Australia, including a new position on copyright for AI developers, the establishment of a new Office of AI within the Department of Prime Minister and Cabinet, and new National Standards for AI Data Centres.
• Contrary to speculation about a copyright "carve-out" for AI developers, and the "wait, monitor, and review" approach suggested by the Productivity Commission in December 2025, the Prime Minister was emphatic that no company should use Australian creative works to build or train AI without creator control, including control of price and value. It appears AI companies will be barred from using Australian books, music, art or news to build or train AI without the consent and control of the author.
• Data centre developers and operators will face new national obligations around energy usage, water minimisation, location standards and skills investment.
• The Government proposes a singular regulatory framework for AI, with consultations beginning shortly with a view to legislation being before Parliament early next year.

On 15 July 2026, the Prime Minister gave a speech addressing the Government's approach to dealing with AI and data centres. Whilst we await further details, the Prime Minister's announcement provides some important insight into how the Government plans to deal with AI, and the likely impact this will have on organisations doing business in Australia.

Key takeaways for businesses

1. No updates to the copyright landscape… yet. Offshore AI modelling was previously favoured by businesses, because of the risk of copyright infringement in training LLMs under Australian law. Contrary to pre-announcement speculation, the Prime Minister has not foreshadowed the introduction of a copyright exception to facilitate onshore AI training. Indeed, while the Prime Minister spoke about attracting frontier investment to Australia, his emphasis on copyright owners retaining control appears to mean that AI developers will still need to secure a licence before training AI on Australian content. In this regard, onshore training has not yet become easier from a copyright perspective. The position may evolve and should be monitored by businesses.

2. Data centre operators face new mandatory standards. The National Standards for AI Data Centres will impose obligations on operators: they must be “net generators, not net users” of energy, minimise water use, comply with location standards so as not to compete with housing, and invest in skills and training. The PM framed this as delivering “greater clarity and speed for approvals, and a streamlined process for verifying compliance” to “enhance our appeal to international investors". Businesses planning or operating data centres in Australia now need to assess compliance with these forthcoming standards.

3. Transparency and provenance obligations remain. Whatever shape legislative change takes, rightsholders continue to push for greater training-dataset transparency to detect unlicensed use, while developers warn that disclosure could erode trade secrets. Any regulatory obligations that may or may not include a carve-out or licensing model are likely to revive that debate, and businesses should be ready to implement data provenance tracking and audit trails if disclosure obligations follow in the National AI Standards.

4. The Office of AI will centralise regulatory oversight. The new Office of AI will coordinate AI policy across all major portfolios. Businesses should expect a more consolidated and mandatory regulatory framework, rather than the patchwork of voluntary principles that has prevailed to date. However, individual Departments will continue to play a role in setting regulations and agencies will continue to play a role in enforcement. This creates both compliance risk and a potential opportunity to engage with a single, clear point of government coordination for policy.

5. Treat AI governance as a commercial asset, not a compliance afterthought. The direction of travel is clear. AI use will increasingly be expected to sit within a documented governance framework. Businesses can demonstrate robust data sources, licensing records and provenance will be better placed to seize a local-training opportunity quickly, and to defend their position if training practices are later challenged.

AI & COPYRIGHT

Current Position

As it currently stands, Australian copyright law requires AI developers to obtain licences before reproducing material protected by copyright for AI training, or be at risk of liability for copyright infringement. This stands as the key reason most AI model training currently happens overseas – particularly in the United States (which has the benefit of the doctrine of fair use) and the European Union (with the text and data mining (TDM) exception).

In December 2025, the Productivity Commission, in its Harnessing data and digital technology inquiry report, did not recommend a similar exception for Australia, suggesting the Government monitor the development of licensing markets, the creative incomes and overseas case law over the next three years.

Latest Updates

Following public indications that, without legislative amendments, AI companies are unlikely to commit to investing in Australian data centres, there was speculation that the Government would announce an exception to try to attract AI investment to Australia.

However, no such announcement was made. Rather, the Prime Minister stated the Government's position would be to protect Australian creators, and focused on reassuring copyright owners:

It remains unclear how this desire to protect Australian creators will be balanced against the desire to attract AI investment. The Prime Minister's speech focused on copyright owners being fairly remunerated for use of their works, but did not indicate if this meant there would be no change to the copyright position in Australia, or whether there would be a move to introduce a collecting society or other model to ensure owners are reimbursed for use of their work.

Office of AI established with immediate effect

A new Office of AI will be established within the Department of the Prime Minister and Cabinet with immediate effect, which the Government says will position Australia as the "first country in the world to bring the economic, social, national security and environmental issues stemming from AI into a single, national framework."

The Office of AI will work with the Minister for Industry and Innovation and the Assistant Minister for Science, Technology and the Digital Economy, among others to coordinate across multiple portfolios, including Industry, Attorney-General's, Treasury, Employment, Education, Defence, the eSafety Commissioner, and Climate Change and Energy.

It remains to be seen whether this Office will address copyright issues in relation to AI, which is facilitated by the Attorney-General's office.

Data centres face greater regulatory obligations

The Department of Industry, Science and Resources' set of expectations for data centres and AI infrastructure developers will now be brought into the single, mandatory, regulatory framework through National Standards for AI Data Centres, with legislation to be brought to Parliament in early 2027. It is not yet clear what the precise legislative mechanism will be, or under what powers the legislation will be made, nor the extent to which these standards may replace or co-exist with existing planning requirements and processes. The standards will apply to new proposals only and will be directed at larger data centres.

• Energy: the next generation of large-scale data centres will face a legal obligation to underwrite new power supply and pay their full share of grid connection costs, so that no costs are passed on to homes or businesses. Data centres must put at least as much energy into the grid as they take out – to be "net generators, not net users" – and to build new renewable generation to strengthen national energy resilience.
• Water: the standards will require data centres to minimise their water use, maximise their energy efficiency and pay for any additional water infrastructure required.
• Location: data centres must be in appropriate locations, and not compete with new housing. Social licence and community consultation will be important considerations.
• Skills and training: organisations operating large data centres will also need to invest in skills and training.

The rationale for national standards is to prevent states from being played off against each other by operators seeking more favourable conditions, and to ensure that the same standards apply regardless of where the data centre is built. Additionally, the standards are framed as delivering certainty for investors.

Organisations planning or operating large-scale data centres in Australia should begin assessing their compliance readiness against these forthcoming standards immediately, particularly in relation to energy supply commitments, water usage and locational suitability. The Government has indicated close consultation with industry leaders in designing the framework, presenting an opportunity for early engagement.

What next?

The Prime Minister's announcement signals a clear shift from voluntary frameworks to mandatory regulation across copyright, AI governance, and data centre operations. Businesses operating in or entering the Australian market should:

• review existing AI training practices and licensing arrangements in light of the current copyright position – noting that, while the Prime Minister made no mention of an AI training exception being introduced the position is not yet settled and the Prime Minister's comments about ensuring creators retain control of their works, including as to price and value, suggests that a licensing model remains a possibility;
• monitor announcements from the Office of AI, which will start to centralise AI policy coordination across government. Policy is not being developed in isolation – increasing privacy enforcement, cybersecurity resilience requirements and digital accountability obligations are increasingly aligning, and can be expected to fall within or be shaped by the Office of AI's remit;
• keep in view the move towards cross-regulator and cross-department co-ordination, in particular, the members of the Digital Platform Regulators Forum (DP-REG, consisting of the Australian Competition and Consumer Commission (ACCC), the Australian Communications and Media Authority (ACMA), the eSafety Commissioner (eSafety) and the Office of the Australian Information Commissioner (OAIC)) who have previously provided various technical working papers on AI and signed a new Memorandum of Understanding strengthening cooperation across privacy, competition, online safety, and consumer protection; and
• in the data centre space, be ready for new energy, water usage, and location commitments against the forthcoming National Standards, and engage proactively with the Government, who plans to bring forward legislation for large data centres in early 2027.

The government's new position on copyright, AI co-ordination and data centres signals a shift from previous commitments, but the details of new policy remain to be settled – the more significant changes will require cross-governmental and industry input to develop new standards, as the Australian government seeks to "seize and shape and share the generational opportunity that AI represents".

Want to know more?

• AI and Copyright: Australia presses pause on reform, 23 February 2026.
• AI at Work – Managing legal risk
• Navigating the Legal landscape – AI in Australia

Authors: Anita Cade, Partner; Nick Perkins, Partner; Nina Fitzgerald, Partner; Geoff McGrath, Partner; Rebecca Cope, Partner; Robert Todd, Senior Consultant; Imogen Loxton, Senior Associate; Cindy Nguyen, Graduate and Joanne Lee, Paralegal