Australia weakening copyright protections to aid AI companies would be “ridiculous and dangerous”, the global peak body for the music recording industry has warned as it watches with concern how the Albanese government responds to big tech’s demands.

While local creatives have raised constitutional issues and threatened political backlash, the International Federation of the Phonographic Industry (IFPI), representing recording industry bodies worldwide, said its members were worried about Australia potentially agreeing to demands other nations had rejected.

“Why would Australia do this? Why would a sophisticated, democratic country that has a phenomenal cultural power of its own choose to make this very odd decision and buy into the promises of a few large AI companies, and throw away their own culture and creativity?” Victoria Oakley, the chief executive of IFPI, told Guardian Australia.

“I don’t think Australia wants to be the weakest link in this situation, the one that believed the promises and gave in and threw creativity under the bus on behalf of everyone else. That doesn’t feel very Australian to me.

“You just need one safe harbour, because then you can train on music from anywhere in the world. So this isn’t just about Australian music and Australian culture; it’s about music and culture everywhere.”

Labor is mulling copyright changes in a suite of policy overhauls around AI, including datacentres, online safety, workforce, energy and the economy. While the prime minister, Anthony Albanese, promised “the strongest possible protection”, warning it would be “theft” if creatives were not paid for their work, creative industries were alarmed after AI companies requested a weakening of copyright law to train on Australian material.

Some AI companies have rejected making licensing agreements under existing copyright law, saying it was too difficult. Anthropic suggested an “opt-out” model that would allow it to scrape content unless rights holders signalled an objection.

Large AI companies say they need legal certainty on issues such as copyright before making investments in Australia or training their models here.

Oakley said AI companies had made similar proposals in the US, UK and other nations and that Australia should not accept such a bargain.

“I just don’t think it’s true that you will only get investment or growth, or be seen as pro-innovation, if you entirely give in to the demands of AI companies,” Oakley said.

“We’ve been talking to capitals around the world, saying ‘are you seeing what’s going on in Australia?’ We think this is a disaster for creativity.”

The attorney general, Michelle Rowland, said via a spokesperson last week that the government was “committed to supporting” creatives and pledged that “any future copyright changes deliver meaningful control and fair compensation”.

Oakley said she worried about AI and copyright “everywhere” but feared “Australia appears to be threatening to do something really ridiculous and dangerous”.

She said creative industries worried about “contagion” of copyright relaxation if Australia caved in, and that copyright material from anywhere in the world could be affected.

She declined to speculate on any potential legal or constitutional challenges, as raised by the Australian Recording Industry Association, but said it would be reputational damage to Australia’s standing in the creative world.

“It would be a huge mistake and I think the prize is not worth what you’re throwing away,” she said.

In recent answers to a parliamentary committee on AI, responding to questions from the independent senator David Pocock about why it couldn’t replicate the kind of deals Spotify had made, OpenAI said the music streaming giant “has a different business, where it primarily transmits un-transformed copyrighted content, so would be expected to license content that it streams”.

But Oakley said music labels had already inked dozens of licensing deals with smaller AI companies around the world.

“It is perfectly possible to license. I’m almost shocked that these words are coming out of the mouths of some of the larger AI companies … We already know how to license music to tech platforms because that’s exactly how Spotify works, or Amazon Music, Apple, or Tidal,” she said.

“You have a ready, willing set of rights holders who want to license with a history of licensing in the streaming world, but also current evidence of licensing to AI firms. Let’s let the market do what it needs to do. Come to us and we’ll make it work.”