Google says it will not "voluntarily" comply with the government's request that it censor YouTube videos in accordance with broad "refused classification" (RC) content rules.
Communications Minister Stephen Conroy referred to Google's censorship on behalf of the Chinese and Thai governments in making his case for the company to impose censorship locally.
Google warns this would lead to the removal of many politically controversial, but harmless, YouTube clips.
University of Sydney associate professor Bjorn Landfeldt, one of Australia's top communications experts, said that to comply with Conroy's request Google "would have to install a filter along the lines of what they actually have in China".
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This week the Computer Research and Education Association (CORE) put out a statement on behalf of all Australasian computer science lecturers and professors opposing the government's internet filtering policy.
They said the filters would only block a fraction of the unwanted material available on the internet, be inapplicable to many of the current methods of online content distribution and create a false sense of security for parents.
CORE said the blacklist could be used by current and future governments to restrict freedom of speech, while those determined to get around the filters and access nasty content could do so with ease.