The Attorney-General’s Department has released an Issues Paper "Fair Use and Other Copyright Exceptions (an examination of fair use, fair dealing and other exceptions in the Digital Age)". (via Kim Weatherall).

From the Introduction:

1.5 A fair use exception, based on the model in the United States, would list a number of factors or principles of ‘fairness’ for a court to consider in deciding whether any activity should be an exception to copyright (ie outside the uses that the copyright owner is able to stop). A specific exception would identify a particular activity (eg. time-shifting) that would be an exception to copyright. The main difference between the two approaches is that a fair use exception would be openended and flexible while a specific exception would be more certain but confined by its scope.
1.6 The Copyright Act currently contains a number of exceptions to copyright known as the ‘fair dealing’ exceptions. The fair dealing exceptions are also based on a concept of fairness but are confined to four specific purposes, such as study criticism and review. The Government is reviewing whether these and other current exceptions are adequate – or whether a new general exception based on ‘fair use’ or new specific exceptions might be appropriate.

How does the USA currently operate? A good example is this chart on copyright clearances for documentary films referred to recently by Professor Lessig.