Australia’s intellectual property system has swung too far in favour of rights holders at users’ expense, a new report has found, with most online infringement driven by “sheer frustration” at poor access.

In its draft report on the state of intellectual property in Australia, the Productivity Commission said the current system was unbalanced, prioritising the interests of “vocal rights holders and influential IP exporting nations” over those of consumers and taxpayers.

It recommended a “new, principles-based, fair use exception”, as exists in other jurisdictions, be introduced to the user rights system to protect both artists and users.

It also called for the government to make a stand against geoblocking, where online content is restricted by territory. Proxies, virtual private networks and “unblockers” are widely used to circumvent them, but discouraged by Netflix and other online content libraries.

Commissioner Karen Chester said research indicated that much online copyright infringement was driven by “sheer frustration from poor access”.

“The best antidote to copyright infringement is accessible and competitively-priced online content, not draconian penalties and big brother enforcement.”

The appetite for content to be released in Australia at the same time as in the rest of the world was clear on Monday, when season six of the Game of Thrones TV show premiered on the subscription channel Foxtel at the same time as it did on HBO in the United States.

With a total paying audience of 727,000 – expected to grow to well over one million viewers by the end of the week – it broke the record for the most-watched program on the history of subscription TV in Australia.

But despite the legal avenue to watch the show, it was widely pirated, particularly from within Australia.

Chester said rights holders and their intermediaries, such as Netflix, needed to do more to deliver “timely and accessible” television series and films: “The government should also make clear that Australians should be able to circumvent geoblocking technology.”

Consumer advocacy group Choice welcomed the commission’s recommendations, with chief executive Alan Kirkland calling for an end to the era of “digital discrimination”.

“We’d like to see the federal government embrace the key recommendations of this report and end geoblocking by making it clear to consumers that they have a right to access international markets and services,” he said.

“More accessible content benefits creators as well, being the best way to reduce piracy. The fact is our copyright system is broken and imbalanced. It was designed for an age before Google, Netflix and countless other digital businesses that Australians have embraced.”

The commission’s report also recommended patents be awarded for “only genuine innovations”, and that fees should be higher to discourage rights holders from retaining them for longer than necessary.

Excessive patents for pharmaceuticals alone cost the government and taxpayers more than $250m every year.

The commission’s suggested changes – “a workable bundle of reforms” – which would take into account those IP arrangements currently cemented by international trade agreements.

But Choice called for an independent cost-benefit analysis of joining the Trans-Pacific Partnership, given the impact it would have on Australia’s intellectual property framework.

The inquiry was announced by then-treasurer Joe Hockey and the small business minister Bruce Billson in August last year, with a view to examining “whether Australia has the right balance between promoting competition and protecting intellectual property, while considering our international trade obligations”.

Submissions on the draft report close on 3 June and the commission will hold public hearings later that month.

The final report will be published in August.

