Facebook has admitted that it scrapes the public photos, posts and other data of Australian adult users to train its AI models and provides no opt-out option, even though it allows people in the European Union to refuse consent.

Meta's global privacy director Melinda Claybaugh was pressed at an inquiry as to whether the social media giant was hoovering up the data of all Australians in order to build its generative artificial intelligence tools, and initially rejected that claim.

Labor senator Tony Sheldon asked whether Meta had used Australian posts from as far back as 2007 to feed its AI products, to which Ms Claybaugh responded "we have not done that".

But that was quickly challenged by Greens senator David Shoebridge.

Shoebridge: "The truth of the matter is that unless you have consciously set those posts to private since 2007, Meta has just decided that you will scrape all of the photos and all of the texts from every public post on Instagram or Facebook since 2007, unless there was a conscious decision to set them on private. That's the reality, isn't it?

Claybaugh: "Correct."

Ms Claybaugh added that accounts of people under 18 were not scraped, but when asked by Senator Sheldon whether public photos of his own children on his account would be scraped, Ms Claybaugh acknowledged they would.

The Facebook representative could not answer whether the company scraped data from previous years of users who were now adults, but were under 18 when they created their accounts.

In June, Meta notified users in the European Union and United States that it would use their data to train its generative AI products, such as Meta AI, unless users opted out.

The company provided an opt out option to EU users in part because of legal uncertainty surrounding strict privacy laws covering those nations.

Ms Claybaugh admitted to the inquiry that those opt-out options were not offered to Australians.

"In Europe there is an ongoing legal question around what is the interpretation of existing privacy law with respect to AI training," Ms Claybaugh said.

"We have paused launching our AI products in Europe while there is a lack of certainty. So you are correct that we are offering an opt-out to users in Europe. I will say that the ongoing conversation in Europe is the direct result of the existing regulatory landscape.

Ms Claybaugh said Australian users had the ability to set data to private, but opt-out options offered to Europeans were in response to laws in force there.

She said that Meta needed a lot of data in order to provide the most "flexible and powerful" AI tool it could, and that a lot of data was needed in order to deliver a safer product with fewer biases.

The development comes a day after the federal government vowed to introduce a ban on social media for children, over concerns of harm the platforms were causing.

Senator Shoebridge told the ABC if the government is concerned about online harms young people face, sorting out privacy laws should be a key priority.

"There's a reason that people's privacy is protected in Europe and not in Australia, it's because European lawmakers made tough privacy laws. Meta made it clear today that if Australia had these same laws Australians' data would also have been protected," he said.

"The government's failure to act on privacy means companies like Meta are continuing to monetise and exploit pictures and videos of children on Facebook."

The government is due to announce long-awaited reforms to the Privacy Act, in response to a 2020 review that found the current laws are outdated.

Attorney-General Mark Dreyfus said earlier this year the legislation would be announced in August.