The Labor government has dumped its controversial changes to the freedom of information request system, which would have imposed new fees and further reduced transparency, after admitting it had no pathway to passing the parliament.

But despite the major backdown, finance minister Katy Gallagher says the Albanese government is still committed to reforming the FoI system and is critical of public servants having to spend too much time responding to requests for government information and decision-making.

The government’s changes to the FoI system would have imposed tighter rules on accessing information, including new grounds to refuse requests based on cabinet confidentiality, banning anonymous requests, and rules to deter what the government characterised as “vexatious and frivolous” requests. Labor had complained that artificial intelligence had allowed for bulk requests to flood FoI systems and tie up government departments, but the government never provided substantial evidence for such claims.

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A staffer at one government office raised concerns that one email every five minutes might “jam something” in their system.

Labor’s proposal would also have implemented new charges for journalists, politicians and other experts seeking access to government information. Similar charges at the state and territory level can be around $50 each.

But after Guardian Australia reported the Coalition was set to vote against the bill when it returned to the Senate on Thursday, the government moved to drop its own plan from the parliament’s program.

Gallagher told the Senate on Thursday morning that the government recognised the bill didn’t have the support of the parliament and would not pass. As she spoke, one member from the Coalition benches interjected “well done” while others yelled “hear, hear”.

But the minister said while the current bill would be withdrawn, the government was still planning to make changes to the FoI system, flagging a new form of the bill in future to fix what she called an “unworkable” system “stuck in the 1980s”. She claimed that 43,000 FoI requests had cost the government nearly $100m in processing time in the last financial year, and more than 1m human hours, and alleged that government employees faced safety risks due to the current system.

“We have an open mind and we’ll continue to engage on the final form of the important reforms that we will bring back to the parliament, to get on with fixing the FoI system that I think we all agree needs updating,” Gallagher said.

The minister did not say what the next form of the bill would look like, but said it would make the system more “efficient”.

The attorney general, Michelle Rowland, was contacted for comment.

The opposition Senate leader and shadow attorney general, Michaelia Cash, called the government backdown “a win for democracy”. She agreed that there needed to be changes in the FoI system, but called for reforms to address “delays, backlogs and bad faith behaviour”.

An FoI inquiry in 2023 described the system as “dysfunctional and broken” owing to years of funding cuts, an “absence of consequence” and a lack of senior pro-disclosure “champions” across the public service. In 2025, the Centre for Public Integrity accused the Albanese government of having a poorer record than Scott Morrison’s Coalition for producing documents for public scrutiny.

“Every single day in this chamber, whether it’s this place or the other place, what we see is the erosion of democracy … forget transparency, they are closing the door every chance they get,” Cash said.

In a statement, Cash claimed the backdown “humiliated” the government.

“This bill had not a single friend outside the public service. It was opposed by the Coalition, all other parties and the crossbench, every major media organisation, every integrity body, and civil society groups across the country,” she said.

“Freedom of Information is not a privilege granted by government at its discretion. It is a democratic safeguard, the mechanism through which citizens hold power to account. This government tried to take that safeguard away, and it has been stopped.

“The Freedom of Information framework needs to be overhauled but in the right way not the Labor secretive way.”

Greens senator David Shoebridge said Labor’s changes would have made the FoI system slower, more expensive and more secretive.

“This bill was written by a government high on hubris with an addiction to secrecy. This bill had no friends inside or outside of parliament and Labor has finally recognised this,” he claimed.

“Labor’s attack was never about fixing FOI for the public, it was about making it harder to see what the government was doing.

“The problem with FOIs is not that the public is getting too much information, it’s that the government is spending a million hours of bureaucrats’ time a year refusing and redacting applications.”

Rex Patrick, a former senator who now runs a consultancy business focused on government accountability, and Kieran Pender, of the Human Rights Law Centre, said Labor should now take the opportunity to undertake a comprehensive review of the FoI system to improve transparency.

“Now is the time for real reform – through an independent process. If Labor care about transparency, now is the time to prove it,” Patrick said.

“People have a right to know what governments are doing. Freedom of information is vital to a healthy, transparent, and accountable democracy,” Pender added.