If a platform and a news business couldn't agree on a price for news after three months of negotiations, a three-member arbitration panel would be appointed to make a binding decision for payment.
Silva said "binding arbitration within the code could be a reasonable backstop — so long as the arbitration model is fair".
However, the proposed arbitration model was "skewed to the interests of one type of business only," Silva said, referring to media.
Google said it had provided a better model with Google News Showcase. Google is paying participating publishers to provide paywalled content to News Showcase users through the model that it launched in October.
"By imposing final-offer arbitration with biased criteria, it encourages publishers to go to arbitration rather than reaching an agreement," Silva said of the government's model.
Swinburne University media lecturer Belinda Barnet said Google was pushing its own model because it wanted more power in negotiations than media businesses.
"It's a cynical ploy by Google," Barnet said. "They tried the misinformation campaign, that didn't work, and now they're saying: 'We can do it better. We're already doing it better.'"
News Showcase "benefits the major players", while the Australian government wanted payment for news to be "fair and across the board", Barnet said.
Details of the draft legislation will be scrutinised by a Senate committee before lawmakers vote on it next year.
Australian Treasurer Josh Frydenberg, who introduced the legislation to Parliament, said in a statement Google could make a submission to the committee before it releases its finding in February.
Breaches of the code, such as failure to negotiate in good faith, would be punishable by a fine of A$10 million (NZ$10.7m) or the equivalent of 10 per cent of annual turnover in Australia.
