Metadata stored about a phone call could include the parties to the call, location, duration and time of the call, but not what was said.
Metadata stored about an internet activity can include URLs visited, the time at which they were visited, the destination IP addresses and other information that could identify where a person had been online.
If sending an email, metadata could include email addresses and the subject of an email.
The report was scathing about the lack of information provided by former attorney-general Nicola Roxon and her department. It said this hampered the inquiry.
"It meant that submitters to the inquiry could not be sure as to what they were being asked to comment on," the report said.
Greens senator Scott Ludlam said the shelving of the proposal was a "temporary win". He had been campaigning against it since June 2010 when it was revealed that the Attorney-General's Department had been secretly meeting with the internet industry about the scheme.
"When it gets close to an election and you've got something that's really glaringly unpopular and toxic . . . [the government] say they will 'not be proceeding with this at this time'," Senator Ludlam said in an interview. "But we know with this proposal . . . that we are going to need to stay continually vigilant because it'll come back in a different form."
Jon Lawrence, from the online users' lobby group Electronic Frontiers Australia, who also campaigned against data retention, said he was not surprised that the committee baulked at recommending whether data retention should be implemented.
"It would have been politically brave for anyone to commit to that publicly in the current context," he said.
Peter Lee, chief executive of the Internet Industry Association, said: "It's not so much a win for industry but more a win for commonsense."
John Stanton, chief executive of the Communications Alliance, said the government's response was "good news" for consumers and the industry.
"We had said from the outset that we didn't think the case had been made for the type of data retention scheme that was being talked about," he said.
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