AI could add $93 billion to Australian economy if SMEs adopt broadly, report finds

Australian small and medium-sized businesses could generate up to $93 billion in additional annual economic value if they adopted artificial intelligence more broadly, according to new research from the Tech Council of Australia.

The Accelerating AI Impact for Small and Medium Enterprises report, undertaken by Delwood Advisory with support from Employment Hero, Google and Deputy, estimates an average SME moving from no AI use to broad adoption across its operations could achieve annual productivity gains worth $136,000.

Despite the potential scale, only around one in four SMEs currently uses AI, with just 5% having adopted it broadly across their organisation, the report found.

The research identified several barriers to uptake, including limited understanding of AI, workforce skills gaps, uncertainty about return on investment and concerns about security and reliability. The report recommends expanding access to affordable, practical training and expert advice, alongside industry-specific examples.

Among businesses already using the technology, 94% reported productivity improvements, while 54% of employees using AI reported improved job satisfaction, according to research cited in the report.

Regional businesses face a particular disadvantage; the report identified a substantial gap in AI adoption between regional and metropolitan businesses. Separately, construction, hospitality and retail recording some of the largest gaps in adoption between SMEs and larger enterprises.

"Small businesses employ almost two-thirds of Australia's private-sector workforce. Improving their productivity matters to the whole economy, and this research shows just how substantial the opportunity from AI could be," said Tech Council of Australia chief executive Dr Kate Cornick.

“But most SMEs are not yet using AI. Only around one in four is using the technology today, and very few have adopted it broadly across their business. There is a significant gap between what AI could deliver and what small businesses are currently getting from it."

Cornick said that for a business owner already dealing with rising costs and staffing pressures, even reducing the time spent on routine administration can make a difference, but many need practical advice to work out which applications will be useful and how to introduce them.

“The findings also show why support needs to be better targeted," she said.

"Regional businesses remain behind their metropolitan counterparts, and some industries face much greater adoption gaps. Government and industry can build on existing programs to help more small businesses put AI to use.”

The report draws on data contributed by Deputy, Xero and LinkedIn, and was produced with the Tech Council bringing together competing technology companies to contribute to a shared understanding of AI adoption among Australian SMEs.