Australia risks missing out on AI economic boom due to 'slow' business uptake

Australia's Treasury has warned that the country will miss out on the economic benefits of the artificial intelligence boom unless businesses move beyond basic use and make larger operational changes, with fewer than 10% of businesses reporting significant AI adoption. Treasurer Jim Chalmers said AI is shaping up to be the 'biggest economic transformation in our lifetime' and expressed confidence Australia can capture the upsides while minimizing risks.

Australia risks missing out on AI economic boom due to 'slow' business uptake, Treasury says Clare Armstrong /news/clare-armstrong/105969816 In short: Treasury says Australia risks missing out on the economic benefits of AI unless businesses go beyond basic use of the technology and make bigger changes to how they operate. Fewer than one in 10 businesses report significant AI adoption, while officials say the feared jobs shock has not yet materialised. What's next? Treasurer Jim Chalmers says he is confident Australia can capture the economic upsides and avoid the downsides of AI. Australia will miss the economic benefits of the artificial intelligence AI boom unless businesses actually use the technology to make bigger changes, Treasury has warned. New advice provided to Treasurer Jim Chalmers said Australia's current AI uptake was widespread but shallow, with less than 10 per cent of businesses reporting "significant" adoption. The Treasury note said much-feared job losses have not yet materialised, but officials are watching young and entry-level workers overseas for early signs. Officials described AI as the first "credible" accelerant of global economic growth in almost two decades, but found Australia was at risk of failing to capture the benefits of the technology. Mr Chalmers said AI was shaping up to be the "biggest economic transformation in our lifetime" and he was confident Australia could "maximise the economic upside and minimise the risks". "Advances in AI are coming thick and fast, with frontier labs reaching new milestones in a matter of weeks, not years,"he said. "We can't just sit around and hope the benefits of AI fall into our lap. We have to reach out and take them." Less than one in 10 businesses report 'significant' AI adoption Treasury said the "rate and breadth" of AI take up in Australian companies "remains slow". "Around two-thirds of Australian businesses report some AI adoption, but less than 10 per cent report significant adoption," the department's note said. Finance, insurance, information, telecommunication and professional services sectors have had the "highest" rates of AI adoption, but Treasury said access alone would not deliver economic gains. "Realising productivity gains requires investment in organisational capital, including changes to processes, business models, management practices and workforce skills," the note said. Additionally, there are large parts of Australia's economy, like health, education, construction and tourism, which are considered much harder to transform with AI. Treasury said the mass AI jobs wipe-out many feared has not materialised in Australia so far, with most studies finding "limited impacts" on the labour market to date. Officials are specifically watching young and new workers overseas for the earliest signs of AI displacing people form their jobs. Enterprize Tasmania chief executive Brian Collins, who leads a group that supports start-ups in the state, said small businesses found it hard to know where to start with introducing AI. "It's a confidence gap more than it is a skills gap … often times it's that people may think that AI is for big companies or that it's going to cost a lot of money and it's not for a five-person business,"he said. "Most small businesses don't have a dedicated tech person, so if you want to adopt AI then it's competing with all the other day-to-day operations the owner of a business is needing to balance. "There's also hundreds and hundreds of AI products … so there's no clear starting point and that creates paralysis rather than creating action." Judo Bank economic advisor Warren Hogan said government could do more to support businesses to make the AI transition. The bank specialises in small businesses. "We risk getting the worst of AI that is the displacement without the best, which is the broader productivity lift and the full employment and the much better economic outcomes that the next five to 10 years offers," he said. "I think we are on the cusp of the biggest lift in living standards we have seen in a generation and we cannot miss that opportunity." AI has potential to boost Australia's productivity The advent of AI has given Treasury "confidence" that its long-run economic growth assumption of 1.2 per cent remains "achievable" for Australia. Recent weak productivity had sparked questions about the feasibility of the country returning to that 30-year historic average rate of improvement. To tackle Australia's broader productivity issues, Treasury said AI alone was not a "substitute for structural reform". The Treasury note considered 1.5 to 2 per cent productivity growth a plausible upside, and between 0.5 and 0.8 per cent a realistic downside. Even the optimistic scenario does not envisage an overnight AI boom in Australia, while the downside could be the result of the country simply failing to make enough use of the technology. Data centre investment boom already here Treasury said the AI investment boom was already boosting economic growth before the promised productivity gains from the technology completely arrive. Globally, private AI investment totalled almost half a trillion Australian dollars in 2025, which was an increase of about 128 per cent over the year. Australia's own data centre construction boom is expected to be worth about $150 billion by 2030. There were about 162 operational data centres in the country as of March, with a further 130 proposed. Treasury said about two-thirds of the expenditure on data centres goes toward imports meaning the money ultimately flows out of Australia. A construction boom would still benefit Australian workers and companies, though Treasury said there would be increased competition for resources like labour, concrete, copper and electrical equipment. Officials likened it to the mining boom with the exception that it was less obvious what Australia would ultimately sell the world in return. Geopolitics was identified as a major risk for Australia, which remains heavily reliant on overseas technology. Australia joins AI meetings in US The federal government is alive to those concerns, with Deputy Prime Minister Richard Marles on Monday travelling to San Francisco ahead of meetings with tech giants Anthropic, OpenAI, Microsoft, Google and Amazon, as well as computer chip manufacturer NVIDIA. "We're working closely with the US to support Australia's national interests and national security, in areas such as defence and emerging technologies, like artificial intelligence," Mr Marles said. Assistant Minister for Science, Technology and the Digital Economy Andrew Charlton is also attending, and has flagged discussions on Australia's expectations for companies to invest in ways that "help build local innovation and capability". Mr Charlton will then go to North Carolina for a ministerial-level G20 meeting focused on innovation, AI skills and workforce.