AI adoption could add AUD $93 billion, report finds

The Tech Council of Australia has released research on artificial intelligence adoption by small and medium-sized businesses, finding that wider use of the technology could add up to AUD $93 billion in annual economic value.

The findings highlight a large gap between the projected gains from broader AI use and current adoption among Australian SMEs. Only one in four SMEs is using AI, while just 5% have adopted it broadly across their operations.

The report estimates that an average SME moving from no AI use to broad adoption across its business could achieve annual productivity gains worth AUD $136,000. Prepared by Delwood Advisory with support from Employment Hero, Google and Deputy, it drew on data from Deputy, Xero and LinkedIn.

The study argues that small businesses facing cost pressures and staff shortages may be able to use AI to reduce time spent on routine administrative work. Examples examined in the report include payroll and rostering in hospitality, and recruitment in retail.

Adoption gaps

The data shows several disparities. It identifies a gap in AI adoption between regional and metropolitan businesses, while construction, hospitality and retail are among the industries with some of the largest differences in uptake between SMEs and larger companies.

The report also cites research showing that 94% of SMEs using AI reported productivity improvements, while 54% of SME employees using AI reported improved job satisfaction.

According to the report, barriers to adoption include limited understanding of AI, workforce skills gaps, uncertainty about return on investment, and concerns about security and reliability. It recommends wider access to affordable training, practical advice and industry-specific examples to help businesses assess where AI may be useful.

Dr Kate Cornick, Chief Executive Officer of the Tech Council of Australia, said small firms had an outsized role in the broader economy.

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

"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.

"For a business owner already dealing with rising costs and staffing pressures, even reducing the time spent on routine administration can make a difference. 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. 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," Cornick said.

Business use

Employment Hero, which supported the report, pointed to its own internal use of AI as an example of how routine work can be reduced. It said the practical challenge for many owners is deciding where to begin and which applications can deliver measurable value.

"Ask a small business owner what tasks consume their week and they'll say payroll, super, awards and compliance. AI takes real weight off that pile. The report puts broad adoption at $136,000 a year for the average SME.

"We know because we've done it inside Employment Hero. Our product teams use AI to move through the roadmap faster, so customers get features months sooner. Our marketing team uses it to test and refine campaigns and web pages in days, not weeks. AI agents now handle 95% of routine HR support questions, so our people can focus on the harder ones. Specific examples like that are what an owner can copy this week.

"The report shows where owners get stuck. Many don't know where to start, and regional businesses are still behind cities. You can't demand change from an owner with no spare hours. Give them practical training, guidance and tools that work, especially in the regions and the sectors furthest behind. Lift small business productivity and you lift the country's," said Ben Thompson, Co-Founder and Chief Executive Officer of Employment Hero.

The report adds to the wider debate over how quickly small businesses can adopt AI tools as larger companies move faster and absorb more of the early benefits. Its focus on regional and sector-based gaps suggests policymakers and industry groups may need to target support more narrowly rather than rely on broad national programs.

For now, the central finding is that the economic upside remains largely unrealised because adoption is still limited among smaller firms, despite evidence that businesses already using AI report productivity gains and some improvement in employee job satisfaction.