Australia warned AI adoption is too slow for gains

The Australian Treasury has warned that the country risks missing out on the economic gains of artificial intelligence because businesses are adopting the technology too slowly. Industry leaders and risk specialists say the shortfall reflects gaps in strategy, governance and practical know-how across the economy.

The assessment has intensified a national debate over how Australian organisations deploy AI, and whether current efforts amount to more than experimentation at the margins. Executives in consulting, technology and insurance say many boards still treat AI as a feature to bolt onto existing operations rather than a catalyst for bigger change.

Daniel Keys, Head of Strategy at xAmplify, said many organisations begin with narrow internal use cases.

"Treasury's assessment reflects the reality for many organisations. We're seeing AI adopted first to improve staff productivity and automate discrete tasks. That is a sensible starting point because it builds familiarity, helps organisations manage risk, and gives people the capability and confidence to work effectively with AI.

"But it is only the first step. The bigger opportunity is not simply to make existing tasks faster. It is to redesign how outcomes are delivered, remove avoidable work altogether, and build operating models in which AI takes responsibility for routine processes end to end. That is where the more substantial productivity and economic gains will come from," Keys said.

Consultants say the gap between automating tasks and redesigning work sits at the heart of Treasury's concern about unrealised productivity growth. They argue that firm-level benefits will require investment in data, systems, skills and organisational design, not just software licences.

Katrina Pilcher, Chief Commercial Officer at Altis Consulting, said many companies still frame AI adoption as a defensive move.

"The Treasury warning this week that Australian businesses are not adopting AI quickly enough highlights a real productivity challenge. But simply encouraging businesses to invest more in AI risks missing the point. What many organisations, particularly small and medium businesses, need is practical education on how to invest in AI intelligently.

"Too many businesses have approached AI with a fear of being left behind, investing in tools because competitors are doing it or because they feel they should be 'doing AI'. But AI is no different from any other technology investment: it creates value only when it solves a clearly defined business problem.

"Before choosing a tool or committing a budget, businesses need to ask: what problem are we trying to solve? What outcomes are we trying to improve? How will we know if the investment has worked?

"The Australian government has an opportunity to provide more accessible resources to help businesses, particularly SMEs without large technology teams, work through those questions and build sound AI business cases. Australia won't realise AI's productivity benefits simply by increasing adoption. We need businesses making smarter investments in AI that solve genuine problems and deliver measurable value," Pilcher said.

Risk specialists say pressure is also rising on fast-growing financial technology firms, which sit at the intersection of AI deployment, data, payments and regulatory scrutiny.

Mark Christen, Senior Claims Adjuster, Professional and Financial Risks at Markel, said 2026 had sharpened expectations.

"Australia's fintech sector has proved it can scale at speed, but 2026 has made clear that governance must now scale just as quickly. Regulatory expectations around AI, cyber resilience, digital assets and anti-money laundering are no longer abstract. Enforcement priorities are now explicit, with concrete consequences.

"For fast-growing fintechs embedded in payment rails, cloud services and financial supply chains, risk sits between growth velocity and governance maturity. Boards must understand critical dependencies, test continuity plans, document controls, and treat resilience as core infrastructure. Speed remains the sector's advantage, but governance will determine who gets to keep it," Christen said.

Keys said the national debate now extends beyond individual projects to questions of local expertise and industry structure.

"For Australia, we also need to be deliberate about what we build from this investment. We have a real opportunity to develop deeper local capability: people who know how to apply AI in practical ways across industries, and Australian companies with the expertise to design, deliver and support it. If we get that right, AI investment can translate into lasting productivity growth, stronger skills and greater economic capability for Australia," Keys said.