CPA Australia says government’s cautious AI regulation approach is sensible but warns of missed opportunity to support struggling business adoption.
What’s happening: CPA Australia warns the Productivity Commission’s cautious AI regulation approach, whilst sensible, misses opportunities to provide meaningful business support for technology adoption.
Why this matters: Australian SMEs risk competitive disadvantage as regional rivals embrace technology faster, with implications for productivity growth and economic competitiveness across the Asia-Pacific region.
Australian small businesses are falling further behind Asia-Pacific competitors in technology adoption, with just over a quarter making profitable technology investments last year compared to regional averages exceeding 50%, according to new research from the country’s largest accounting body.
The organisation’s response to the Productivity Commission’s second interim report highlights a growing technology adoption gap that could undermine Australia’s economic competitiveness. “This is definitely not an ‘if you build it, they will come’ scenario,” said Gavan Ord, CPA Australia’s Business Investment Lead.
“The Commission’s report questions whether Australian businesses are already behind the curve internationally in the adoption of AI – and the answer is a categoric yes,” he said.
Reality check required
The Productivity Commission’s framework for AI regulation receives support from CPA Australia, but Ord argues the report assumes capabilities that don’t exist for many small and medium enterprises.
“We needed the Commission to provide recommendations to government on incentives to help boost the uptake of technologies, including AI, as well as guidance on the benefits and practical support that businesses need to implement it,” he said.
“The report assumes a level of knowledge, expertise and capability that doesn’t match reality for many SMEs who focus 100 per cent of their time and effort on getting through each day with little time to consider investing in technologies, even if they think it could be beneficial to do so.”
Asia-Pacific comparison
CPA Australia’s annual Asia-Pacific Small Business Survey reveals the extent of Australia’s technology lag. The research shows just 26% of Australian small businesses invested in new technology that proved profitable over the past 12 months, compared with a survey average of 56% across the 11 markets included.
Singapore, Malaysia and Vietnam demonstrate significantly higher technology adoption levels, highlighting competitive advantages their businesses gain through digital integration. Only 39% of Australian small businesses reported that more than 10% of their revenue comes from online sales, compared to the survey average of 67%.
The skills and support gap extends beyond technology investment. Just 18% of Australian small businesses sought expert advice from IT consultants or specialists last year compared to the average of 28% across the region.
Business confidence reflects this technology divide. Only 55% of Australian small businesses expect to grow in 2025, compared with the Asia-Pacific average of 71%.
“In addition to ensuring a sensible approach to AI regulation, the government should invest in supporting business growth by offering better incentives for the uptake of technologies than is currently the case, as well as providing educational programs on how to benefit from it,” Ord said.
Digital reporting overdue
CPA Australia welcomes the Productivity Commission’s recommendations to make digital financial reporting mandatory for disclosing entities, urging immediate implementation for listed companies through phased rollout.
“This does not need to be an issue for the Treasurer’s roundtable,” Ord said. “The benefits of digital financial reporting for businesses and the community more broadly are clear and already being evidenced around the world. A phased approach should begin as soon as it is practical to do so.”
The push for mandatory digital reporting addresses longstanding inefficiencies in corporate data management. “Manual data extraction is expensive, slow, and prone to error. Digital financial statements are machine readable and with aid of digital tools, including AI, can be easily and accurately analysed by investors, audit firms, regulators, and others,” he said.
Despite voluntary digital financial reporting being available for over a decade, uptake remains negligible. This illustrates broader challenges facing even large enterprises in adapting to technological change.
“Australian companies have had the ability to voluntarily lodge digital financial reporting for over a decade, yet its complete lack of uptake underscores how challenging it can be – even for large enterprises – to adapt to technological change,” Ord noted.
“Cost-free access to corporate financial data is bound to result in macroeconomic benefits that go to the heart of this inquiry. We’ve contemplated long enough, the time has come make digital financial reporting a mandated reality.”
The timing coincides with the Treasurer’s Economic Reform Roundtable later this month, where business leaders will discuss productivity and competitiveness challenges facing the Australian economy.
Keep up to date with our stories on LinkedIn, Twitter, Facebook and Instagram.
