Australia launched its National AI Plan with $29.9 million for safety. But Xero’s Angad Soin argues the government’s curriculum approach ignores time-poor small businesses’ reality.
What’s happening: The Albanese Labor Government released the National AI Plan on 2 December 2025, a comprehensive roadmap to build an AI-enabled economy that harnesses the full potential of artificial intelligence for the benefit of all Australians.
Why this matters: Whilst the government emphasises education and training, over one third of SMEs have adopted AI, and only 29% of regional organisations are using it compared to 40% in metropolitan areas.
The Australian government has launched its National AI Plan with ambitious goals to position the country as a leader in artificial intelligence, but the blueprint faces immediate pushback from those closest to the small business sector who warn it prioritises education over practical adoption.
On 2 December 2025, the Albanese government unveiled the comprehensive plan designed to accelerate AI development and adoption whilst balancing innovation with protection from potential risks. The National AI Plan has three goals: capturing the opportunities, spreading the benefits and keeping Australians safe.
Assistant Minister for Science, Technology and the Digital Economy Dr Andrew Charlton said this is a plan that puts Australians first, making sure Australians can benefit from this transformative technology.
Government unveils AI roadmap
The government’s strategy centres on building both digital and physical infrastructure, supporting local AI capability, and positioning Australia as a leading destination for future AI investment. Today’s announcement is backed by a $29.9 million commitment to establish the AI Safety Institute in early 2026 to ensure that the government is monitoring and responding to risks, supporting agencies and regulators.
“The National AI Plan is about making sure technology serves Australians, not the other way around,” said Minister for Industry and Innovation Tim Ayres. “This plan is focused on capturing the economic opportunities of AI, sharing the benefits broadly, and keeping Australians safe as technology evolves.”
The plan sets out specific measures to support small and medium enterprises, regional communities and groups at risk of digital exclusion, with key initiatives like the AI Adopt Program and the National AI Centre providing tailored guidance and resources to help businesses and not-for-profits adopt AI responsibly.
Business Council Chief Executive Bran Black said AI is a transformational technology with the potential to lift productivity and improve Australians’ quality of life, calling the new plan a critical step towards realising those opportunities.
However, the plan’s emphasis on workforce training and education as the primary pathway to AI adoption has drawn sharp criticism from major players in the business software sector.
Time-poor businesses need tools
Angad Soin, Managing Director AU/NZ and Global Chief Strategy Officer at Xero, issued a strongly worded statement challenging the government’s approach, arguing it fundamentally misunderstands the constraints facing Australian small businesses.
“The government’s new National AI Plan offers a curriculum when what small business needs is a catalyst,” Soin said. “By assuming that education alone will drive the P&L benefits required to support the ‘backbone of the economy,’ the plan ignores the massive gap between knowing about AI and actually deploying it.”
Xero’s research reveals a striking disparity: nearly a quarter (23%) of Australian small businesses lack the time to research and learn how to use AI, double the rate of their contemporaries in the US and UK. For small businesses already struggling with productivity challenges, the additional burden of training represents an insurmountable obstacle.
“Ask your local small business owner where they are going to squeeze in training on AI, they simply cannot,” Soin stated. “If a policy requires a cafe owner working 60 hours a week to find time for a webinar, it will fail small businesses.”
The plan notes that only 29% of regional organisations are using AI compared to 40% in metropolitan areas, with 26% of regional businesses not aware of AI opportunities. These figures underscore the adoption challenge that critics argue cannot be solved through education alone.
Productivity gap widens
The stakes for closing the AI adoption gap extend far beyond individual businesses. According to the Productivity Commission and other researchers, Australian SMBs operate at approximately 50% of the productivity levels of large businesses.
“We risk sleepwalking into a two-speed economy,” Soin warned. “While early adopters see revenue growth, the majority (54%) mistakenly believe AI disappearing would have ‘no impact’ on them. This ‘readiness gap’ isn’t apathy, it’s a lack of accessible tools.”
Analysis from SmartCompany suggests most SME-facing activity in the plan consolidates what already exists, with the $17 million AI Adopt Program, which provides consultations, training and tools to help SMEs develop and use AI, brought under the National AI Centre’s remit.
The plan emphasises that building a workforce equipped to create the infrastructure, develop AI solutions and apply them effectively is critical to unlocking the full economic and social potential of this technology. It also confirms that workers and unions will play an important role in shaping AI uptake and adoption.
However, recent scandals suggest Australian businesses are keen to use AI to reduce labour costs without necessarily maintaining service quality, creating anxiety around the impact of AI on labour markets and work conditions.
Recent research shows the complexity of AI adoption for small businesses. Government data indicates 23% of SMEs remain unaware of how to use AI technology, whilst 42% have no adoption plans. Amongst those that have adopted AI, concerning gaps in deployment practices have emerged, with many relying on free versions of AI tools for confidential business tasks.
Three-part policy shift proposed
Rather than accepting the government’s education-first approach, Xero has proposed a concrete alternative framework focused on immediate adoption support. The company’s three-part policy shift includes establishing Digital Adoption Grants to help cover the cost of secure software with embedded AI capabilities that does the work for business owners, rather than requiring them to learn new systems.
The second element involves creating a curated marketplace offering a government-vetted list of trusted tools supported by co-funding, similar to Singapore’s successful SMEs Go Digital model. This approach would cut through complexity whilst providing quality assurance that time-poor business owners cannot conduct themselves.
Finally, Xero calls for time-limited tax incentives specifically for business software subscriptions, de-risking the initial investment in productivity tools and making adoption financially accessible for smaller operators.
“To fix this, we need to pivot from only funding ‘education’ to also funding ‘adoption’ to put tools in the hands of small businesses to start realising the benefits,” Soin argued.
The government’s plan does acknowledge the infrastructure foundations being laid, with private sector investments that could scale up to more than $100 billion already catalysed, with more in train. The Plan also supports the growth and commercialisation of AI solutions made in Australia by launching an AI Accelerator funding round of the Cooperative Research Centres program.
Business software experts have consistently emphasised that successful AI adoption requires practical, integrated solutions rather than standalone learning initiatives. As one industry analysis notes, businesses must approach AI deployment with clear strategies about solving specific problems rather than adopting technology because it’s trending.
“The technology exists. The desire is there. We just need policy that gives small business owners back their most valuable asset: time,” Soin concluded.
“As the technology continues to evolve, we will continue to refine and strengthen this plan to seize new opportunities and act decisively to keep Australians safe,” Minister Ayres stated, suggesting the government remains open to adapting its approach as implementation progresses.
The tension between the government’s vision of an AI-enabled economy and the practical realities facing Australia’s 2.5 million small businesses will likely shape policy debates throughout 2026. Whether education or adoption receives priority funding could determine whether Australia’s productivity gap narrows or widens in the years ahead.
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