Treasury has warned Australia could miss AI’s economic benefits, and COSBOA says 2.7 million small businesses need targeted support to catch up.
Australia risks missing out on the economic benefits of artificial intelligence unless small businesses are given targeted, practical support to move beyond basic use, the Council of Small Business Organisations Australia says.
The call follows new Treasury advice to Treasurer Jim Chalmers, which found Australian AI adoption remains widespread but shallow. Around two thirds of businesses report some use of AI, but fewer than 10% report significant adoption, with Treasury noting that access to the technology alone will not deliver productivity gains without changes to how businesses actually operate.
COSBOA says the country’s 2.7 million small businesses must be central to any push to lift adoption. Recent National AI Centre research found 43% of Australian SMEs had adopted AI to some degree, but COSBOA’s own research found just 14% had integrated it into their business operations or services in a meaningful way.
COSBOA CEO Skye Cappuccio said small business owners weren’t the barrier to progress.
“Small business owners are adaptable and entrepreneurial. The problem isn’t a lack of willingness to innovate. It’s that they are incredibly time-poor and often don’t know where to start,” Cappuccio said.
Time-poor, not tech-shy
Cappuccio said many small business owners were already using AI in limited ways, but that this fell well short of the deeper changes needed to drive real productivity gains.
“Many are already experimenting with AI for things like social media and marketing, but that is very different from embedding it into business processes in ways that genuinely save time, reduce administrative burden and improve productivity,” she said.
She acknowledged government programs supporting small business AI adoption already exist, but said they hadn’t gone far enough.
“Commonwealth, state and territory governments have invested to varying degrees in programs to support small business AI adoption, and those programs have merit. But we haven’t yet seen the kind of concerted effort needed to shift the dial at scale,” Cappuccio said.
Trust over sales pitches
For many small business owners, Cappuccio said, AI still feels disconnected from the day to day reality of running a business.
“For many small business owners, AI still doesn’t feel relevant to their business. Others lack confidence in their ability to use it or are unsure whether they can use it safely,” she said.
She said the solution was practical, trustworthy advice, not vendor pitches.
“That is why small businesses need practical advice and guidance they can trust. That support needs to be relevant to their industry and their business, and genuinely designed to help them, rather than sell them a particular product,” Cappuccio said.
A widening gap
Cappuccio identified two immediate priorities for government: building small business awareness of practical AI applications across industries, and improving AI literacy so businesses can apply the technology effectively.
She drew a contrast with how larger organisations are approaching the same shift.
“Large businesses are already investing heavily. They can hire specialist skills, develop their own AI tools and agents, train their staff and measure the productivity gains,” Cappuccio said.
“Small businesses cannot be expected to make that transition in the same way or at the same pace without an initial hand to adapt.”
Cappuccio warned that getting the response wrong carried real risk for the broader economy.
“If we get this right, AI can help small businesses become more productive and competitive. If we get it wrong, we risk creating an even greater divide between large and small businesses,” she said.
She pointed to the Government’s own National AI Plan as the vehicle to deliver that support.
“The Government’s own National AI Plan promised that the next phase of work would focus on helping small businesses scale their use of AI. We want to see that phase delivered, and funded, with awareness and AI literacy at its centre,” Cappuccio said.
COSBOA has previously called for policies incentivising digital adoption among small businesses, alongside a light-touch regulatory approach that avoids creating additional barriers to adopting new technologies such as AI.
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