UPDATE: Major Australian businesses are stalling on the adoption of artificial intelligence (AI) technology due to regulatory uncertainties and a shortage of skilled workers. A new report from Amazon Web Services, released today, reveals that despite these challenges, AI usage in Australia surged by 16% between 2024 and 2025, with an additional 180,000 businesses now leveraging the technology.
The study, which surveyed over 2,000 executives, shows that while more than half of Australian companies are integrating AI into their operations, most (58%) are only utilizing it in basic capacities. In contrast, nearly one in four businesses are tapping into advanced AI solutions, with small and nimble companies leading the way. “Start-ups are pioneering transformative innovation, with 42% using AI to create new products and services,” said Michelle Hardie, head of professional services at Amazon Web Services.
However, the report highlights a stark contrast in AI adoption rates between large enterprises and smaller firms. Only 18% of large businesses are employing AI for new service development, raising concerns about a potential two-tier economy that could hinder Australia’s AI-driven growth and innovation.
Three key barriers are impeding broader AI adoption, according to the study. Respondents cited a lack of digital skills (39%) and challenges in attracting skilled local workers (38%) as significant hurdles. Additionally, the absence of financial support and clear regulatory frameworks are contributing to the slow uptake. Alarmingly, less than 24% of participants are aware of the government’s AI consultation efforts.
With AI emerging as a national priority, the federal government issued voluntary AI guidelines in September 2023, yet has yet to respond to public consultations regarding mandatory regulations. “It’s crucial that AI regulation is predictable and innovation-friendly,” Hardie emphasized. “Finding the right balance between fostering AI adoption and addressing emerging risks is essential.”
As Australia faces a growing urgency to harness AI’s potential, businesses are calling for straightforward and effective ethical controls. The federal government must act decisively to create an environment that encourages innovation while safeguarding against risks.
Stay tuned as developments unfold on this vital issue affecting Australia’s economic future.
