Australia risks losing $44bn AI prize amid national skills crisis

Two new reports reveal that a critical national skills gap and slow adoption among small-to-medium businesses are preventing a productivity surge and derailing the federal government’s plans for a future-proofed technology workforce.

It comes as Australia’s technology workforce has gone into reverse, derailing the federal government’s goal of creating 1.2 million tech jobs by 2030, and exposing a major weakness in its Future Made in Australia agenda.

A Deloitte Access Economics report, commissioned by Amazon, revealed that boosting AI adoption among small to medium businesses could add $44bn to Australia’s GDP annually.

The firm’s modelling suggests the financial incentive is immediate and exponential. The report found an SMB moving from an intermediate to a fully “enabled” level of AI use could expect a staggering 111 per cent increase in profitability.

But the findings reveal The vast majority of SMBs are deploying the technology in an “unorganised or ad hoc manner”.

Of the 1000-plus businesses surveyed, only 5 per cent are deemed “fully enabled,” meaning they have AI strategy embedded in core processes, centralised data systems, and comprehensive employee training.

“SMBs contribute more than half of Australia’s private sector GDP and generate 60 per cent of company profits. However, they also lag larger enterprises in productivity per hour worked,” Deloitte Access Economics partner John O’Mahony said.

“This productivity gap drags on Australia’s broader economic performance. AI offers a powerful way for SMBs to increase efficiency and drive economic growth – if they can clear the barriers that prevent them adopting the technology and unlocking its full value.”

The barriers identified for SMBs are less about high-tech resistance and more about practical challenges. This includes not knowing where to start, limitations in current business systems and data quality, and a skills deficit in the workforce. To clear these roadblocks, the report recommends a time-limited, $1bn AI investment boost for small businesses via a 50 per cent tax deduction on AI-specific products and skills training.

But the challenge extends beyond the nation’s two million SMBs. A separate report, The Productivity Pivot from technology services provider Datacom, highlights a critical national skills gap.

The once-booming tech sector lost more than 30,000 positions in the 2025 financial year, the first contraction since 2020, with job numbers falling to 949,172, according to the Department of Industry, Science and Resources annual report, released last month.

The department issued a blunt “not met” rating against the government’s goal to hit 1.2 million tech jobs by 2030, warning the downturn may mark the start of a sustained slide.

The Datacom report found that 58 per cent of Australians do not consider themselves tech literate, despite 71 per cent expressing a desire to improve their digital skills.

This has led to a call for a human-centred ‘techno-social’ approach that focuses on augmenting human capability rather than replacing it.

Laura Malcolm, Datacom Australia managing director, said a “legacy of mistrust” concerning automated decision-making was holding the nation back.

“If we want to use AI to its full potential, we must rebuild public confidence – ensuring systems are fair, explainable, and aligned with human values,” she said.

This skills and trust deficit is not just an economic headwind but an equity concern, according to Holly Hunt, CEO and founder of Women in Digital.

Ms Hunt said women remained under-represented in tech roles and Australia and were needed in the sector. She said “upskilling must be front and centre – not just to grow the tech workforce – but to ensure all Australians feel confident using AI and can actively shape how it empowers them at work”.

“If people feel left behind, the benefits won’t be shared equally,” Ms Hunt said.

“It’s important that Australians from all backgrounds have the confidence and skills to use AI. One of the best ways to achieve this is by ensuring they’re part of the design process and working in tech themselves. When diverse voices help build these systems, they’re far more likely to serve everyone fairly.

“Women make up half of Australia’s population, yet they remain under-represented in tech roles. Changing that is a huge opportunity. We’re at risk of falling short of the Australian’s government goal to reach 1.2 million tech jobs by 2030, and supporting women to enter the industry could be a key part of the solution.”

This article first appeared in The Australian as Australia risks losing $44bn AI prize amid national skills crisis