What the national AI plan means for businesses in Australia

Australia’s National AI Plan, which landed with little fanfare in December 2025, has put the onus on businesses to play an active part in Australia’s AI future.

The 37-page document offers businesses long-awaited, clear guidance on what to expect and sets out three key priorities: “capture the opportunity”, “spread the benefits”, and “keep Australians safe” (regarding the launch of a new AI Safety Institute).

“The plan is a start, but not a big-ticket tool,” says Kylie Walker, CEO of the Australian Academy of Technological Sciences and Engineering (ATSE), which represents over 900 leaders in tech and engineering.

Australia has a real opportunity to lead in ethical AI and make the most of the technology, but Walker says the load must be shared. “The government is clearly signalling that it will provide leadership and some investment towards Australia’s aspiration to be a global or regional AI leader, but it sees most of the investment coming from businesses.”

Funding snapshot: A$460 million for AI and related initiatives

The plan focuses on building capability, with Australia placed as the second most popular destination for data centre investment globally in 2024 (after the US). Around A$100 billion is earmarked for Australian investment, from local operators to international tech giants including Amazon, Microsoft and Google. Much of this capital will be deployed with the purpose of corralling the required compute power, energy and advanced cooling demands.

The government is also exploring ways to unlock high-value data sets held by both public and private sectors for AI pilots and training, the plan states.

 

"The feedback I hear from companies with 200 employees or fewer is that they do not know where to start with AI, and the plan does not tell them how to catch the opportunities."

 

More than A$460 million in existing funding is committed to AI and related initiatives, including over A$362 million in research grants and A$17 million for the AI Adopt Program to support small and medium enterprises. 

Australia, however, significantly lags the global leaders on government investment. Australia’s A$300 million investment in AI over the past five years is a far cry from 2025 figures for the US at A$670 billion, China at almost A$170 billion, the UK at A$40 billion or Canada and Israel both around A$21 billion.

Calls for greater incentives to develop and adopt Australian made AI

Whether the goal is productivity gains or creating a domain-specific AI model, the plan still points to opportunities for businesses of all sizes.

Every larger business has a bespoke data set and practices unique to their enterprise, which Walker says can provide an opportunity to develop AI tools that can enhance their operations. “Big business can create a virtuous circle that will benefit the smaller businesses in the ecosystem, help the Australian economy and support Australia’s security by promoting sovereign AI.”

The plan highlights the government’s determination to provide infrastructure and onshore computing resources for Australian businesses to adopt and scale AI. 

“What is missing are incentives for Australian organisations to create their own AI and purchase locally developed solutions, rather than buying them off the shelf,” says Dr Sue Keay, director of the UNSW AI Institute and chair of peak body Robotics Australia Group. 

“From a national security perspective, why rely on frontier models from other countries for critical industries?” 

While Australia has well-reported domain-specific frontrunners, such as radiology diagnostic company Harrison.ai (cited in the report) and several other groups now working on large language models, Keay believes Australia’s National AI Plan largely leaves the business community to figure out how to seize the AI opportunity for itself.

 

"Unlike the Big Four accounting firms, small firms do not have the resources to invest in developing AI. Even finding the time to experiment and adopt AI can be challenging for smaller firms."

 

“The feedback I hear from companies with 200 employees or fewer is that they do not know where to start with AI, and the plan does not tell them how to catch the opportunities,” she says.
Why some SMEs are struggling to navigate the national AI opportunity

Startups and SMEs stand to benefit from increased domestic investment, whether they are developing new AI models or applying them in day to day operations.

For William Young FCPA, a big positive is how the new plan clearly steers responsibility for AI out of the IT department and makes it a top-down agenda item for businesses, from board level to business units and individuals. On the flipside, he says, there is room for stronger support for AI adoption among SMEs.

As the co-founder of Praxio AI, which launched an AI assistant to research and draft client documents for Australian tax professionals in August 2025, Young is meeting with numerous small accounting practices.

Firms with younger principals and partners tend to be trialling AI in their practices, he observes, but “SMEs and smaller practices need more help”. Upskilling and training people in AI is the essential starting point, Young says.

“Unlike the Big Four accounting firms, small firms do not have the resources to invest in developing AI,” he adds. “Even finding the time to experiment and adopt AI can be challenging for smaller firms.”

For Young and his business partner, Australia’s AI skills shortage could have been a sticking point in the early development phase of their business. Instead, the pair worked on their AI model with developers in two different offshore locations. “We could not find anyone in Australia to help us,” he recalls.

On the development side, Young notes more localised AI products are required across industries to meet the needs of Australian businesses and to grow the economy.

And time is pressing. For Australia to achieve its ambitions, the rapid evolution of AI needs to be factored into future plans, Young suggests. “Ongoing government consultation with industry is required because the technology is changing so fast.”