Sydney, 16 July 2026 | After years of having an acknowledged AI trust deficit, Australian businesses are embracing AI faster than ever, with investment, adoption and expectations on ROI all increasing according to new Â鶹ԭ´´ research. But that new-found confidence may also be creating new blind spots.

AI now supports over a quarter (29%) of tasks in the average Australian business, up from 25% last year¹, with leaders expecting that to reach 48% within two years, up from 41% in 2025. While Australia still trails high-adoption markets including the US, Germany, China, Japan and India, its higher-than-average pace of growth could potentially help close the gap.

°Őłó±đĚýÂ鶹ԭ´´ Value of AI Report 2026, conducted by Oxford Economics across more than 2,600 business leaders in 13 countries, identifies a clear gap between Australia’s AI ambition and its readiness to deliver on it, particularly around data foundations, governance frameworks and leadership oversight.

“Think of this as Australia’s AI school report: improving, but still not working to its potential,” said Angela Colantuono, President and Managing Director, Â鶹ԭ´´ Australia and New Zealand. “With an estimated AU$150 billion of AI-related infrastructure investment promised over the next several years, Australia has a once-in-a-generation opportunity to turn AI confidence into national competitive advantage. But infrastructure alone won’t get us there. And with multiple new AI obligations coming into play for Australia between now and the end of the year, driven by local and international regulation, organisations need to strengthen their data foundations, governance frameworks and leadership structures. Otherwise, we risk building the rails for an AI economy without being ready to run on them.”

Investment and ROI is accelerating

As an average, Australian organisations expect to spend approximately AU$35.5 million² on AI this year, up from AU$27.5 million last year, with a further 44% increase expected over the next two years. That said, Australian spend still trails the global average of AU$40.4 million by around AU$5 million, a gap that reflects both the opportunity and the urgency to move faster.

Returns are growing alongside that investment. Australian companies expect to drive ROI of 19% this year, up from 15% last year, and rising to 37% in two years – though still below the global average.

“The returns are starting to come but not fast enough, and not for everyone. AI value compounds over time. The organisations that act now, focus on the right end-to-end processes and get their data in order will look back in two years and be glad they did. The ones that wait will be asking why the gap got so hard to close,” continued Colantuono.

Agentic AI is central to those ROI expectations. ROI from agentic AI is expected to reach AU$21.2m in the next two years, more than quadrupling from last year’s estimates of AU$4.4m. Despite this, 62% of Australian businesses say they are satisfied with their current AI ROI, even though over half acknowledge AI is still not achieving its full potential.

Governance needs work

The governance picture is more concerning. Only one in five (22%) say they are mostly or fully ready in AI governance when it comes to skills and expertise, against 33% globally. Some 42% suggest they are deploying agents faster than they can standardise and govern them, rising to 68% when including those who are unsure. Over half (54%) of business leaders say employees are increasingly accepting AI outputs without sufficient scrutiny.

The operational risks are real: 43% do not have human-in-the-loop processes for agentic workflows, while nearly half (49%) report that AI agents have already taken incorrect actions during pilots or deployment, typically causing some rework and delays.

Leadership structures also trail global peers. Under half of Australian companies have a dedicated AI leader responsible for AI adoption (46%), leadership KPIs for AI (33%), or even training on AI capabilities and risks (41%).

Professor Toby Walsh, Scientia Professor of Artificial Intelligence at UNSW’s School of Computer Science and Engineering, said “Lack of understanding risks driving decisions by fear rather than evidence, and so closing the governance gap must start with closing the trust gap. Artificial intelligence is only valuable if people know when to trust it, and when to question it. Good governance shouldn’t be viewed as slowing innovation. It’s what allows organisations, employees and the broader community to adopt AI with confidence.”

Data recognised as essential, but readiness lags

While Australian leaders rank integrated data systems (64%) and data quality (51%) as the biggest enablers of AI readiness, data quality remains the biggest challenge for AI in Australia, with the share of businesses that say they are data-ready for AI falling from last year; nearly three-quarters (73%) report challenges with poor data quality.

Sovereign AI requirements are also shaping how organisations scale – 99% of Australian organisations say they now operate under some form of sovereign AI framework or requirement, and 76% cite data residency constraints that limit model choice.

Workforce readiness will determine whether momentum translates into value

More than four in five (82%) Australian businesses are not convinced their upskilling is keeping pace with AI’s rapid evolution, while 77% report shadow AI occurs at least occasionally. Only 1% of leaders believe AI will have no impact on workforce planning.

“These findings point to an urgent need for role-specific training, stronger safe-use guidance and change management that brings employees along as AI becomes embedded in daily work,” said Colantuono.

Confident adoption, early stage maturity

Australia’s maturity is progressing, particularly in generative AI, where 53% of organisations are scaling or leading – close to the global average of 54%, but still 17 percentage points behind the US, China and Germany. The gap is wider on agentic AI, where only 19% are scaling or leading versus a global average of 24%.

On more established technologies, Australia sits close to the global average in software automation and RPA but trails in traditional machine learning at 52% who are scaling or leading versus 59% globally.

In addition, the dominant adoption pattern remains project-by-project – targeted deployments within individual processes rather than coordinated, enterprise-wide transformation. Additionally, Australian organisations are less likely than global peers to connect AI strategy to industry-specific priorities.

“Australia has moved from AI hesitation to AI momentum,” Colantuono concluded. “Now we need to turn that momentum into maturity: stronger governance, better data and a workforce ready to use AI with confidence. Get that right, and Australia won’t just catch up, it can lead the world in responsible, high-impact AI,” concluded Colantuono.

More information on the research will be shared at the Â鶹ԭ´´ NOW AI Tour taking place at the Hordern Pavilion in Sydney on 12 August.  For more information or to register, click .

For the full report click here: Â鶹ԭ´´ Value of AI 2026 Australia

¹ For the Â鶹ԭ´´ Value of AI 2025 research findings, click here.

² Respondents were asked to provide financial estimates in USD. AUD figures are based on an exchange rate of AUD $1 = USD$0.69, using the exchange rate as of 13 July 2026.

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That said, Australian executives may be underestimating upcoming challenges. Less than half (47%) expected COVID-19 to increase flexibility for remote work over the next year. They did expect that maintaining productivity given new ways of working (49%) and establishing a culture that supported more remote employees (44%) would become top challenges for businesses, but at a far lower percentage than many other countries in the survey.

from employers and employees in 10 countries, including Australia. It was conducted in partnership with , Oxford Economics, and the Society for Human Resource Management (SHRM).

Deliberately design for employee engagement

Speaking during the , Sarah McCann-Bartlett, CEO of Australian HR Institute, said that her organisation’s research revealed challenges as companies moved to hybrid work. While most organisations In Australia fall somewhere along a continuum between onsite and remote work choices, having a hybrid model that equally engages all employees can be more difficult.

“There’s concern among some HR practitioners about creating a two-tiered system in the workplace, and that employee engagement among those who can’t work remotely will drop. Some are considering other flexibility benefits they can provide to support the work/life balance of these employees,” she said. “We need to give it the thought, time, consultation, project management, training, and engagement that we would any change project. Envision your future and deliberately work towards that.”

Don’t leave out culture change

Just because it’s possible to have workers all remote, doesn’t mean that’s necessarily the most productive working model. McCann-Bartlett advised companies to make hybrid work decisions in the context of the corporate culture.

“For those looking at moving to a new workplace model, culture change has to be part of this process. she said. “This is even more urgent for Australian organisations…to focus on building much healthier, and more inclusive, ethical cultures.”

Think digital first

Most of the surveyed Australian leaders were satisfied with the technology they have for new ways of working—but they may not be accommodating all workers. For example, less than 23 percent said that most of their workers had the necessary technology and environment effectively work remotely. Customer service workers (54%), general staff (51%), and service/field workers (51%) were especially disadvantaged in this area.

“HR needs to think digital first. It’s one people strategy that leads with digital,” said Jason Averbook, CEO and founder of Leapgen. “Digital starts with a mindset and vision…second, it’s how do I understand my people and how they work…how do I make sure I’m designing for them and not HR…third, that HR develops not processes, but employee journeys that generate feelings which create the employee experience…and fourth is the technology.”

Holistic employee experience

With the advent of digitalisation, employers have the tools to find out what workers are going through and act on their input. However, in the same survey, Australians were significantly less likely than respondents in other countries to conduct regular employee pulse surveys (25%).

“One of the biggest learnings from the pandemic is that humans are more important than ever, and I hope this stays with us in every country…it’s time to start checking in with people instead of checking up on people, enabling people instead of monitoring people,” said Averbrook. “Those organisations that listen and act are going to be key. We need to design the employee experience for the whole person…physical, emotional, spiritual, social and intellectual.”

Bridging the workforce learning gap

The report also found that although companies viewed reskilling as a long-term talent investment, just 30 percent expected to invest in learning programs for reskilling and upskilling over the next year vs. 38 percent in other countries.

“Reskilling is very pertinent because we’re looking at potential labor shortages in a number of areas,” said McCann-Bartlett. “The border has been shut for over a year with no skilled immigration and a reduction in foreign students…who stay on and take up roles in Australia. If we don’t focus on this, the skills our workforce needs are not going to be developed.”

The future of work is now

Organisations can take advantage of the massive appetite and opportunity for change by designing employee-centric HR strategies.

“People realise we have to be much more agile in fragile times,” said Averbook. “That takes an understanding of the employee. We have to stop counting heads and make heads count…then based on employee persona, we can say some work can happen in the office, at home…we design for the mindset of the organisation.”

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