A new report from the Tech Council of Australia concluded that Australia’s large, medium-sized and start-up companies must increase spending on technology adoption to contribute to an economy-wide push to increase overall technology investment levels and ensure the country does not fall behind the rest of the world.

the report, was published in Novemberargues that Australia should adopt a national technology investment target. It suggests that an increase in total technology investment from 3.7% to 4.6% of the country’s GDP could contribute AUD 39 billion in productivity gains by 2035. The increase would require an increase in both investment in technology use and spending on technical research and development.

Researchers said increased spending could increase economic productivity and keep Australia competitive with global markets.

Technology adoption is part of the path to productivity

The Tech Council reported that Australian businesses are currently investing $90 billion in technology use – equivalent to 2.2% of GDP, or about $2,100 per capita. Although this figure has risen from $1,700 per capita in 2016-17, the share of GDP has remained unchanged.

According to the report, investing in technology adoption involves acquiring technology that is new to the business but not necessarily to the industry, the country or the rest of the world. This distinguishes spending on adoption from investment in R&D technology, which involves the development of entirely new technology.

The Tech Council argues for a GDP increase of at least 0.4% of investment in technology use in large, medium and small businesses, bringing the total share to 2.6% of GDP by 2035. A 0.7% increase in R&D spending would put investment in technology investment at 4.6% of GDP — well above the currently estimated 3.5%.

Researchers found that if Australia raises total technology investment even higher to 6.9% of GDP, $167 billion in productivity gains could be unlocked by 2035.

“Australians enjoy some of the highest living standards in the world,” Tech Council CEO Damian Kassabgi said in a press release. “To ensure that we can continue to grow, we need to see an increase in productivity growth.”

He added: “Australia’s productivity growth has been falling for some time, which is one of our most pressing economic challenges. To achieve the level of growth we need to reverse this and see our economy thrive requires greater technology development and adoption.”

Australia lags behind in business technology adoption

The report noted that Australian companies are lagging behind the EU in terms of technology adoption.

Australia and the EU compare their respective levels of technology use using a Digital Intensity Indexwhich measures factors including digital skills, cyber security, digital business management, digital technology and infrastructure as well as e-commerce and online presence.

Australian companies cluster more around the lower rungs of the rating system. Just over half of all Australian businesses have a ‘baseline’ level of technology use, compared to 41% of businesses in the EU Only 10% of Australian businesses were classified as either ‘established’ or ‘advanced’, compared to 25% of businesses in the EU

This low figure comes despite technology adoption having practical benefits. Research from the Office of Innovation & Science Australia and AlphaBeta showed that the Australian Stock Exchange’s top 200 companies actively investing in technology adoption and R&D between 2005 and 2016 were more likely to survive and grow than other companies on the index that prioritized paying dividends.

A survey conducted by Ai Group in 2024 found that Australian businesses are addressing their challenges in adopting technology. 84 percent of the companies surveyed were found to be actively using new technologies, including 100% of large companies, 82% of medium-sized companies and 63% of small companies.

How much technology adoption is required in Australian businesses?

The Tech Council anticipates increased adoption investment from large, medium and small businesses. Given the current levels of technology use shown in the EU comparison, researchers estimated that:

• Small businesses could contribute 0.19% of GDP in technology use investment by 2035 by more of them (12%) moving from a “baseline” status of digital intensity to an “evolving” category.
• If a greater number (17%) of medium-sized enterprises made the leap from “emerging” to “established” by helping innovative small businesses scale up to this size, they could add 0.16% to GDP.
• Another 0.05% of GDP could be gained from large firms if 7% of them move from “established” to “advanced”. This would see 5% of local businesses labeled as ‘advanced’.

Financial management training could increase investment

The Tech Council recommended Australia explore opportunities to create technology industry-led training programs for all types of businesses in the economy. The training programs could focus on opportunities for companies to adopt technology and manage technology risks.

“Managerial skill has been shown to have a significant impact on productivity, in part through the role managers play in facilitating innovation and exploiting the benefits of technologies,” the report said. Latest Gartner research found that CIOs have greater success when they elevate CXOs across companies.

Researchers also suggested that these programs be established as “vendor-agnostic executive education programs,” to avoid being associated with special technology interests. This would encourage wider uptake of economy-wide technological upgrading to support future investment.

“Technology investments enable companies to commercialize their research and create new business models, making our economy more productive and resilient,” Kassabgi said. “There are also practical benefits to increased technology use, which can accelerate growth for both small and large businesses.”