Budget wins praise but business warns of skills gaps

The Federal Budget has drawn a mixed response from business and technology leaders across Australia.

Executives across small business advisory, enterprise IT, industrial software, construction, aged care and HR technology welcomed the focus on productivity, digital investment and cost-of-living relief, while warning of ongoing gaps in workforce skills, compliance pressure and practical delivery.

Laurence McLean, Director of Operations at Peninsula Australia, said the small business measures signalled intent but would not ease all operational strains.

"The Federal Budget delivered several measures aimed at supporting small businesses, including making the instant asset write-off permanent, extending tax relief measures and introducing initiatives designed to reduce red tape and improve productivity. Overall, the Budget represents a positive signal for business confidence. However, whether it translates into sustained productivity gains will depend on whether SMEs are genuinely given more time and operational breathing room - not just financial incentives.

He said the measures would be welcomed by many small businesses, but a clear gap remained between the financial support announced in the Budget and the day-to-day pressures business owners still face. For many, the challenge is no longer just cash flow, but time, capacity and managing increasingly complex workplace obligations while trying to grow.

Tax incentives may help businesses invest in equipment and technology, McLean said, but they do not necessarily reduce the people-management and Fair Work Act compliance burden many owners carry every day. As confidence improves, he said, businesses should focus on building strong workplace foundations, because scaling without the right HR systems can quickly expose employers to operational and compliance risks. Reducing red tape on paper does not always reduce the practical administrative burden owners face.

Technology suppliers highlighted similar risks for smaller firms struggling with adoption costs and skills.

"The Budget's productivity agenda is hard to argue with, but productivity measures tend to be designed with larger organisations in mind. For a business of 20 or 30 employees, the barriers are more basic: can I afford the tools, and do I have someone who knows how to use them? Until both of those questions have better answers, the gap between what large enterprises can do and what SMBs can do will keep widening," said Vinayak Sreedhar, A/NZ Country Head, ManageEngine.

He said Australian small and medium businesses are already making tough decisions about where every dollar goes, and IT investment is often deprioritised because of the perception that serious tools come with enterprise price tags. That perception is increasingly outdated, he said, and can cost SMBs in ways that are not always obvious until something goes wrong, such as a security breach or compliance failure.

With economic growth forecast to slow and inflation remaining elevated, Sreedhar said Australian businesses are entering a period in which technology will be the main lever for maintaining competitiveness without increasing headcount. He said this is the moment to invest strategically, not retreat.

He also argued that Budget measures driving digital transformation in government must be matched by equal investment in security operations. Identity and access management, privileged access controls and real-time threat detection are not optional extras, he said, but the foundation of trustworthy and resilient digital government services.

Industrial software executives linked the Budget's AI and digital infrastructure focus to the need for a faster private-sector response.

"The infrastructure is going to be there for industry to avail of the benefits of AI - but it's now incumbent on industry to take advantage of that infrastructure," said Dave Such, Vice President Pacific, AVEVA.

Such said AI is now the biggest challenge and opportunity boards are discussing globally, particularly in heavy industry. In a competitive environment, he said, industry needs to get on the front foot by setting data strategies, ensuring the right tools are in place and taking advantage of proximity to AI infrastructure as it is built out. Government cannot drive this alone, he said, and industry must be behind the wheel.

He added that Australia must also begin transitioning its workforce to an AI era. AI promises productivity gains and long-term competitive advantage, but people need to know how to use it. Data literacy programs and AI training must begin now, he said, and responsibility is shared across the public and private sectors. Without that shift, he warned, an entire cohort of workers could be left behind, with wider economic consequences.

At integration specialist Boomi, attention centred on digital sovereignty and AI governance around the government's AI-related spending.

"The Federal Budget's emphasis on inflation, cost-of-living relief, and productivity comes as no surprise, and the government's turn to AI in pursuit of these gains is welcome, particularly where the focus extends to AI solutions built in Australia. This is where digital sovereignty stops being a talking point. The value of these commitments depends on where the data lives, where the models are trained, and who ultimately controls the infrastructure underneath," said David Irecki, CTO for APJ, Boomi.

He said that while no dollar figure had been assigned to a nationwide AI initiative, meaningful action was under way to improve the government's digital capabilities. Sustained backing from both government and industry in AI, digital skills and emerging technologies will be essential to build on that momentum.

Irecki said the Budget would be a significant test of the government's resolve. The initiatives lay foundations for further investment, but the next steps must include investment in AI talent, workforce upskilling and cross-sector collaboration to support AI-friendly legislation.

He added that AI guardrails and governance must remain front of mind to ensure adoption keeps pace with the safeguards needed to protect citizens, maintain trust and uphold the integrity of government decision-making. That means building connectivity and control into AI-powered operations, giving agencies end-to-end visibility over their data and the policy enforcement needed to scale responsibly.

Jo Anne Ruhl, Vice President and Managing Director, Australia and New Zealand, Workday, pointed to the Budget's AI Accelerator grants and workforce planning funding as a structural shift, while warning of inefficiencies in current AI use.

"The Federal Budget's allocation for 'AI Accelerator' grants, alongside significant funding for Jobs and Skills Australia to evaluate workforce requirements, represents a proactive investment in national growth. In addition to encouraging AI uptake, the commitment promises to create new possibilities and make work more human-centric. To succeed, we must address a hidden burden not explicitly named in the Budget - Australia's AI tax," said Ruhl.

She said many businesses currently use AI to increase speed, but that does not always lead to better outcomes. Workday data suggests staff save several hours a week through AI, yet much of that time is lost fixing or refining AI-generated results. At scale, she said, this inefficiency becomes an "AI tax", costing major organisations millions of hours.

According to Ruhl, a major cause of that tax is fragmented and unsupported adoption of AI tools. Without enterprise-wide implementation or proper guidance, employees often experiment in isolation. She said training is vital to minimise rework and reduce AI-related stress, and warned that businesses that fail to provide it risk higher burnout and turnover among the employees expected to lead the future workforce.

She also emphasised the need for an adaptable workforce ready for changing roles and new skill sets. Moving beyond rigid job titles to a skills-based approach, she said, would give employees and organisations the agility they need to thrive in the future of work.

As Australian businesses move from standalone experimentation to embedded AI, Ruhl said the focus must shift to improving output quality and equipping the workforce with the right technical skills. Organisations will extract the most value, she said, if they invest in skill development and workflow redesign at the same time, allowing employees to prioritise judgment and high-value decision-making.

Sector-specific measures in housing and aged care also attracted scrutiny.

"The negative gearing reform is a good start in encouraging housing developers to build new - or build more on existing blocks of land. Yet it might disregard what is truly important for Australians: not just a home, but a home we want to live in," said Dr Haren Sam, A/NZ Regional Director, Autodesk.

Sam said build-to-rent and new builds may help address the sheer number of homes Australia needs, but the design and construction process must come first. He warned that the negative gearing reform could encourage developers to cut corners in the name of productivity, rather than delivering homes built to last for generations.

He said new housing must be durable, and Australia needs to make better use of digital tools to analyse the environment and land being built on, while ensuring layouts suit the average Australian family. There is little value in delivering large numbers of new homes, he said, if people cannot make them feel like home.

Aged care technology provider SugarAI focused on whether new funding would translate into faster access for older Australians.

"The budget announcement to deliver more beds, packages and care for older Australians is welcome news for a sector that is already seeing significant strain due to increasing demand," said Adam Frank, SVP & GM - APAC, SugarAI.

Frank said the challenge is not just capacity, but how quickly and efficiently providers can connect older Australians with the care they need. While part of the funding will support construction of an additional 5,000 beds each year, he noted that demand continues to outpace supply, with the number of Australians aged 85 or older expected to grow by about 30,000 each year to the end of the decade, and an estimated 200,000 already waiting to access aged care services.

As demand grows, he said, the sector will need not only more beds and packages, but also better visibility across admissions, occupancy, enquiries and care coordination to reduce delays and improve the experience for older Australians and their families.

The focus now, Frank said, must be on helping providers respond faster and create clearer pathways from enquiry to admission and ongoing care, so people can access support sooner.