COSBOA urges support to boost small business AI use

The Council of Small Business Organisations Australia has urged the Federal Government to expand support for small business adoption of artificial intelligence, warning Australia risks widening the gap between small and large businesses.

The call follows Treasury advice that Australia could miss the economic gains from AI unless businesses move beyond basic use and change how they operate. COSBOA argues small businesses should be central to that effort, with policy focused on helping owners understand where AI fits in their operations and how to use it safely.

Australia has about 2.7 million small businesses, and COSBOA says their role in the economy means any national AI strategy will fall short if adoption remains shallow among smaller firms. The group is urging governments to place greater weight on practical advice, sector-specific guidance and broader AI literacy.

Recent findings point to a gap between experimentation and deeper use. Research from the National AI Centre found 43 per cent of Australian SMEs had adopted AI to some degree, while COSBOA's own research found only 14 per cent of small businesses had integrated AI into operations or services.

The gap goes to the centre of the productivity debate. Basic use of AI tools for tasks such as promotional content may be spreading, but business groups and policymakers are increasingly focused on whether companies are changing workflows, reducing manual administration and using software in ways that reshape day-to-day operations.

Skye Cappuccio, Chief Executive Officer of COSBOA, said small business owners were open to new technology but often lacked the time and direction needed to apply it meaningfully.

"Small business owners are adaptable and entrepreneurial. The problem isn't a lack of willingness to innovate. It's that they are incredibly time-poor and often don't know where to start," Cappuccio said.

She said many owners were already testing AI in limited areas, but had not yet embedded it in core functions.

"Many are already experimenting with AI for things like social media and marketing, but that is very different from embedding it into business processes in ways that genuinely save time, reduce administrative burden and improve productivity.

"Commonwealth, state and territory governments have invested to varying degrees in programs to support small business AI adoption, and those programs have merit. But we haven't yet seen the kind of concerted effort needed to shift the dial at scale.

"For many small business owners, AI still doesn't feel relevant to their business. Others lack confidence in their ability to use it or are unsure whether they can use it safely," Cappuccio said.

COSBOA's position adds to a wider policy debate over whether current public investment is too fragmented. Support schemes exist across jurisdictions, but the group argues they have not yet produced broad-based change in small business use of AI.

Two priorities

COSBOA says the next phase of policy should focus on two immediate priorities: raising awareness of practical AI applications across industries, and improving AI literacy so owners and staff can use tools in ways that improve efficiency.

The approach reflects concern that many small operators do not need abstract discussion about advanced systems, but straightforward examples tied to retail, hospitality, professional services, trades and other sectors. In COSBOA's view, support should be designed around business needs rather than a vendor or a single product.

"That is why small businesses need practical advice and guidance they can trust. That support needs to be relevant to their industry and their business, and genuinely designed to help them, rather than sell them a particular product," Cappuccio said.

The group also contrasted small businesses with larger companies, which often have internal technology teams and bigger budgets to test software, train staff and measure returns on investment. Smaller firms, by comparison, may rely on owners making decisions between customer work, compliance and cashflow demands.

"Large businesses are already investing heavily. They can hire specialist skills, develop their own AI tools and agents, train their staff and measure the productivity gains.

"Small businesses cannot be expected to make that transition in the same way or at the same pace without an initial hand to adapt.

"If we get this right, AI can help small businesses become more productive and competitive. If we get it wrong, we risk creating an even greater divide between large and small businesses.

"The Government's own National AI Plan promised that the next phase of work would focus on helping small businesses scale their use of AI. We want to see that phase delivered, and funded, with awareness and AI literacy at its centre," Cappuccio said.

COSBOA has previously argued for policies that encourage digital adoption by small businesses and for a light-touch regulatory approach that does not add barriers to uptake of new technologies. Its latest intervention suggests the debate is shifting from whether small firms should engage with AI to how quickly they can move from trial use to integration across the business.

Founded in 1977, COSBOA represents small businesses through a network of more than 50 national and state-based member organisations.