Which Aussie businesses are leading the AI race?

Sian Fenner
12:00pm November 13 2026

Westpac-DataX findings reveal while the share of Australian SMEs spending on AI has more than doubled in the past year, less than a third have identifiable spend on AI or digital tools. (Image: Unsplash) 

Australia’s small and medium enterprises (SMEs) could be major players in the quest to raise national productivity levels, and experts suggest AI can be a game changer.

All up, SMEs account for 54 per cent of value added to Australia’s GDP and 65 per cent of private sector employment, yet we estimate that currently SMEs operate at about a third of the productivity of larger firms. Adopting AI may be the way SMEs can help to close that productivity gap. 

The RBA reports that most firms are now investigating AI, but few have materially changed how work is done. According to recent findings from the Westpac-DataX Business Panel, the story is much the same for Australia’s SMEs.

The latest figures show a little under a third of SMEs in Australia have identifiable spend on AI or digital tools, while spending on AI itself is still low. Some 5.7 per cent of SMEs were spending directly on AI as of August 2026, compared with 7.5 per cent of businesses with annual revenues between $5 million and $150 million. 

Bigger businesses also prioritise a higher share of spending on digital tools, while firms already using digital tools are more likely to adopt AI, according to the OECD.

However, the DataX Business Panel reveals that the share of SMEs spending on AI has more than doubled in the past year. 

This follows improvements in leading AI models and the development of agentic AI tools that can carry out a sequence of tasks with limited human input, rather than answering one prompt at a time.

Who’s spending on AI tools? 

  • SMEs with annual turnover below $5 million: 5.7 per cent
  • Commercial businesses with annual turnover above $5 million: 7.5 per cent


Still, spending on AI remains small, at less than 1 per cent of SME operating expenses. 

Partly, this reflects the relatively low cost of many AI tools and the fact that our data does not capture free AI tools or AI functionality bundled into existing software subscriptions, such as Microsoft Copilot.

Adoption is rising, but unevenly 

Our data shows that the share of firms spending on AI has risen across all industries, with adoption concentrated in office-based sectors.

In Australia, AI spending is led by professional, scientific and technical services, with 10.2 per cent of SMEs operating in those industries showing identifiable spend on AI. 

Close followers are information, media and telecommunications at 9.6 per cent, and administrative and support services at 8.4 per cent. Each has risen by more than seven percentage points since early 2023.

These industries also have higher spending on AI and digital tools relative to their operating costs, at around twice the SME average, although it remains very low as a share of expenses. 

Health care has seen a notable increase, with 7.4 per cent of SMEs in that sector now spending on AI across a range of tasks, from AI scribes that take notes during patient consultations to imaging tools that help detect skin and other cancers.

Which SME sectors are spending on AI? 

  • Professional, scientific and technical services: 10.2 per cent

  • Information, media and telecommunications: 9.6 per cent 

  • Administrative and support services: 8.4 per cent

  • Health care: 7.4 per cent 

  • Transport: 2.6 per cent

  • Agriculture: 1.6 per cent 


At the other end of the dial, AI spend is lowest in agriculture, at 1.6 per cent, and transport, at 2.6 per cent. 

This does not mean these industries are standing still on technology. Agriculture has recorded a strong increase in identifiable spending on digital tools, coinciding with its relatively strong productivity growth over the past five years.

Adopting AI is only the first step. How much it lifts SME productivity over the longer term depends on how businesses use it. 

To narrow the productivity gap and help build resilience in a challenging economic environment, AI adoption will need to increase. But businesses will also need to rethink how they operate.

A version of this article was first published in Westpac's Backing Business Magazine


1 Source: Westpac-DataX Business Panel, August 2026 figures.

This analysis uses the Westpac-DataX Business Panel, which underpins the Westpac Business Signal. Figures are three-month averages. The Westpac-DataX Business Panel captures identifiable expenditure rather than overall AI use. It is therefore not directly comparable with survey-based measures of AI use. 

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