Australia’s 2026 federal budget promises to boost productivity through artificial intelligence (AI), but experts warn that relying on generic chatbots is not enough for meaningful economic gains.

Small and medium-sized enterprises often experiment with AI to draft emails or summarise documents, which may save time but won’t transform national productivity.Real value comes from tailored AI solutions that address specific industry problems.

For instance, construction firms can improve scheduling and safety risk management, while farmers can combine satellite imagery, soil data and weather forecasts for better decision-making.

Australia already has a strong AI foundation, with the National AI Centre tracking over 1,500 companies and significant investments in AI infrastructure since June 2025.

The budget includes measures like revised R&D tax incentives, refundable tax losses for startups, a permanent $20,000 instant asset write-off, and up to $70 million for the AI Accelerator program to strengthen local AI capability.

However, proposed capital gains tax changes could reduce incentives for startup founders and investors, while the sudden pause of the Industry Growth Program has left some grant bids uncertain.

Ultimately, the budget’s success will depend on aligning grants, tax incentives, and support infrastructure to help Australian businesses and researchers develop specialised, commercially viable AI solutions rather than merely providing access to generic tools.