AI and the digital skills deficit are the most pressing policy priorities for the federal and state governments in 2025, a survey of some of Australia’s biggest tech companies has found.
The Australian Information Industry Association’s Digital State of the Nation survey shows AI policy alone climbed from fourth to second place on the list of IT policy in a year, reflecting growing unease over the federal government’s progress.
Just under 60 per cent of 80 industry respondents agreed more should be on AI policies that “promote safe and fast adoption”, pushing it above the level of concern for cybersecurity and “a digitised society and economy”.
Digital skills remained at the top of the list of priorities, continuing a trend that began in 2022 and indicating a pressing need for investment in the vocational and STEM education system.
AI has also become the most in-demand digital skill, cited by 68 per cent of respondents, up from 51 per cent last year. Cybersecurity and applications development are next most important skills.
The AIIA said the survey shows the digital economy “at a crossroads” and a tech sector constrained by economic uncertainty. This year, 51 per cent of respondents forecasting flat, small or negative employment growth, a rise from 45 per cent in 2024.
The survey also reveals optimism in Australia’s digital economy has plummeted with one fifth (20 per cent) of respondents reporting confidence, down from 48 per cent in 2022.
Businesses cite government spending reductions, outdated procurement systems, and underinvestment in modern infrastructure as critical constraints.
Notably, more companies are looking offshore for growth — underscoring the urgent need for Australia to foster a more conducive domestic environment for innovation.
AIIA chief executive Simon Bush said the survey results “reinforce the need for a well-defined and clear strategic direction from government with policies and regulations that drive adoption and investment in digital technologies”.
“The ambition to be a leading digital economy by 2030 is at risk, but with the new Albanese government having a clear mandate following the election, the time is now for a clear articulation on digital policy direction and leadership,” he said.
This year, the survey revealed 68 per cent of respondents believe federal and state governments do not understand the importance of ICT, down slightly from 72 per cent in 2024.
The AIIA says this indicates a continued and strong call to action for long-term vision, stable policy, and more meaningful public-private collaboration.
Following the release of the survey, AIIA has called on the government to deliver a National Digital Strategy led by the Prime Minister, Treasurer and a dedicated Minister for the Digital Economy.
The organisation also wants to see funding at the national level for AI capability, with a plan to target 100,000 digital cadetships by 2030.
Additional policy recommendations include:
- Establishing an AI Centre of Excellence to commercialise research and foster domestic capability;
- Reforming procurement to support SMEs and replacing outdated legacy systems with secure, AI-enabled solutions; and
- Unlocking public data in health, disability and clean energy to drive innovation
“The ICT sector would like to see decisive and coordinated action, led by the returning government with the AIIA survey showing what the industry expects and where action is most needed,” Mr Bush added.
“Our companies need clear direction on regulation and policy so that they can start investing in the economy with confidence, which will benefit the country with better and high-paying jobs.”
This is the fifth annual survey by the AIIA, which surveys its 400-strong membership annually to understand industry issues, aiding policy development and communication with the government.
The largest sector represented in the survey are small and medium-sized enterprises, with 38 per cent respondents coming from this sector. 26 per cent are multinationals and 24 per cent are large enterprises.
With Justin Hendry
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