Industry leaders say SMEs hold the key to bridging Australia’s R&D and innovation gap
At the National Innovation Policy Forum in Canberra, industry and research leaders urged Australia to refocus on practical, people-first AI adoption to address its widening innovation deficit and unlock SME-driven growth.
Australia’s innovation performance continues to lag global peers. The nation invests just 1.68% of GDP in R&D, far below the OECD average of 2.7%, and ranks 105th globally for research commercialisation. Despite strong academic output, fragmentation across 160 programs and 14 government portfolios has stifled outcomes.
Professor Cori Stewart, CEO of the Advanced Robotics for Manufacturing (ARM) Hub, warned that the country is at a tipping point.
“We have industries beginning to understand their troubles, and AI that can support both SMEs and large corporations,” she said. “If we’re smart, we can do it—but there’s no Plan B.”
SMEs are seen as Australia’s hidden strength. Their agility and faster AI adoption cycles can drive measurable outcomes—reducing costs, improving efficiency, and accelerating innovation. Experts agree the barrier isn’t technological but cultural: aligning AI with business goals and workforce readiness.
“The challenge isn’t the technology—it’s the same people and process work we mastered when we moved from paper-based systems to computers,” said Professor Cori Stewart, CEO, ARM Hub.
This mirrors earlier technology transitions, when early adopters of computers and digital tools in the 1980s and 90s gained a lasting edge. Studies show that up to 70% of AI success depends on people and processes, not algorithms.
Through initiatives like AI Adopt Centres and Propel-AIR, ARM Hub is helping businesses translate AI into value by identifying high-impact problems, training staff, and deploying fast, ROI-driven solutions.
The Forum’s key takeaway: Australia doesn’t need more innovation programs—it needs smarter adoption. With AI as a catalyst and people at the core, the nation can shift from lagging to leading in global innovation.
