Cisco, Governance Institute warn Australia risks losing $142 billion as AI regulation lags

A lack of rules governing artificial intelligence technology is holding Australian businesses back, a report has found, and could result in them squandering a $142 billion opportunity.

Networking firm Cisco and the Governance Institute of Australia issued the warning on Tuesday after conducting research across multiple firms, including banks, charities, education and retail groups.

More Australian organisations were adopting the technology in 2025, the study found, although the nation still lagged behind others in the Asia Pacific region.

The findings come after the federal government pledged to release a national AI plan before the end of the year, and following an update to Australia’s Voluntary AI Safety Standard.

The report, called Turning Hesitation Into Action, analysed Cisco’s AI Readiness Index and the institute’s AI Deployment and Governance Survey, in addition to holding discussions with representatives from the finance, education, non-profit and retail sectors.

It found Australian organisations were slow to adopt AI tools, with just 22 per cent expressing full confidence in the technology, up from four per cent in 2024.

Almost two in three organisations did not offer AI training to staff (64 per cent), and most could not effectively measure the return on their AI investments (93 per cent).

Many Australian businesses lacked the necessary expertise or guidelines to invest in AI innovation with confidence, Cisco Australia and New Zealand chief technology officer Carl Solder said, despite OpenAI’s estimate it could deliver a $142 billion dividend by 2030.

“Australia has been lagging relative to its peers across the industry - across the Asia Pacific and also globally,” he told AAP.

“There was one particular pillar ... that quite a few had expressed challenge around, which was governance.”

Roadblocks to adopting AI technology, according to the report, included ethical concerns, security and privacy challenges, operational hurdles, and a risk of falling behind competitors.

Organisations were also delaying investments in AI due to uncertainty about upcoming regulations, Governance Institute of Australia policy and advocacy senior advisor Daniel Popovski said.

The US had taken an innovation-first approach while European nations focused on managing risks, he said, but it was still unclear what AI rules and laws would look like in Australia.

“What we need is a bit of policy certainty from the current government when it comes to how they wish to regulate AI,” he said.

“They have, on the one hand, demonstrated that they want to take a risk-based approach and then they’ve pumped the brakes on that and now they’re saying they want more of that innovation ecosystem.”

The report issued six recommendations to organisations for the safe adoption of AI, including greater staff training, controls to ensure safe experimentation, and the formation of in-house governance committees.

The federal government has yet to issue mandatory guardrails for AI use, but Digital Economy Assistant Minister Andrew Charlton recently told a Brisbane event it would issue a national AI plan this year.