Australia’s sluggish economy is pushing firms to chase productivity gains through technology and smarter policy settings, but that path also risks putting pressure on jobs, investment decisions and long-term business confidence.
Right now, economic growth in Australia sits well below its long-term trend, and it does not look like it will accelerate quickly without a stronger policy reset. Large professional services firms are signalling they plan to hold investment and headcount broadly steady over the next year even as they keep spending heavily on innovation, technology platforms and people. One major firm has already committed around $80 million to new technology and innovation initiatives, while also putting money into culture, ethical leadership and audit quality as part of its long-term strategy.
Behind the scenes, artificial intelligence is becoming a central lever in that strategy. AI tools are being rolled out across everyday workflows and service lines, following structured governance frameworks that emphasise transparency and responsible use. Early productivity gains are already beating internal expectations, with AI now embedded as part of how teams work rather than a separate experiment. This is reshaping hiring patterns. Demand is rising for some roles, new specialist jobs are emerging and demand is falling for others, prompting companies to invest heavily in training, digital upskilling and access to trusted AI platforms so staff can adapt to AI-enabled work.
At the same time, flexible work continues to evolve. Many organisations are sticking with “structured flexibility” and encouraging staff to spend at least two days a week in the office without imposing rigid mandates. The idea is to blend in person collaboration with the benefits of remote work and to support wellbeing, lift team cohesion and protect workplace culture. Staff feedback suggests flexibility remains a key reason they stay, so employers are trying to balance predictability for teams with personal choice about where work gets done.
Global politics is adding another layer of complexity. Trade tensions and shifting tariffs are not directly hitting service firms, but they are weighing on clients, especially exporters, by slowing decision-making and lengthening sales cycles. Changes in immigration and mobility rules are also tightening access to international talent. In response, demand is rising for advice on supply chain diversification, tax, compliance and risk management as organisations try to build resilience in a more fragmented world. Australia’s policy stance of cooperating with major partners where possible while reserving the right to diverge when needed seems to be maintaining strong economic links with key markets like China while deepening security ties with allies such as the United States.
Energy policy and the shift to renewables sit in the middle of this broader competitiveness story. Businesses are mainly asking for consistency and long-term certainty rather than constant policy changes. One large advisory firm already sources 100% renewable electricity for its offices and has been working toward net zero emissions since 2017, aiming to cut its carbon footprint by half by 2030. It is also working with staff and suppliers to support a fair transition, accepting that energy prices may be volatile in the short term but expecting them to stabilise as the system matures.
Looking ahead, Australia’s biggest challenge appears to be lifting productivity in a way that improves real wages and living standards without sacrificing social outcomes. That likely means higher investment in equipment, technology and social infrastructure backed by a tax system that supports businesses of all sizes, keeps compliance costs in check and gives certainty around returns. Continued funding for education, health and support for vulnerable groups should deliver long-term economic and social gains. To fully capture the upside of AI, regulation will need to be proportionate, strong enough to build trust in new technologies but flexible enough to encourage innovation. Housing policy will also remain critical, as secure and affordable housing underpins both workforce stability and broader economic resilience.
