Australian Boards Don’t Understand AI. Here’s Why That’s Your Problem Too.
New research from Queensland University of Technology confirms something that anyone who has worked in technology in Australia already knows: the people running our biggest companies mostly don’t understand technology.
Out of the 500 largest ASX-listed companies, more than half have zero directors with STEM expertise on their board. Over 15 years: a period that included the smartphone revolution, cloud computing, and now generative AI: the share of STEM-qualified directors crept from 8% to 13%. Meanwhile, accountants, bankers and lawyers still hold 42% of board seats.
This would be a minor curiosity in 2010. In 2026, it’s a structural problem.
This isn’t about credentials
I spent 40 years in tech. Aspect Computing, then 22 years at Microsoft, four at Telstra, and six at AWS. I’ve sat in boardrooms and executive briefings across Australia. The issue isn’t that accountants and lawyers are bad directors: many are excellent. The issue is that AI isn’t a technology project any more. It’s a business strategy question, a risk management question, a competitive question. And you can’t answer those questions well if you’ve never built anything with technology or led a team through a technology shift.
A former colleague of mine who spent years at AWS focused specifically on helping Australian boards and executive teams understand AI: not the technical details, but the strategic and governance implications. His observation: boards tend to either dismiss AI as a tech team problem or panic about it as an existential threat. Very few engage with it as what it actually is: a general-purpose capability that changes what’s possible across every function of the business.
That gap between the boardroom and reality has consequences.
When boards don’t understand the technology
Three things happen when a board doesn’t understand the technology it’s responsible for overseeing.
First, they can’t set strategy. If you don’t understand what AI can and can’t do, you can’t make good decisions about where to invest, which vendors to trust, or what competitive threats to take seriously. You end up relying entirely on management: which is fine if management is across it, but a single point of failure if they’re not.
Second, they can’t manage risk. ASIC has made it clear that cybersecurity is a board responsibility, not an IT department responsibility. AI introduces new risks around data, bias, liability, and regulatory compliance. A board that can’t interrogate these risks is flying blind.
Third, they move too slowly. The QUT research found that companies with more STEM expertise on their boards invested more in innovation and were valued more highly by investors. That’s not a coincidence: it’s because boards that understand technology make better resource allocation decisions faster.
Why this matters for small business
If you run a small business, you might think this is a large-company problem. It is. But it has knock-on effects.
The big companies that set the pace for AI adoption in Australia: the banks, the retailers, the insurers: are governed by boards that mostly don’t understand what they’re adopting. That means slower, more cautious, more compliance-driven AI rollouts. It means the tools built for Australian enterprise will lag global equivalents. It means the regulatory environment will be shaped by people who think about AI in terms of risk minimisation rather than value creation.
For small businesses, that creates an unexpected window. You don’t have a board. You don’t have a governance committee. You don’t have a 12-month approval process for a new software tool. You can move faster than the ASX 500 precisely because there’s no one sitting between you and the decision.
The QUT research shows Australian boards have barely changed in 15 years. Small businesses can change in a week.
What good looks like
In recent weeks, the Australian government signed an MOU with Anthropic, billions have flowed into data centre investment, and Anthropic confirmed a Sydney office. The appetite to invest in AI infrastructure is real.
But investment without governance is how you get Optus-scale breaches, how you get AI systems that discriminate and no one notices, how you get expensive technology projects that deliver nothing.
Good governance of AI doesn’t require every board member to be an engineer. It requires boards to ask better questions: What data are we training on? Who is accountable when the AI gets it wrong? What’s our exposure if this vendor goes under or pivots? Are we compliant with the Privacy Act as amended?
You can’t ask those questions well without at least one person in the room who has worked with the technology.
The opportunity nobody is talking about
The same research that highlights the problem also points to the opportunity. Companies with STEM-qualified directors on their boards innovate more and are valued more highly. That finding held even in low-tech industries.
For Australian businesses looking to differentiate: large or small: the question isn’t just “are we using AI?” It’s “do the people making decisions about AI actually understand what they’re deciding?”
Most Australian boards, it turns out, don’t.
That’s either a crisis or a competitive advantage, depending on which side of the gap you’re on.
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Sources
- StartupDaily: The weird thing about Australian boards is how few directors have tech expertise in the AI age
- Elms, N. & Weerasinghe, A. (2025). STEM expertise on Australian ASX 500 boards, 2007–2022. Journal of Accounting Literature. doi:10.1108/JAL-07-2025-0373
- 2025 Watermark Board Diversity Index. AICD
- Australian Government MOU with Anthropic
Frank Arrigo has spent 40+ years in tech: starting with a B.App.Sci (Computing) from Monash University (1982–1984), then Aspect Computing, 22 years at Microsoft (1991–2013), four years at Telstra (2014–2017), and six years at AWS (2018–2024). He publishes SmallBizAI.au, a practical guide to AI for Australian small business owners.
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