One in three Australian businesses are using free artificial intelligence tools to boost their productivity, a report has found, and most are sharing confidential company data with the software despite the risks.

HP and Microsoft revealed the trend in a study on Wednesday that also showed most small and medium businesses were eager to adopt AI technology, although just over half had done so.

The news comes after the federal government declared plans to make AI a "national priority" following its productivity roundtable in August, and after OpenAI announced it would establish an office in Australia in 2025.

The research, titled From Hype to Help, surveyed more than 500 business and IT decision-makers working for small to medium businesses in Australia.

It found almost nine in every 10 r

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