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Honcho Research
Q1 2026Quarterly Edition

Australian State & Territory
Digital Fitness Score

Tracking business formation, AI adoption, broadband, and digital skills across every state and territory. Data from ASIC, ATO, NBN Co, ACCC, ABS, LinkedIn, and NAIC.

Australia Digital Fitness Score Q1 2026: ACT Dominates, NT Lags

  • ACT scores 95.8 in Q1 2026, making it Australia's most digitally fit jurisdiction by a margin of 11 points over NSW
  • South Australia records the fastest average broadband speed of any reporting state at 101.4 Mbps, yet sits fifth overall due to low company registration activity
  • AI adoption ranges from 88 per cent in the ACT to just 45 per cent in the Northern Territory, exposing a 43-point national gap in business AI readiness

"What this quarter's data makes clear is that digital fitness in Australia is not a capacity problem for most jurisdictions — it is a consistency problem. The ACT demonstrates what high performance looks like across every weighted metric simultaneously, and the distance between that benchmark and the rest of the country tells us where investment and policy attention need to be directed."

— Miralda Ishkhanian, Chief Operating Officer at Honcho
Three key findingsQ1 2026
1

95.8 vs 84.7

ACT Leads By An Unbridgeable Margin

The ACT posted a composite score of 95.8, outpacing second-placed NSW by 11.1 points — the largest gap between any two adjacent rankings this quarter. Its ABN registration rate of 160.42 per cent of the national benchmark and an AI adoption rate of 88 per cent anchor that lead across the two heaviest weighted components. No other jurisdiction comes close on either measure.

2

NT 45.9

Northern Territory Signals A Structural Divide

The Northern Territory recorded a composite score of 45.9, less than half the ACT's result and nearly 26 points below seventh-placed Tasmania. Its AI adoption rate of 45 per cent and digital skills score of 40 are the lowest across all eight jurisdictions, while the absence of a broadband speed data point reflects infrastructure gaps that compound the shortfall. The NT's result is not a marginal underperformance — it represents a category of its own.

3

SA 99.57

South Australia Punches Above Its Weight

South Australia's ABN registration rate of 99.57 is the highest among the five mainland states, and its broadband speed of 101.4 Mbps leads all jurisdictions where data was recorded. Despite those standout metrics, the state's composite of 78.9 reflects drag from a company registration rate of just 26.47 — the lowest on the mainland — which limits its overall ranking to fifth.

Editor's note

ACT's composite score of 95.8 leaves every other jurisdiction at least 11 points behind in Q1 2026.

Q1 2026 — State rankings

#1ACT95.8
#2NSW84.7
#3VIC81.0
#4QLD80.8
#5SA78.9
#6WA76.9
#7TAS72.0
#8NT45.9
Published by Honcho Research · Business Switch Pty Ltd (ABN 83 134 235 304)
About this scoreMethodology and scoring
Score design

Why Australia needed a different kind of score.

What this score measures

Every existing state and territory business ranking in Australia measures registration volume in raw numbers. The biggest states win by construction, because they have the most people. That is not insight. It is geography.

This score asks two different questions. First: which states and territories are building genuine digital fitness and AI capability in their business base, not just registering businesses? Second: when you compare states and territories on an equal footing of per 10,000 residents, where is entrepreneurial and digital dynamism actually concentrated?

The answers are materially different from what any existing ranking produces.

What "digital fitness" means here

Digital fitness is not a binary. It is a composite of eight measurable conditions: whether new businesses are forming at a healthy rate per resident; whether the infrastructure exists to support AI and cloud tools; whether the workforce has the skills to use them; and whether state and territory policy is creating the enabling conditions for all of the above.

This score measures observable data from primary government and commercial sources including ASIC, ATO, NBN Co, ACCC, ABS, NAIC and LinkedIn, updated quarterly. Every component, weight, and source is published in full.

How the composite score is calculatedEight components · Weighted sum · Indexed to 100 at highest-performing state per component
20%
Company registrations
ASIC · monthly · normalised
Raw count divided by ABS ERP, then multiplied by 10,000. Removes the mechanical population-size advantage from the ranking.
20%
ABN registrations
ATO/ABR via data.gov.au · monthly · normalised
Same normalisation applied. Captures sole traders and partnerships: the majority of new business activity that company data alone misses.
15%
AI adoption index
NAIC / Fifth Quadrant · quarterly · inherently comparable
Already expressed as % of SMEs per state. No further normalisation required: a rate is directly comparable across states regardless of population.
10%
NBN premises coverage
NBN Co · quarterly · inherently comparable
Expressed as % of serviceable premises activated. Already a rate, directly comparable across states without further adjustment.
10%
Online trading
ABS Business Characteristics Survey · annual · inherently comparable
Expressed as % of businesses selling online by state. A rate, directly comparable. One-year lag is this component's acknowledged limitation.
10%
Broadband speed
ACCC Measuring Broadband · quarterly · inherently comparable
An average expressed in Mbps, directly comparable across states. Excludes mobile broadband. Higher speed = higher score.
10%
Digital skills penetration
LinkedIn Digital Economy Report · annual · inherently comparable
Expressed as % of workforce with verified digital skills by city/region, directly comparable. Skews toward professional workforce; acknowledged limitation.
5%
State/territory digital policy
Honcho assessment · annual · rubric published
Scored 0–3: AI strategy (+1), digital economy fund (+1), startup program (+1). Lowest weight due to subjectivity. Tracks enablers, not outcomes.
ℹOn normalisation: Only the two registration components (company registrations and ABN registrations) require per-resident normalisation, because they are raw counts that scale directly with population size. All remaining scored components are already expressed as rates, percentages, or averages that are inherently comparable across states and territories of different sizes. No further adjustment is needed or appropriate for those components.
Component weights are fixed for each calendar year. Any methodology changes will be flagged and prior-period scores restated for comparability. ICT hiring was assessed for inclusion but removed: it can be suppressed by AI substitution of traditional ICT roles even in highly capable states, confounding the signal.
State RankingsQ1 2026 composite scores
Digital Fitness Composite

Eight states and territories. Eight components. One ranking.

Composite digital fitness score by state, Q1 2026 (8 components, 100 = maximum)
1
Australian Capital Territory #1 OverallAI adoption #1
The Australian Capital Territory leads the nation comfortably with a Digital Fitness Score of 95.8, driven by an exceptional ABN registration rate of 160.42 per 1,000 people, the highest AI adoption index in the country at 88, and the strongest state and territory policy score of 4.9.
96
/ 100
2
New South Wales #2 OverallTop company registrations
New South Wales claims second place nationally with a Digital Fitness Score of 84.7, backed by a strong broadband speed index of 99.8 and the highest raw company registration rate among the mainland states at 36.03 per 1,000 businesses.
85
/ 100
3
Victoria Fastest broadband (states)
Victoria holds third place with a score of 81.0, posting a competitive broadband speed index of 100.1 -- the highest of any state -- though its digital skills score of 69 leaves some room to close the gap on New South Wales.
81
/ 100
4
Queensland Solid NBN coverage
Queensland sits fourth overall with a score of 80.8, supported by a solid NBN rollout completion rate of 94 per cent, though its online trading index of 55 is the second lowest among the eastern seaboard states.
81
/ 100
5
South Australia Highest ABN rate (states)Top broadband speed (states)
South Australia finishes fifth overall with a score of 78.9, but its standout result is an ABN registration rate of 99.57 per 1,000 people -- the highest of any state and second only to the ACT nationally -- reflecting a vibrant small business formation environment.
79
/ 100
6
Western Australia
Western Australia ranks sixth with a score of 76.9, recording the lowest broadband speed index among states with a fixed network at 96.7, yet its ABN registration rate of 78.39 per 1,000 people remains competitive with the eastern states.
77
/ 100
7
Tasmania High ABN registration rate
Tasmania ranks seventh with a score of 72.0, supported by a surprisingly high ABN registration rate of 114.45 per 1,000 people, though its company registration rate of 13.27 and online trading index of 50 are the lowest of any state, highlighting a gap between business formation and digital commerce activity.
72
/ 100
8
Northern Territory
The Northern Territory finishes last with a score of 45.9, significantly below the next-ranked state, and its NBN rollout completion rate of just 66 per cent -- a full 26 percentage points behind the ACT -- underscores the infrastructure challenges that continue to weigh on its digital economy potential.
46
/ 100
#1
ACTAustralian Capital Territory
95.8
#2
NSWNew South Wales
84.7
#3
VICVictoria
81.0
#4
QLDQueensland
80.8
#5
SASouth Australia
78.9
#6
WAWestern Australia
76.9
#7
TASTasmania
72.0
#8
NTNorthern Territory
45.9
Composite digital fitness score by state, Q1 2026 (7 components, 100 = maximum)
#State / TerritoryCompositeCo. regsABN regsAI adoptionNBN rateOnline tradingDigital skillsBroadbandPolicy
1 Australian Capital Territory Leader
96
5/3
2 New South Wales
85
4/3
3 Victoria
81
4/3
4 Queensland
81
4/3
5 South Australia
79
4/3
6 Western Australia
77
4/3
7 Tasmania
72
3/3
8 Northern Territory
46
2/3
Dot ratings relative within this dataset only. Filled teal = top quartile per component; half gold = second quartile; empty = bottom half. Not absolute scores. All eight states and territories are included.
Composite scores are weighted averages of eight component scores. Each component is indexed against the highest-performing state or territory for that period, which receives a score of 100. Change column shows rank movement vs prior quarter; negative values indicate an improvement.
Migration overlayContextual signal, not a scored component
Context signal

Migration policy is digital fitness policy.

Net overseas migration data is presented as a contextual overlay, not a scored component. It explains the mechanism behind SA and WA's distinctive registration signals and has direct implications for which states will move up or down this ranking in coming quarters.

Net overseas migration by state, FY2024 (ABS, thousands). WA and SA highlighted as targeted-migration states.
ACT migration signal
The ACT records the highest business registration density of any territory.
The ACT's ABN registration rate of 160.42 far exceeds every other state and territory, pointing to exceptionally strong business formation activity.
TAS migration signal
Tasmania's ABN registration rate punches well above its overall digital rank.
Despite ranking seventh overall, Tasmania posts an ABN registration rate of 114.45, suggesting robust new business activity relative to its composite score.
SA migration signal
South Australia shows a standout ABN registration rate against its mid-table rank.
South Australia's ABN registration rate of 99.57 is the third highest nationally, outperforming states ranked above it including New South Wales and Victoria.
WA migration signal
Western Australia leads all mainland states on ABN registration density.
Western Australia's ABN registration rate of 78.39 exceeds that of New South Wales at 77.69, despite sitting two places lower in the overall rankings.
New company registrations per 10,000 residents, Q1 2026
NSW
36.0
per 10k
QLD
34.5
per 10k
VIC
32.6
per 10k
ACT
29.8
per 10k
WA
29.0
per 10k
SA
26.5
per 10k
NT
18.5
per 10k
TAS
13.3
per 10k
ABN registrations per 10,000 residents, Q1 2026
ACT
160.4
per 10k
TAS
114.5
per 10k
SA
99.6
per 10k
WA
78.4
per 10k
NSW
77.7
per 10k
QLD
73.8
per 10k
VIC
73.2
per 10k
NT
56.5
per 10k
Company vs ABN registrations per 10,000 residents, Q1 2026. Note WA's ABN rate.

The forward implication: The fastest-climbing states and territories in future editions will be those with the most targeted skills migration pipelines. States that combine high-volume targeted migration with strong broadband infrastructure and an active AI adoption program are structurally positioned to close the gap on the leaders.

Migration data: ABS National, State and Territory Population. Business registration multiplier literature from Department of Home Affairs Business Innovation and Investment Program outcomes data. Not a Honcho proprietary calculation. Net overseas migration presented as contextual overlay only; it does not contribute to composite scoring.
Component Scores8 components × 8 states
Breakdown

Component scores by state and territory

Component profiles, all eight states and territories (radar, indexed to 100 per component)
ComponentWeightNSWVICQLDWASAACTTASNT
Company registrations20% 36.03 32.55 34.48 28.97 26.47 29.82 13.27 18.5
ABN registrations20% 77.69 73.19 73.78 78.39 99.57 160.42 114.45 56.51
AI adoption index15% 77 75 73 71 72 88 70 45
NBN premises coverage10% 96 95 94 92 94 98 93 66
Online trading10% 60 57 55 53 52 65 50 45
Broadband speed10% 99.8 100.1 98.1 96.7 101.4 94 99.6 —
Digital skills penetration10% 70 69 67 65 66 80 64 40
State/territory digital policy5% 4.2 4 3.8 3.7 3.6 4.9 3.4 2.2
Raw data values as entered. Composite scores are derived by indexing each value against the highest-performing state for that component (score = 100) then applying the published weights. See Methodology for full calculation.
State AI & Digital Policy5% of composite score
Policy

Government strategy documents are not digital fitness outcomes. But they track enabling conditions.

The policy score carries 5% of composite weight — the lowest component — because a state can publish an AI strategy without a single SME adopting AI. The score tracks enabling conditions, not results. The rubric is published in full and is open to challenge.

Rubric: Three binary criteria, +1 each. (1) Dedicated AI strategy: publicly released document specifically addressing AI adoption at state level. (2) Active digital economy fund: funded program actively accepting applications. (3) Funded startup program: state-government-funded accelerator or pre-seed fund with active cohorts.

StateAI strategyDigital economy fundStartup programScoreKey programs and notes
NSW ✓ ✓ ✓ 3 / 3
VIC ✓ ✓ ✓ 3 / 3
QLD ✓ ✓ ✓ 3 / 3
WA ✓ ✓ ✓ 3 / 3
SA ✓ ✓ ✓ 3 / 3
ACT ✓ ✓ ✓ 3 / 3
TAS ✓ ✓ ✓ 3 / 3
NT ✓ ✓ ✗ 2 / 3
Policy scores assessed as at the quarter end date against publicly available government documents and program application portals. Updated annually or on material policy announcement. Corrections from state government agencies are welcomed at research@honcho.com.au
Methodology
Scoring

How the Digital Fitness Score is calculated

Composite score

Each jurisdiction's composite Digital Fitness Score is a weighted average of eight component scores. Each component is indexed against the highest-performing state or territory for that period, which receives a score of 100. All other states are scored relative to this benchmark.

Component weights

Company registrations20%
ABN registrations20%
AI adoption index15%
NBN premises coverage10%
Online trading10%
Broadband speed10%
Digital skills penetration10%
State/territory digital policy5%

Company and ABN formation rates are calculated per 10,000 ABS Estimated Resident Population. Broadband speed, NBN coverage, and online trading percentages are sourced directly from government and regulatory publications. Digital skills scores use LinkedIn's methodology for skills penetration. State policy scores are assessed quarterly against published AI and digital economy strategy documents.

On normalisation: Only the two registration components require per-resident normalisation, because they are raw counts that scale directly with population size. Rate-based components (AI adoption, NBN connection, online trading, LinkedIn skills, broadband speed) are indexed directly without further normalisation, as they are already expressed as rates or averages that are comparable across jurisdictions of different sizes. The weighted sum of all indexed component scores produces each state or territory's composite. Weights are fixed for the calendar year.
Sources
Data

Primary data sources

Company registrationsASIC Monthly Company Registration Statistics
ABN registrationsATO/ABR ABN Registration Dataset (data.gov.au)
Population denominatorsABS Estimated Resident Population — Cat. 3101.0
AI adoptionNational Artificial Intelligence Centre (NAIC) AI Adoption Tracker
NBN rolloutNBN Co Quarterly Corporate Reports
Broadband speedACCC Measuring Broadband Australia
Online tradingABS Business Characteristics Survey — Cat. 8167.0
Digital skillsLinkedIn Digital Economy Report
State policyState/Territory Government AI Strategy Documents
Migration overlayABS National, State and Territory Population; Department of Home Affairs visa outcomes

The Honcho Australian State & Territory Digital Fitness Score is produced by Honcho Research, a division of Business Switch Pty Ltd (ABN 83 134 235 304). Data is sourced from public government and regulatory publications. Scores are indicative only and do not constitute financial or investment advice. Past performance is not indicative of future rankings. All data is current as at the quarter end date. Australian English throughout.

Honcho
Australia's business registration and managed services platform

Honcho helps Australians register, run and grow their businesses. From company and business name registration to registered office address, annual compliance, domain, email and virtual services, Honcho is the platform over 900,000 Australians have used to start and manage their businesses.

The Honcho Australian State & Territory Digital Fitness Score is published quarterly as a contribution to the public understanding of how Australia's SME base is building digital and AI capability.

Visit honcho.com.au →
Disclosure and editorial independence
This report is produced and funded by Honcho, a registered trademark of Business Switch Pty Ltd (ABN 83 134 235 304). All score data, component scores, and composite rankings are derived mechanically from the primary sources listed in the Sources section. No component weighting, state or territory score, or editorial finding has been adjusted to reflect Honcho's commercial interests or to favour any state or territory government, industry body, or third party. The methodology is published in full and is open to independent scrutiny.

Citation: When referencing scores or findings from this score, the full name must be used: Honcho Australian State & Territory Digital Fitness Score. Abbreviated references that omit "Honcho" do not constitute a valid citation.
Honcho Australian State & Territory Digital Fitness Score
Q1 2026  ·  Published
honcho.com.au
Research · Honcho Research