The Australian Institute of Company Directors’ has released its biannual Director Sentiment Index (full report here), which has revealed dissipating faith in the Abbott Government.
The survey, which captures the views of more than 500 company directors, found overall sentiment has fallen 6.8 points in the first half of 2014 following a big post-election bounce in the second half of 2013 (see next chart).
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Nevertheless, despite the latest fall, sentiment remains above the same time last year.
According to the Survey:
- Directors have become more pessimistic about the health of the Australian economy, with the US economy expected to be stronger in the coming year. The positive sentiment regarding the Asian economy continues, although has declined since the previous survey.
- Sentiment around business conditions has declined, with confidence regarding the general business outlook and specific sector outlook returning to a neutral position. However, directors still expect their primary business to grow in the coming year.
- There has been a substantial decline in the number of directors that believe the government’s performance positively affects their business decision making and consumer confidence.
- While a majority of directors believe the current Federal Government understands business, the proportion agreeing with this statement has declined since the previous survey.
- Low productivity growth is now considered the biggest economic challenge facing Australian business, followed by global economic uncertainty. Too much regulation or ‘red-tape’ dropped from being the biggest concern in the 2nd half of 2013 to the third biggest.
- Directors maintain that the level of ‘red-tape’ and the time spent on regulatory compliance has increased over the last 12 months. However, there is increased optimism that ‘red-tape’ will decrease over the coming year.
- General economic conditions followed by ‘red-tape’/regulation are still seen as the biggest impediments to productivity growth.
- For the seventh survey in a row, infrastructure is rated as the top priority for the Federal Government to address both in the long and short term. A majority maintains that the building of the NBN is a positive thing for Australia.
- Sentiment regarding the proposed paid parental leave scheme is negative, with a majority of directors believing the government should defer or scrap the scheme.
- Nearly half of directors maintain that abolishing the Carbon Tax would affect their business positively, while a similar proportion believes it would not affect their business at all.
