The confidence of Australian directors about the outlook for business and the future of the economy has dramatically improved since the election of the Coalition, but they see increasing red tape and the burden of regulation as Australia’s greatest economic challenges, according to the latest Director Sentiment Index (DSI) which is published by the Australian Institute of Company Directors .
For the first time in the history of the survey, a majority of directors surveyed agreed that ‘the current government understands business’ (55 per cent agree, compared to just 8 per cent in the last survey in April ). Further, almost 70 per cent of directors expect the new Government will have a positive impact on their business decision making, while 80 per cent expect it to affect consumer confidence positively.
The outlook for the future health of the Australian economy has significantly improved, although directors remains slightly pessimistic. Interestingly, there has been a notable increase in pessimism about the present and future health of the US economy. The outlook for the Asian economy continues to be positive and most continue to rate the European economy as the weakest economy.
When asked to identify the biggest economic challenges facing Australia, directors cited too much regulation or “red-tape’ and global economic uncertainty, together with low productivity growth.
More than 60 per cent of directors believe that the level of ‘red-tape’ and the time spent by the board on regulatory compliance has increased over the last 12 months, with more than 70 per cent of directors identifying workplace health and safety and preparing and paying taxes as the aspects of their business most affected by ‘red-tape’. Respondents saw general economic conditions followed by ‘red-tape’ and regulation as the biggest impediments to productivity growth.
The survey sends a clear message to Government, loud and clear, that reducing the regulatory burden, both through cutting existing red tape and taking a more efficient approach to creating any new regulation, must be a priority.