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Category: Economic Trends / Small Business / Business, Economics and Finance

Policy uncertainty damaging business confidence: AICD

Thursday, 1 Dec 2016 08:02:18 | Peter Ryan

Mr Brogden says Brexit and Presdient-elect Donald Trump have dented sentiment. (ABC News: Nikki Short)

Growing uncertainty over the direction of the Federal Government is continuing to damage consumer and business confidence, according to a key survey of company directors out today.

A twice yearly survey by the Australian Institute of Company Directors (AICD) found almost 80 per cent of directors believe the state of policymaking is "negatively impacting" confidence.

Only 8 per cent of directors feel the Government's performance is having a positive impact on their ability to make decisions, according to the Director Sentiment Index, which polls company directors.

Almost 40 per cent of directors identified economic policy uncertainty, political instability and short-term thinking as the top three issues likely to keep them awake at night.

External Link: Peter Ryan speaks to AICD's John Brogden

AICD chief executive John Brogden said company directors remain worried about the size of the budget deficit and a lack of plans for infrastructure spending and taxation reform.

But Mr Brogden told The World Today that, after several years of political uncertainty, company directors have little choice but to continue taking care of business.

"The encouraging news is that, despite global headwinds and pessimism regarding the Australian Government's ability to deliver real reform, directors are getting on with business themselves," Mr Brogden said.

However, Mr Brogden conceded Britain's shock decision to leave the European Union and Donald Trump's election as US president have clearly dented director sentiment.

"2016 will be a year that we'll be talking about decades from now. It has surprised us and stunned us at almost every turn," Mr Brogden said.

"That is reflected in the fact that directors rated global economic uncertainty as the number one economic challenge currently facing Australian business."

Mr Brogden also criticised the Federal Government for dragging its feet on infrastructure investment despite ultra-low global borrowing costs.

"Directors have been crying out for many years now for the government to invest in infrastructure," Mr Brogden said.

Despite the uncertainty about global and local issues, the index showed that general business confidence has increased by 10 points since July this year and is at its highest since 2013.

The survey found 34 per cent of directors expect their businesses to increase investment and staffing over the next year.

Follow Peter Ryan on Twitter @peter_f_ryan and on his Main Street blog.

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