Directors are more optimistic about the outlook for Australian business conditions than at any time since the biannual Director Sentiment Index (DSI) began in 2011 — and they’re anticipating increasing investment and demand for labour in 2018.
The survey found Australian directors are more optimistic about economic conditions in Asia, the US and Europe, with concerns abating over Brexit and the US economy.
Continuing the positive trend over the past two years, directors are also more confident about the outlook and conditions in their own sector. Confidence in the overall economic outlook for the year ahead more than doubled from 13 points to 29 points; and 57 per cent of directors said they expect their business to expand in 2018.
Directors have high expectations for rising investment, labour demand, business exports and outsourcing. Optimism around future profits, wages growth and decreasing unemployment is also evident. Expectations of future credit availability are more optimistic.
“We’ve recently seen the strongest employment results since 1994,” said AICD Chairman Elizabeth Proust AO FAICD. “That directors are so confident about employment and wages growth over the coming 12 months suggests the economy may be turning a corner after a sustained period of flat wage growth and investment.”
The DSI, by Ipsos Connect, surveyed the views of 973 AICD members between 21 September and 4 October 2017.
Politics and productivity
The backdrop of a chaotic Australian political discourse has been an ongoing concern for directors, who have nominated “less focus on short-termism” as the main measure needed to lift national productivity. More than 80 per cent of directors surveyed rated the quality of public policy debate as poor or very poor.
The survey was conducted prior to the October High Court decision, which ruled five MPs ineligible to sit in Federal Parliament because of their dual citizenship — threatening the Turnbull Government’s slim majority and posing potential legal challenges to many of its decisions.
Infrastructure, energy policy and international competitiveness were nominated the top three issues the Federal Government should address in the long term — high energy prices the No. 1 issue directors want the governments to tackle. “Directors clearly feel the current impasse over energy policy is holding us back. But, in the long term, infrastructure remains the big-ticket item to grow our productivity and prosperity,” said AICD managing director and CEO Angus Armour FAICD.
Culture and diversity
Directors nominated a greater focus on the long term in planning and reporting, accountability for corporate misconduct, culture and diversity as areas needing improvement in relation to business standards and social licence.
The AICD’s Blueprint for Growth national reform document, released in April 2017, recommended a range of structural reforms to improve public policy debate and encourage long-term thinking.