Directors push for national productivity agenda

The latest Director Sentiment Index (DSI) for 2H 2025 has reinforced calls for an urgent overhaul of regulatory settings in order to lift Australia’s flagging productivity.

The survey of 1,072 AICD members was conducted by Roy Morgan between September 15 and September 29.

The DSI shows directors rank productivity growth (42 per cent), global economic uncertainty (39 per cent), and regulatory red tape (35 per cent) as top economic challenges facing Australian business.

Concerns about both productivity and red tape have risen sharply. Two-thirds of directors believe that regulatory and compliance requirements are actively constraining productivity, and over half of directors say this is the main barrier to new investment. Three-quarters (75 per cent) of directors expect compliance burdens to increase in their business in 2026.

Despite recent interest rate cuts, confidence in current Australian economic and business conditions has not lifted and significantly more directors (40 per cent), believe the outlook for the coming year is weak.

AICD Managing Director and CEO Mark Rigotti said the message coming from directors was clearly that the next wave of prosperity won’t come from rate cuts or rhetoric.

“Rebuilding Australia’s productivity engine will need to come from better regulation and backing innovation and taxation reform.

“Directors are telling us that the lack of focus on an effective regulatory system is one of the biggest barriers to lifting productivity, particularly the cumulative burden of overlapping and inconsistent regulations and a lack of coordination between regulators and different levels of government.”

AICD Chief Economist Mark Thirlwell said monetary easing alone had not restored corporate confidence, with sentiment weighed down by a range of ongoing structural challenges in the economy.

“Poor productivity levels are seen by more than three-quarters (78 per cent) of directors as posing a risk to Australia’s economic outlook over the next 12 months.

“The housing crisis is a key area of concern, with more than half of directors (52 per cent) believing that housing supply should be the top priority for investment aimed at boosting  productivity, followed by investment in regional infrastructure and renewable energy sources.”