Red tape and cyber risks weigh on director confidence heading into 2026 - Director Sentiment Index 2H 2025

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

The DSI for the second half of 2025 shows directors rank productivity growth (42%), global economic uncertainty (39%), and regulatory red tape (35%) as the 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%) of directors expect compliance burdens to increase in their business in 2026.

After showing tentative signs of recovery in the previous survey, director
sentiment has fallen again in the second half of the year. The DSI dropped 5.2
points to -29.1 and remains in negative territory for the seventh consecutive
survey since the second half of 2022.

AICD Managing Director and CEO Mark Rigott said rebuilding Australia’s productivity engine will need to come from better regulation, and backing innovation.

• 82% of directors say a major deregulation
  agenda would strengthen productivity and economic growth
• 52% of directors say planning regulations should be the main focus for deregulation followed by industrial relations (50%)
• 58% of directors say compliance & regulation is the main factor affecting their board’s risk appetite
• State-based taxes (52%); personal income tax (47%); company tax (46%) ranked top for taxation reforms to boost productivity