The results from the Australian Institute of Company Directors’ latest Director Sentiment Index show that Australia’s business leaders are more confident at the beginning of 2017 than they have been in the past six years.

    Director Sentiment Index 1H20171:51

    Now in its seventh year, the Director Sentiment Index (DSI) is a key indicator of the issues that are important to our members and the wider director community. It is a driver for discussions on the economy, policy reform and corporate governance and is one way we consult and engage with members on advocacy issues.

    The latest survey conducted in late March, shows that directors are more confident than they have been in six years with overall sentiment increasing by 12.3 points.

    The lift in sentiment is largely due to increased confidence around domestic and international economic conditions.

    “Directors’ confidence in the outlook for the Australian economy rose significantly, as did their expectations around the health of the US and Asian economies. Concerns around global economic uncertainty and a China slowdown also dropped substantially,” explained AICD Chairman Elizabeth Proust AO FAICD.

    “The results show that directors feel buoyed by the economic outlook and are taking a positive growth mindset,” she said.

    Directors are also feeling particularly bullish about domestic conditions telling us they expect to invest more and hire more staff over the next 12 months. Confidence relating to these two measures has increased ten points and nine points respectively since the second half of 2016 and are at their highest point in five years.

    While optimistic on the business outlook, they remain concerned with the level of public policy debate in Australia and the effect the Federal Government is having on business decision-making and consumer confidence.

    Last month, the AICD released its national reform agenda, Blueprint for Growth, which recommended a range of structural reforms to improve public policy debate and encourage long-term thinking including the introduction of fixed four-year terms for the Federal Government.

    The results from the DSI show that directors rated tax reform as the most important short-term issue for the Federal Government to address, followed by energy policy and infrastructure.

    On the policy front, directors nominated tighter controls on foreign purchases, a boost to housing supply through streamlined construction approvals and reform of negative gearing arrangements as the three top measures governments should prioritise to address housing affordability.

    Other key findings

    • Directors are more pessimistic regarding the level of corporate taxation in Australia in the 1st half of 2017, with 60 per cent holding the belief that it is too high.
    • Only 25 per cent of directors believe the current AGM system is working well.
    • Almost 70 per cent say there is a risk-averse decision-making culture on Australian boards.
    • Directors are more pessimistic regarding the level of corporate taxation in Australia in the 1st half of 2017, with 60 per cent holding the belief that it is too high.

    The DSI results are a statistically valid representation of our membership, with 1,106 respondents from all sectors including private business (46 per cent), not-for-profit organisations (33 per cent), listed companies (9 per cent) and government (7 per cent). Conducted bi-annually, the survey measures the opinions, current priorities, future intentions and expectations of Australia’s directors and is the only indicator of its kind in Australia.

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