- Company directors are calling for infrastructure to be put at the top of the priority list in next month’s Federal Budget.
- Members of the Australian Institute of Company Directors (AICD) want investment in renewable energy infrastructure. Only 10% think the government should prioritise investment in coal power.
- The AICD says some of the discussion about coal power only heightens uncertainty which is bad for business confidence.
Australia’s company directors want infrastructure at the top of the priority list in next month’s Federal Budget.
The latest Director Sentiment Index released today by the Australian Institute of Company Directors (AICD) shows 42% saying infrastructure investment is needed ahead of controlling government debt and tax reform.
The index is the only indicator measuring the opinions and intentions of directors on the economy, government policy and governance regulations.
When asked to list their three priorities for infrastructure investment, directors nominated renewable energy (50%), regional infrastructure (42%) and telco networks (38%).
Here are the priorities the directors believe Treasurer Scott Morrison should concentrate on in the budget:
Angus Armour, AICD’s Managing Director and CEO, says the results of the latest index show under-investment in infrastructure is a clear concern.
“Not only do directors rate infrastructure as the top priority for the budget, it also remains the top priority for the government to address in the long-term, followed by the ageing population and climate change,” he says.
“Directors want a national focus on infrastructure, including a needs-based forward pipeline of projects and reforms to encourage innovative and expanded funding options.
“It’s notable that directors nominate renewable energy sources and regional infrastructure as the top priorities — it sends a clear message of where they believe the infrastructure investment needs to be.
“Taken in March, the DSI (index) reflects a period when discussion around Australia’s energy future was being elevated.
“Since then we’ve seen the discussion around energy policy become more fragmented.”
Only 10% of company directors rated coal as a priority for infrastructure investment.
The report also found the nation’s business and governance leaders are more confident than ever, with overall sentiment index rising to its highest point on record, as this chart shows:
Almost half of directors are optimistic about the general business outlook over the coming year and 51% are optimistic about the outlook for their own sector.
In order to rebuild public trust, 46% believe improvement is needed in demonstrating respect for customers, clients and communities, followed by improving corporate culture (43%), trustworthiness of leadership (41%), increased genuine stakeholder engagement (37%) and greater accountability in cases of misconduct (32%).
NSW directors were the most optimistic about their own state’s economic health, with 56% rating that state’s economy over the next 12 months as strong.
This was the most favourable result for any state/territory economy, ahead of the ACT and Victoria (both 44%), Western Australia (19%), and Queensland and South Australia (both 17%).
Stephen Walters, the AICD Chief Economist, says strong optimism is being driven by confidence in the outlook for the Australian and global economies, despite geopolitical concerns.
“We can clearly see that nationally, directors are increasingly optimistic about the economic outlook, both for their own sector and the broader economy. They’re also more confident in the outlook for the US, Asian and European economies,” he says.
“However, there’s a divergence between NSW and Victorian directors and those in other states, particularly in regards to their own state economies.
“What we’re still seeing is evidence of a two-speed economy where the powerhouses of NSW and Victoria are driving the optimism in the national economy.”
Other key findings from the Director Sentiment Index:
- 44% expect to see wages growth over the coming 12 months, with 48% expecting wages to remain stable.
- 32% expect the unemployment rate to fall over the coming 12 months, with 53% expecting it to remain stable.
- 73% of directors rated personal tax rates as too high, while 65% said that corporate tax was too high.
- Directors want to see action on comprehensive tax reform, with 49% nominating it as their top priority for the Federal Government in the short term.
The director index survey was conducted with 945 AICD members between March 8 and 20.
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