Australia's company directors blame the federal government for falling consumer confidence

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The state of government policy making in Australia has company directors worried.

Almost 80% of them say the federal government is negatively impacting consumer confidence, according to a survey released today by the Australian Institute of Company Directors (AICD).

The bi-annual Director Sentiment Index shows only 8% of directors feel that the government’s performance is having a positive impact on business decision making.

They are concerned about a lack of infrastructure investment, taxation reform and the size of the federal budget deficit.

“Directors have been crying out for many years now for the government to invest in infrastructure,” says AICD chief executive John Brogden.

Source: AICD

“Interestingly, for the first time directors have identified renewable energy sources as the top priority for infrastructure investment, followed by regional infrastructure and roads.”

Directors identified economic policy uncertainty (38%), political instability (33%) and short-termism (32%) as the top three issues likely to be most disruptive to their business over the next decade.

The Director Sentiment Index represents all sectors including private business (43% of respondents), not-for-profit organisations (33%) and listed companies (11%).

The latest index shows that business is planning to increase investment and boost employment over the next 12 months, despite global political and economic uncertainty seeing the overall sentiment among Australian directors drop by 5 points to 22.5.

Director sentiment. Source: AICD

In the year ahead, 34% of directors expect their business to increase both staffing and investment. General business confidence has also increased by 10 points since July this year and is now at its highest level since 2013.

Directors identified global economic uncertainty (30%), low productivity growth (26%) and a slowdown in China (25%) as the main economic challenges facing Australian business.

The Director Sentiment Index, conducted by Ipsos on behalf of the 39,000 members of the AICD, is the only indicator measuring the opinions and future intentions of directors.

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