The top end of town, Australia’s powerful company directors, like Malcolm Turnbull a lot more than they did Tony Abbott.
Sentiment among company directors has risen to its highest level in two years following the appointment of Turnbull as prime minister.
The latest Director Sentiment Index from the Australian Institute of Company Directors shows overall sentiment up 9.6 points in the past six months, reversing the decline of the last two years.
The same index this time last year showed the confidence felt by company directors for Tony Abbott’s government sliding to its lowest level since the election in 2013.
However, the latest survey shows there has been a sharp rise to 46% from 24% in the number of directors who believe the federal government understands business.
The index has reversed a downward trend since the second half of 2013 when the Abbott government was elected, as this chart shows:
“The federal government is in a strong position to pursue a reform platform. Directors want reform and they want it urgently,” says John Brogden, CEO of the Australian Institute of Company Directors.
“Our survey results clearly indicate the direction it should take — tax reform and a detailed infrastructure plan are the top priorities for the government in the next three to six months.”
The Director Sentiment Index found that an “ineffective tax system” is the third biggest economic challenge facing Australian business, ranking behind global economic uncertainty and low productivity growth.
Support for tax reform increased, with 82% indicating the GST should be raised, broadened or both (up from 78%).
“Directors believe the GST should be higher and broader to meet future economic and social challenges,” says Brogden.
“Public debate must shift to determining the appropriate rate and the areas that should be subject to GST, plus other measures that would form part of a comprehensive tax reform package.
“We call on the government to produce a detailed analysis of viable tax reform options that can be properly debated by the Opposition and other stakeholders so the best outcome is achieved to the benefit of all Australians.”
The Director Sentiment Index is the only indicator of the sentiment and future intentions of directors in all sectors, including private business (49% respondents), not-for-profit organisations (31%) and listed companies (14%).
The survey of 521 AICD members was conducted between after Prime Minister Turnbull took office on September 15.
(Disclosure: Chris Pash is a member of the Australian Institute of Company Directors.)
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