Business leaders outline biggest election issues

The economy and economic management are the top issues influencing how company directors will vote on 21 May, the latest Director Sentiment Index (DSI) from the Australian Institute of Company Directors (AICD) has found.

Around 14 per cent of the over 1,700 directors surveyed highlighted the economy as their most important issue, just ahead of climate change at 13 per cent.

“As we have seen already, both sides of politics have centred their campaigns around the economy, as most Australians feel the impact of the rising cost of living. Directors, too, have indicated that economic management is top of mind, as they call for policy certainty to ensure prosperity,” commented AICD MD and CEO Angus Armour.

“The results also reflect what we have known for some time, directors are seeking a clearer pathway and stronger commitments on climate change, which is almost of equal importance to directors as strong economic management.”

The DSI found that sentiment among directors had fallen from a score of 17.9 in December last year, to 10.8 in the latest survey while still remaining generally positive.

Labour shortages were seen as a top economic challenge for Australian businesses according to 60 per cent of directors, a 5 per cent increase on the previous survey.

Additionally, the proportion of respondents who saw global economic uncertainty as a top economic challenge surged by 25 percentage points to 55 per cent.

“The drop in director sentiment was expected, given the significant amount of uncertainty facing Australian business now, largely driven by global circumstances, including the impacts of the invasion of Ukraine,” said AICD chief economist Mark Thirlwell.

“Still, it's also important to note that the DSI remains in positive territory, suggesting that directors, even after taking all these risks into account, are still relatively optimistic about Australia's overall economic and business prospects.”

Climate change was the third biggest economic challenge (34 per cent) followed by COVID-19 (27 per cent), which fell 16 points compared to the last survey.

Almost 57 per cent of respondents believed that Australia’s economic health was currently strong. An equal proportion said that the economy would stay strong in the next 12 months, down from 67 per cent in December.

As seen in the last DSI, climate change was ranked by directors as the top priority for the federal government over both the short term (39 per cent) and long term (50 per cent).

Skills shortages (36 per cent) ranked second over the short term while the ageing population (25 per cent) was the second biggest long-term issue.

About 23 per cent of directors identified cyber crime and data security as the top issue keeping them awake at night, ahead of global economic conditions (9 per cent), structural change (9 per cent), and legal and regulatory compliance (8 per cent).

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.