An overwhelming majority of Australian business directors (80 per cent) say their commitment to diversity and inclusion will remain the same or become stronger in Australia, despite the bakclash occurring under Donald Trump’s second term.
Meanwhile, many directors are weary that escalating trade tensions under the Trump presidency will threaten the economic outlook for both Australia and the world, the latest director sentiment survey from the Australian Institute of Company Directors (AICD) has revealed.
Released this week, the Director Sentiment Index (DSI) surveyed 1127 company directors over the course of a month earlier this year to reveal global uncertainty as the top economic challenge facing Australian businesses — surpassing cost of living and productivity growth.
Two thirds of directors reported compliance and regulation as the main factor affecting their board’s risk appetite, while a slightly higher number expect regulatory compliance to increase over the next year.
More than half of directors said they expect a further RBA rate cut in the next six months, while 83 per cent believe there is still a skills shortage in the Australian workforce.
Concerns over global protectionism and regulation levels have also increased significantly over the past year, however — significantly fewer directors believe a recession is likely within the next 12 months (25 per cent compared with 46 per cent in the second half of 2024).
Directors identified domestic economic conditions as the number one challenge, followed by legal and regulatory compliance and cyber-crime.
Meanwhile, 70 per cent of directors believe a major business deregulation agenda would lead to a positive impact on Australia’s productivity and economic growth.
Leading up to the federal election, economic management and policies to reduce red tape will be among the most important issues influencing directors’ vote, according to AICD Managing Director and CEO Mark Rigotti.
“We strongly believe this needs to be a priority for the next Federal Government which is why the AICD has released a three-point plan to boost innovation and productivity with better regulation, better digital governance and better targeted disclosures,” he said in a statement.
“We’re calling on both major parties to announce what red tape they would repeal within the first one hundred days of their government.”
AICD Chief Economist Mark Thirlwell said that despite the improvement in both economic and business conditions for the first half of the year, fundamental structural issues in the economy are preventing the DSI from moving away from negative territory.
“Double digit rebounds in the measures of economic outlook and business conditions reflect the positive impact of the RBA’s February rate cut, along with the receding recession risk,” he said.
“But directors are balancing that good news against mounting global economic uncertainty and growing concerns about protectionism. And persistent domestic challenges including productivity growth, the housing crisis, cost of living pressures and skills shortages continue to weigh heavily.”
What does the index say about DEI?
The latest Index also shed light on diversity and inclusion, with 44 per cent of directors saying they don’t believe the current state of diversity on Australian boards is satisfactory — a drop from 51 per cent in the last survey.
Most directors (80 per cent) also claim that their board’s commitment to diversity will be the same or stronger despite the dramatic DEI changes occurring under Trump’s second term.
Other issues that were surveyed in the Index include housing, energy policy and flexible work arrangements.
More than fifty per cent of directors nominated housing supply as the most important aspect in infrastructure investment, while 33 per cent identified housing affordability as the next short term priority.
Regarding flexible work arrangements, roughly two thirds said it had a positive impact on staff recruitment, retention, health and wellbeing, though 40 per cent believe it to be detrimental for innovation and cyber security.
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