Directors want government to increase infrastructure investment

Despite an uncertain political environment, directors are calling on the Federal Government to increase infrastructure investment as the key driver of long term economic growth.

The latest Director Sentiment Index by the Australian Institute of Company Directors (AICD), conducted weeks after the federal election, shows that although overall sentiment has increased slightly by 4.3 points, directors have grave doubts about the new Parliament’s ability to deliver necessary reform.

“Despite the uncertainty directors see in the current Parliament they are emphatic in their calls for long term policy and the need for significantly increased investment in nation building infrastructure,” said John Brogden, Managing Director and Chief Executive Officer of the AICD.

“Increased spending on infrastructure boosts economic activity and employment. The creation of long-lived productive assets can reduce the cost of living and lift national prosperity. Prudent management of the asset’s income stream can aid budget repair, while eventually facilitating more public asset recycling.”

Directors have selected infrastructure as the number one issue for Government to address in the long-term, nominating regional infrastructure, renewable energy sources and roads as the top priorities for additional investment.

Directors also list budget repair and comprehensive tax reform as priorities for the federal government, but are pessimistic about the new Parliament’s capacity to drive reform.

“Our results highlight serious doubts about government’s ability to drive reform – it’s now up to all sides of politics to prove that this new Parliament can deliver,” said Mr Brogden.

“Politicians are too focused on short-term issues and need to deliver a long-term reform plan for the nation.” 

Almost 90% of directors feel that the make-up of the Senate is likely to negatively affect business confidence and less than a third (28%) of directors believe that the incoming Parliament will deliver stable government. The quality of public policy debate is seen as lacking, with 85% of directors characterising it as ‘poor’ or ‘very poor’.

The Director Sentiment Index is the only indicator of the sentiment and future intentions of directors in all sectors, including private business (43 per cent of respondents), not-for-profit organisations (33 per cent) and listed companies (11 per cent). It was conducted between 20 – 28 July when results from the Federal election became clear.