Chief executives are increasingly nervous about Australia’s economic prospects, with a quarter expecting business conditions to deteriorate this year, according to a closely watched survey.
The Australian Industry Group chief executive survey has singled out uncertainties surrounding the coming federal election, industrial relations, Brexit and global trade tensions as key risks to business.
Ai Group chief executive Innes Willox said the poll of 252 businesses employing 87,000 workers presented an “underwhelming view” of political leadership and a shift to populist policies as the Coalition faces a likely electoral defeat.
“There are a range of factors that are well within our own control that are not attracting the policy attention they deserve,” Mr Willox told AM.
“When you’ve got around two-thirds of CEOs saying things aren’t going to get any better in 2019 you know you’re in for a choppy year.
“Alarm bells should be ringing in Canberra this election year. Our political leaders should be setting ambitious goals and making targeted investments that will deliver long-term benefits.
“We need more decisive active from Canberra in a range of areas, including workplace relations and energy policy, rather than simply drifting with the international tide.”
Lending crackdown a threat to business
One of the biggest challenges to business, according to the survey, is a lack of customer demand as borrowers recalibrate their household budgets after real-estate-value falls in Sydney and Melbourne.
Mr Willox said fallout from the banking royal commission was another potential risk, as tighter credit conditions limit the ability of business to source capital to invest across sectors.
While business has not “switched off” in the leadup to the election, Mr Willox said business had “certainly turned down the volume”, meaning business was cautious about taking bold steps.
He said CEOs were also concerned populist policies, such as cuts to migration, risk protectionism and greater exposure to global economic uncertainty.
“We’re seeing walls — real and metaphoric — being erected and that inhibits trade, the movement of people and capital and that all impacts on business,” Mr Willox said.
He said the decision by Jobs Minister Kelly O’Dwyer to quit Parliament for personal reasons was another factor adding to uncertainty.
“When senior ministers decide to leave, that’s just another thing that business looks at and has to factor in,” he said.
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