Nearly 60 per cent of company directors across Australia say compliance and regulation is the main factor affecting their board’s risk appetite.
This is according to the latest director sentiment survey from the Australian Institute of Company Directors (AICD), which also shows an improvement in both economic and business conditions for the first half of 2025.
This AICD survey of 1,127 company directors was conducted by Roy Morgan between February 19 and March 6, 2025.
AICD managing director and CEO Mark Rigotti said 70 per cent of directors believe a major business deregulation agenda would have a positive impact on Australia’s productivity and economic growth.
“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,” Rigotti said.
“We’re calling on both major parties to announce what red tape they would repeal within the first 100 days of their government.”
While the Director Sentiment Index (DSI) remains in negative territory for the sixth consecutive survey (-23.9), it has lifted nearly 10 points – the strongest improvement since 2021. Significantly fewer directors also believe a recession is likely within the next 12 months, 25 per cent now compared with 46 per cent in the second half of last year.
However, nine out of ten directors believe that escalating trade tensions under the Trump US presidency threaten the economic outlook for both Australia and the world.
Global uncertainty is now the top economic challenge facing Australian businesses, surpassing productivity growth and cost of living. And concerns over global protectionism have increased significantly.
Domestic economic conditions remain the number one issue keeping directors awake at night, followed closely by legal and regulatory compliance, with cyber-crime dipping slightly to number three.
Economic management is the most important issue influencing directors’ vote in the upcoming Federal election, followed by policies to reduce red tape.
The survey also shows that 67 per cent of company directors expect regulatory compliance to increase over the next 12 months. Just over four in 10 say industrial relations (43 per cent) and planning regulations (42 per cent) should be the main focus for deregulation.
Eight in 10 say their board’s commitment to diversity will be the same or stronger despite diversity, equity and inclusion changes under the Trump US presidency.
Meanwhile, 44 per cent don’t believe the level of diversity on Australian boards is satisfactory compared with 51 per cent last survey.
AICD chief economist Mark Thirlwell said despite the overall improvement in sentiment this time, underlying structural issues in the economy are keeping the DSI stuck in 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,” Thrilwell 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.”
Regarding the RBA, 55 per cent of directors are expecting a rate cut in the next six months.