Business leaders lose confidence in Australian economy

Tuesday 3rd September, 2013. Sydney, Australia. Australian business leaders have lost faith in the country’s likelihood of delivering a strong economic performance in the next 12 months, according to Newport Consulting’s latest State of Play report, released today.

Of the surveyed Australian business leaders, 92 per cent viewed the economy as slowing, stagnant or in decline, compared to only 37 per cent of Kiwi leaders holding this view of the New Zealand economy.

Australian leaders are far more concerned about their business prospects compared to their Kiwi peers. The percentage of Australian leaders worried about tough business conditions has more than tripled over the past five years, rising from 7 per cent to 35 per cent, where this has only marginally increased in New Zealand. In the five years of the study to date, this year’s findings reveal the lowest levels of confidence among Australian businesses.

The special election-year report confirms increasing business dissatisfaction with the government, with ‘government inadequacy’ the number-one factor cited by leaders as driving their more negative outlook. This suggests that respondents believe government policy must transform if business is to thrive again.

However, Australian leaders appeared more upbeat with their longer-term view, with 25 per cent believing the economy will grow from mid-next year, and a noticeable 74 per cent citing growth for their three-year outlook. In particular, leaders are looking to the incoming federal government to restore confidence in the country’s economic future. New Zealand leaders, however, are fairly consistent with their current views and three-year predictions.

Other key indicators of a more negative outlook by Australian leaders include a spike in the percentage of companies cutting jobs (14 per cent last year 26 per cent this year) even as fewer New Zealand companies are reducing staff.

Further, compared to last year, more companies are absorbing higher business costs and not passing price increases on to their customers this year. Businesses are also challenged by access to capital, with a lack of funds preventing businesses from investing in new CAPEX projects.

David Hand, Managing Director of Newport Consulting, says: “In the five years of conducting our State of Play studies, this report paints by far the most somber picture of Australian business confidence. By contrast, the Kiwis appears to be turning around their economic performance with growing confidence. More than half of the Australian leaders surveyed feel that the government is working against business, compared to only 13 per cent of New Zealand leaders.

The winding-down of the resources boom is clearly affecting business confidence, and leaders are looking to the incoming government to lead an effective response to this.

The report concludes by voicing Australian business leaders’ strong dissatisfaction with the government, offering the following key advice to Canberra ahead of the election: reduce party politics and focus on good policy, practice better economic management principles and adopt a longer-term plan and vision for the country. Meanwhile, in New Zealand, close to 40 per cent of leaders encouraged the government to continue with what they are doing, with very few leaders having any criticism or strong advice to their government.

The 2013 report is a special five-year anniversary edition. State of Play has been conducted annually since 2009 by operational management consultancy Newport Consulting. It draws on responses from an online survey completed by 280 business leaders in Australia and New Zealand between June and July 2013. The report serves as an independent pulse-check of Australia and New Zealand business confidence.

About Newport Consulting – (www.newportconsulting.com.au) Newport Consulting is an operational management consulting company that helps organisations improve their business performance through operational excellence. Newport was founded in early 2006 by David Hand and Karin Haberl. David is one of Australia’s leading operational improvement experts. Newport Consulting has worked in a number of key industry sectors, including the resources sector, and has worked with some of Australia and New Zealand’s leading corporations.

Download State of Play:
State_of_Play_Managing_on_the_Edge_2013-14.pdf
David Hand, Managing Director of Newport Consulting