Despite recent reports highlighting an overall negative outlook for Australian business in 2015, CEOs are growing more optimistic about the growth their companies will see this year.
PwC’s 18th Annual Global CEO Survey revealed 43 per cent of Australian CEOs are expecting to see growth in the next 12 months, a 9 per cent rise from the year before. CEOs confident with the growth they will see in the next three years also rose, up 21 points to 55 per cent.
While CEOs were found to have a more positive outlook for the coming years, 60 per cent believe there has been a rise in threats to growth. Over-regulation, the handling of the country’s debt, and cyber security risks were highlighted as the biggest concerns.
“Both the Government and business community understand what’s required in order to secure Australia’s long term economic future, but unfortunately the current political environment in Canberra isn’t conducive to delivering outcomes,” PwC Australia CEO Luke Sayers said.
“Part of that problem is clearly a difficult senate, but the broader and more important issue is a failure, by both business and government, to properly communicate the rationale for change to the broader community.”
The Australian CEO report found 76 per cent of Australian CEOs hold geopolitical uncertainty as the top economic and policy threats to growth, while 74 per cent believe the Government should be ensuring an internationally effective tax system.
Over-regulation was highlighted as serious issue, with 95 per cent of Australian CEOs saying they were very concerned about its affect on growth.
“The next five years will be critical if Australia is to keep its privileged place amongst the world’s advanced economies. Beyond that time-frame it will get increasingly difficult for Australia to fully participate in, and withstand shocks from, the global economy,” Mr Sayers said.
“We need to see significant movement on the development of social and economic infrastructure to support both our ageing population and participation in the global digital economy. Fundamental reforms, including tax reform, must be addressed.”
Headcount is forecast to rise in 2015, with 55 per cent of CEOs expecting to expand their workforce. In terms of headcount, Australia’s growth expectations are well ahead of the 21 per cent of global peers who expect to boost their employee numbers.
More CEOs are focusing on diversity in the workplace. 86 per cent of CEOs said they have a diversity and inclusiveness strategy, 22 per cent more than global results.
“When talking to clients the mood seems to be one of cautious optimism, and it’s pleasing to see that being borne out in areas like hiring intentions,” Mr Sayers said.
“The philosophical argument about the benefits of a more diverse workforce has been won. What we now need is both genuine improvement in areas like gender, and also a more sophisticated understanding of diversity, one that extends to diversity of cultural experience and skills.”
Forty-six Australian CEOs took part in PwC’s survey, including Qantas CEO Alan Joyce, BHP Billiton Chief Executive Andrew Mackenzie, and Woolworths head Grant O’Brien.
China was named as the top destination for growth in the international market by 67 per cent of Australian respondents. The US (45 per cent), Japan (21 per cent) and Indonesia (21 per cent) followed.
Although recent trade agreements have sparked wide talks of opportunities for growth in Asia, Mr Sayers said businesses are yet to take advantage.
“We invest more in New Zealand than we do in both China or Indonesia and we can’t assume geographic advantage automatically translates to economic advantage in the Asian region.
“Success in Asia requires companies to nurture long-term relationships and invest in putting people on the ground. Companies that want to capture a share of the region’s growth can’t afford to treat it as a fly in, fly out proposition.”
