The vast majority of company directors across Australia are calling for an urgent overhaul of regulatory settings to help shift Australia’s flagging productivity.
The Australian Institute of Company Directors (AICD) issued a survey in partnership with Roy Morgan. The results of its Director Sentiment Index (DSI) for the second half of 2025 show that 82 per cent of company directors think a major deregulation agenda would strengthen productivity and economic growth.
The DSI survey also shows that productivity growth is a top economic challenge facing Australian business, highlighted by 42 per cent of the 1,072 company directors surveyed in late September this year. Global economic uncertainty comes in second at 39 per cent, and regulatory red tape is third at 35 per cent. Concerns about both productivity and red tape have risen sharply, according to AICD.
Two-thirds of directors believe that regulatory and compliance requirements are actively constraining productivity, and over half of directors say this is the main barrier to new investment.
Three-quarters (75 per cent) of directors expect compliance burdens to increase in their business in 2026.
Meanwhile, director sentiment has fallen again in the second half of the year after showing tentative signs of recovery in the previous survey. The DSI dropped 5.2 points to negative 29.1 and remains in negative territory for the seventh consecutive survey since the second half of 2022.
Despite recent interest rate cuts, confidence in current Australian economic and business conditions has not lifted and significantly more directors (40 per cent), believe the outlook for the coming year is weak.
Cybercrime and data security are both again the number one issue keeping directors awake at night, followed by legal and regulatory compliance and domestic economic conditions. And the level of anxiety over the impact of artificial intelligence has surged.
AICD managing director and CEO Mark Rigotti said the message coming from directors was clearly that the next wave of prosperity won’t come from rate cuts or rhetoric.
“Rebuilding Australia’s productivity engine will need to come from better regulation, and backing innovation and taxation reform,” Rigotti said.
“Directors are telling us that the lack of focus on an effective regulatory system is one of the biggest barriers to lifting productivity, particularly the cumulative burden of overlapping and inconsistent regulations, and a lack of coordination between regulators and different levels of government.”
Just over half (58 per cent) say compliance and regulation is the main factor affecting their board’s risk appetite, while 52 per cent say planning regulations should be the main focus for deregulation, followed by industrial relations (50 per cent).
The calls for deregulation follow recent arguments in the retail space, in particular, about simplifying the General Retail Industry Award (GRIA).
AICD chief economist Mark Thirlwell said monetary easing by the RBA alone had not restored corporate confidence, with sentiment weighed down by a range of ongoing structural challenges in the economy.
“Poor productivity levels are seen by more than three-quarters (78 per cent) of directors as posing a risk to Australia’s economic outlook over the next 12 months,” Thrilwell said.
“The housing crisis is a key area of concern, with more than half of directors (52 per cent) believing that housing supply should be the top priority for investment aimed at boosting productivity, followed by investment in regional infrastructure and renewable energy sources.”
Housing affordability is seen as a major issue for the Federal Government to address by 28 per cent of directors, second only to productivity growth, which 39 per cent see as the top economic challenge for the Federal Government to address in the short term.