The results of Deloitte’s fifth biennial Directors’ Cut Survey, released today, show 67 per cent of CEOs and chairs say regulation is increasing, and 65 per cent of respondents believe corporates are wrapped up in red tape.
Fifty board chairs and chief executives of ASX 200 companies were interviewed on the issues, challenges and opportunities faced by Australian boards and executives.
Deloitte managing partner assurance and advisory Richard Deutsch said there is a tendency in corporate Australia to focus on government red tape as a drag on productivity, and the group’s discussions with chairs and CEOs have substantiated this.
“There was a feeling among CEOs that, while governments talked about simplification, regulation was still increasing, and there was a lack of harmonisation,” Mr Deutsch said.
“They are also willing to look elsewhere to achieve their business objectives as Australia is seen as inflexible, with complex approval processes for construction projects, high costs, and powerful unions.”
The survey found that 63 per cent of CEOs and chairs are looking to enter Asian markets for growth.
“Chairs acknowledged that internal red tape had been partly driven by their risk committees asking for more information as they were more aware of their liabilities as directors," Mr Deutsch said.
“Governments can certainly do a lot to streamline the regulatory environment.
“It may be stringent in some areas, but it’s also accompanied by positives for business such as low sovereign risk and a stable political environment.”
Mr Deutsch warned that, despite their views on red tape, it is “critical” that Australian corporates don’t lose sight of the more strategic issues confronting their organisations rather than being overwhelmed by compliance.
“Where organisations are in control of their own destiny is managing their own corporate red tape, as an abundance of internal rules, procedures and requirements can hamper the growth drivers of innovation, creativity and productivity,” he said.
“Good boards don’t see regulation as an excuse for inaction or to create more rules.”
Looking to the future, the survey found that strategy and growth, as well as operating in an environment characterised by continued economic and political uncertainty, emerged as the leading concerns for the coming 12–24 months, followed by regulation.
“The focus for chairs and CEOs remains on maintaining results in the short term, while trying to take a strategic approach to the longer term,” Mr Deutsch said.
“The hunt for investments that will produce decent returns is also a dominant concern given the low interest rate environment globally.”