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Politics hits CFO confidence: Deloitte

Uncertainty around federal government policy has dented CFO confidence, according to Deloitte’s most recent CFO survey.

News Michael Masterman 17 July 2014
— 1 minute read

For the fourth straight quarter, optimistic CFOs outnumber their pessimistic peers, however, the net percentage of CFOs who were more optimistic about their company’s prospects than they were three months ago, fell from 36 per cent to just 6 percent this quarter.

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The quarterly survey has revealed that the single biggest factor to negatively impact CFO confidence in Q2 was federal government policy uncertainty.

“Australian chief financial officers are definitely feeling the drag of political uncertainty,” said Deloitte chief operating officer, Keith Skinner.

“Be it concerns over the implications of the budget initiatives or uncertainty over their passage through the senate, business confidence has undeniably hit a speed bump this quarter taking the edge off the impressive positive trajectory we have seen over the past three quarters,” he said.

CFO respondents also showed  mixed sentiment in respect of the federal Budget.

“The government has chosen to follow a path of fiscal constraint, a route that is supported by the majority of CFOs with 54 per cent of CFOs agreeing with the speed of fiscal repair proposed by the Budget. A further 18 per cent of CFOs feel the pace of repair should be even faster,” said Mr Skinner.

“CFOs who took part in our survey believe that the budget includes some tough medicine, but it is medicine the Australian economy, and in particular the forward budget position, needs,” Mr Skinner said.

According to the survey, the Australian dollar has also weighed heavily on optimism this quarter, crashing 45 percentage points, from plus 25 per cent to minus 20 per cent.

“The recent uptick of the Australian dollar is putting another downer on CFO optimism,” said Mr Skinner.

“However, despite these macro concerns we can take comfort in the fact that the vast majority of ASX listed company CFOs we surveyed, still expect to see their revenues (80 per cent) and operating cash flows (72 per cent) to increase over the next 12 months,” added Mr Skinner.

Politics hits CFO confidence: Deloitte
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