Directors say surplus “at all costs” unnecessary

The majority of Australia’s company directors say the federal government does not need to achieve a budget surplus “at all costs” in 2012-13, particularly if global economic volatility worsens.

The finding was published in the Australian Institute of Company Directors’ (AICD) April director sentiment index.

Almost 60% of directors surveyed said a surplus was not vital, while 26% of directors said it was.

The report suggests many directors disagree with ratings agency Fitch Australia, which said Australia’s AAA credit rating could be at risk if the government did not return the budget to surplus.

The index, which measures the opinions and future intentions of company directors, has ranked overall director sentiment as slightly pessimistic, but there are signs of increasing optimism about the economy.

“The findings reveal that directors’ sentiment and their business’ prospects are less pessimistic than they were in November 2011, though they are still more pessimistic than they were at this time last year,” AICD’s CEO, John Colvin, says.

“Directors remain optimistic about the Asian economy and are also less pessimistic about the health of the Australian and US economies. Of course, the eurozone debt crisis and its repercussions are still a major concern for directors.”