Prime Minister Malcolm Turnbull says he wants to get the economy firing and prepare Australia for digital disruption, with many business leaders already giving the new PM the nod of approval.
Serial entrepreneur Dick Smith told SmartCompany he believes Turnbull will give business confidence a much-needed boost.
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“He’s a successful business man and I like the fact he’s middle of the road,” Smith says.
Telstra chief executive Andrew Penn tweeted his support for the new leader of the federal Liberal Party, saying Turnbull brings a “welcome focus” on innovation, technology and economic reform.
But will a change in leader be enough to boost falling business confidence?
Firstly, it’s important to understand how business confidence is actually measured.
The National Australia Bank conducts a monthly survey on business confidence by phoning 350 small, medium and large companies and asking them about how they expect their business to perform in the upcoming month.
The bank asks the businesses about their views on the performance of the economy and whether they are likely to employ more people.
There are also a number of other business confidence surveys conducted by companies including SENSIS and Roy Morgan Research.
According to the NAB index, business confidence slumped to a 23-year low during December 2014, but was given a massive boost when the federal government handed down its budget in May.
This was also reflected in other business confidence surveys thanks to the budget’s generous tax incentives for small business.
However, since then the NAB business confidence rating has steadily declined from a rating of eight points to just one.
So what can Turnbull do about business confidence, then?
Stephen Koukoulas, managing director of Market Economics, told SmartCompany it is definitely possible for a prime minister to boost business confidence.
“That said, it is about more than just a personality and a charismatic leader,” Koukoulas says.
“That’s handy, but it’s about what they actually do.”
“Turnbull has an opportunity to change the Coalition’s rhetoric about the economy. What was a problem for Abbott and Hockey was that when they were in opposition they undermined the economy and they didn’t change that when they got in office. They shot themselves in the foot,” he adds.
Koukoulas says while Turnbull has a tough job in front of him, the business community does seem to like him and that is a good start.
Business owners are not stupid and they know very well if the economy is or isn’t performing well, Koukoulas says.
Because of this, the logical place for Turnbull to start is to admit the economy is soft rather than refusing to talk down the economy like Abbott did.
“He has got to hit the ground running with a change of ideas,” Koukoulas says.
“It has to be a change in how the economy is managed, how they manage the budget.”
“Are they still bent on getting a surplus? They’ve got to be honest about the issues facing Australia and then confront them,” Koukoulas adds.