Latest Deloitte Quarterly Survey

BUSINESS confidence at the top end of town has nosedived, pushed down by a high Australian dollar, the fragile global economy and local uncertainty over the carbon and mining taxes.

The latest Deloitte quarterly survey of more than 100 chief financial officers across Australia's biggest listed companies shows confidence levels have hit their lowest level since the series began in the second half of 2009.

"Certainly, coming out of the global financial crisis, we thought that optimism was stabilising and looking to increase, but these last three months have been a setback and quite a significant move backwards," said Deloitte chief operating officer Keith Skinner.

The percentage of respondents who were more positive about their business's financial prospects than three months ago almost halved to 23 per cent in the second quarter of this year.

The optimists were still marginally ahead of the pessimists, who accounted for 19 per cent of respondents, but "the extent of the fall is significant", Mr Skinner said.

End of sidebar. Return to start of sidebar.More than two-thirds of CFOs said business faced above-average levels of economic uncertainty, shaving a few percentage points off the number willing to take on extra risk.

About half warned that the high Australian dollar -- now above parity with the US greenback -- was hurting their sales and about three-quarters felt it was damaging the economy as a whole.

Earlier this month, the Reserve Bank indicated it planned to revise down its growth forecasts for the economy. Westpac is now tipping the central bank's next move will be to cut -- rather than hike -- interest rates and that the cash rate is likely to fall by 100 basis points over the next 12 months.

Financial markets have also been volatile, fearing the debt crisis in Europe and political impasse over the US deficit reduction program will destabilise the global economy, potentially sending it back into recession.

Mr Skinner said the news was not all bad, with 94 per cent of CFOs identifying organic growth as a priority for their business over the next 12 months and 55 per cent identifying acquisition as an option for expanding their business.

Most also expected stronger cashflows in the coming year and indicated that credit, particularly from banks, had become more accessible and less expensive over the past quarter.

"Individually, as corporates, a lot are in a reasonably strong position," Mr Skinner said. "They just need the confidence to convert that to activity in the short term."

He said corporate Australia had been hit with one shock after another over the past 18 months: from natural disasters and sovereign debt crises to the uncertainty over carbon and mining taxes.

About 84 per cent of CFOs felt the contraction in the economy in the March quarter was a one-off, but 66 per cent thought it reflected higher risk and uncertain economic conditions ahead.