The slump in business confidence to recessionary levels is an "abysmal" result for the Rudd government, the federal opposition says.
The latest quarterly National Australia Bank business survey shows confidence has tumbled to its lowest since the 1991 recession as share market turmoil and 12-year high interest rates worry the captains of industry.
Expectations for the September quarter fell as one-third of firms expected conditions to worsen, particularly in the building and property sectors.
The opposition's spokesman for small business Steven Ciobo said this was an "extraordinary" result.
"Labor has remarkably exceeded in getting business confidence to a level not seen since the recession despite Australia having 2.75 per cent GDP growth."
"It takes a special amount of ineptitude to get a result this abysmal."
He said since the government came to power last November both business and consumer confidence has done nothing but fall.
Consumer confidence is also near recessionary levels.
"And to compound the problem, instead of providing reassurance, Labor is doing the exact opposite," Mr Ciobo said.
He said there is uncertainty about inflation, future employment, economic conditions going forward and Labor's proposed emissions trading scheme.
"And we have an uncertain and reckless treasurer who is making all of these problems worse," he said.
Commenting on the survey, NAB's head of economics Jeff Oughton said falling consumer confidence, rising borrowing costs and share market volatility were rattling business expectations.
"When you get a great deal of uncertainty and nervousness, confidence adjusts accordingly," he said.
"A triple whammy of reduced activity, lower consumer confidence, rising costs for borrowing, oil and other key purchase costs, and volatile and lower equity markets continue to weigh on the business outlook."
Small Business Minister Craig Emerson slammed Mr Ciobo's comments, saying business confidence had also slumped in Europe and the US as a result of international market turmoil.
"Steven Ciobo is the only person in Australia who would blame the crash in business confidence in Europe and the United States on the change in government in Australia in November last year.
"The truth is business confidence has suffered as a result of global market turmoil, a credit crunch, and 12 successive interest rate rises.
"If the opposition wanted to do something constructive about business confidence it would pass the budget instead of opportunistically blowing a massive hole in the budget surplus."