While local investors parse through the Australian Federal budget winners – like green energy, infrastructure, healthcare and parents, as well as Government warnings that power bills will rise 50% – the general sense is the Federal Government’s revised 2022-23 Budget has some nice, fiscally responsible measures. Pretty basic, yes, but essential measures as economic growth faces severe domestic and global challenges.

Saxo Markets analyst Jessica Amir told Stockhead overall the budget forecast is for slower GPD growth and only $10 billion of net new spending and savings of around $29 billion to fund a significant new (re-prioritised) agenda.

Here are the sectors and the names to watch according to Jessica:

The ‘green transformation’

  • $20b to be put toward Australia’s transformation to net zero
  • The government outlined a large fund to mitigate climate change risk and support the transformation to net zero
  • Targeting recently commenced projects on wind farms in VIC and the TAS Marinus Link project
  • While also delivering cheaper infrastructure loans for investment into renewable energy, in order to lower energy costs, achieve net zero over the coming years.

Focus will be on lithium, rare earths, hydrogen, with companies like Pilbara Minerals (ASX:PLS), Lynas (ASX:LYS) and Iluka (ASX:ILU) on watch.

Building, construction, infrastructure and mining

  • With the introduction of the national Housing Accord between government and other industry bodies, there is a target of building one million new homes over five years, starting mid-2024.
  • The government will establish a $10bn housing Australia future fund, with an aim of providing 20k new social housing dwellings.
  • $350m will be spent over five years in delivering 10,000 affordable dwellings, with state governments to provide another 10,000 homes. The government also committed to its pre-election promise of a shared equity scheme, allowing eligible people to buy a house with a smaller deposit.

Focus will be on stocks like Transurban (ASX:TCL), Abbri (ASX:ABC) and eyes will also be on banks that could benefit from housing polices, so CBA, ANZ Bank, NAB, as well as Westpac (ASX:WBC) and Suncorp (ASX:SUN), Bendigo and Adelaide Bank (ASX:BEN), Bank of Queensland (ASX:BOQ).

Health and aged care

  • The Government will spend $787.1m over four years on making a greater co-payment for prescription drugs, starting next year.
  • Plans to open 50 Medicare urgent care clinics, expand access in suburbs and regions. Overall, along with a rise in spending on hospitals, and extending various COVID-19 support measures, the government has pledged $6.1b.
  • Committing $2.5b to improving aged care facilities and staffing issues.
  • Another highlight here is the increasing child care subsidies and paid parental leave

Focus will be on health care businesses like Ramsay Health (ASX:RHC), Sonic Health Care (ASX:SHL), ResMed (ASX:RHC) as well as Healius (ASX:HLS) and Australian Clinical Labs (ASX:HCL).

Energy:

  • Government warns power bills will rise 50%
  • Estimates power prices will rise 50% over the next two years.
  • This follows on from the Australian Energy Regulator warning electricity prices will rise by up to 50% just in 2023.
  • Either way, it seems the Australian Government won’t be able to fulfill its election promise to cut power bills.
  • Several bodies warned Australia will run out of energy next year including the Australian Consumer and Competition Commission, who says there is a significant risk the nation will be short supply in 2023 by 56PJ, (which could further cause prices to rise, and result in some manufacturers closing their businesses, with market exists already occurring).

This might be a catalyst for some to perhaps consider looking at large cap oil companies, and associated ETFs.