Sharemarket winners: the companies that benefit most from Federal Budget 2023 policies

With thanks to CommSec, let’s run through the ripple effect of this week’s Federal Budget 2023 on your share investments.

Budget Measure: $14.6 billion cost-of-living relief package.

Could boost consumer spending on electronics, clothing and groceries. The measures include welfare payments for the unemployed and single parents ($1.9 billion); one-off energy bill discounts ($3 billion); cheaper prescription drugs ($1.6 billion).

The cost-of-living relief package is in addition to the previously announced reduction in childcare fees ($5 billion) and wage increases in the aged care sector ($14.1 billion).

Key sectors affected: Consumer discretionary and consumer staples stocks will benefit, like Myer, Harvey Norman, Premier Investments, Super Retail, JB Hi-Fi, Coles Supermarkets, Metcash and Woolworths.

Budget Measure: Increase in the PRRT.

The proposed increase in the Petroleum resources rent tax (PRRT) is expected to generate $2.4 billion in revenue over four years. The policy, which increases the tax paid by the offshore Liquefied Natural Gas (LNG) industry, is seen as being more equitable across the industry and not impacting growth projects.

In fact, shares of LNG producers jumped over 2 per cent on Monday following the pre-release of the policy ahead of the Budget 2023, which showed that the government has adopted more favourable-than-expected changes to the policy.

Key sectors affected: Energy, like Woodside Energy, Beach Energy and Santos.

Budget Measure: Spending on Defence following Strategic Review and AUKUS submarines deal.

Includes re-direction of savings from Defence to the AUKUS program. The recently announced $368 billion submarine deal could benefit engineering companies involved in government contracts, like shipbuilders, construction companies, education and communications providers.

The government is also set to spend $400 million to support the retention of Australian Defence Force members. This is via a bonus for personnel who sign on for another term of employment.

Key sectors affected: ASX-listed companies Austal, Codan, DroneShield and Electro Optic Systems are key defence-orientated companies. Also, materials, industrials and communications companies could benefit.

Budget Measure: 15 per cent pay rise for aged care workers at a cost of $11.3 billion over four years.

Key sectors affected: Healthcare, Consumer Staples and Consumer Discretionary. Aged care providers Estia Health and Regis Healthcare shares could lift on increased spending and support for the aged care industry.

Budget Measure: Review of $120 billion infrastructure project list.

Confirmation in the Budget 2023 of scaling-back the Coalition’s sizeable infrastructure program could weigh on building materials, residential and commercial property developers.

Key sectors affected:

Materials, industrials and property sectors, like Transurban, Adbri, BlueScope Steel, Boral, Brickworks, CIMIC, James Hardie, Mirvac and Stockland.

Budget Measure: Net migration target of 315,000 in 2023/24 after 400,000 increase in 2022/23.

More people mean greater demand for houses, consumer durables like fridges and everyday items like groceries. While the extra workers lift the supply of labour, they also increase the demand for goods and services.

Key sectors affected: The population boom could benefit real estate, consumer discretionary and consumer staples, which includes supermarkets and electronics retailers, such as JB Hi-Fi, Harvey Norman, Premier Investments, Metcash, Coles Supermarkets, Wesfarmers and Woolworths.

Budget Measure: Affordable housing.

Establishing a new investment fund, the Housing Australia Future Fund (HAFF), to boost the supply of, and better facilitate private investment into, social and affordable housing. Increase the National Housing Finance and Investment Corporation‘s liability cap by $2 billion to a total of $7.5 billion. Tax breaks to ensure more investment in build-to-rent projects. Expand eligibility for First Home Guarantee and Regional First Home Buyer Guarantee.

Key sectors affected:

Industrials, materials, real estate stocks, such as Simonds Group, Mirvac, Lendlease, and Stockland. Building materials, residential and commercial property developers could be in focus alongside property-listing firms REA Group and Domain.

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Child Care Subsidy to cost $55.31 billion over four years – up $9 billion.

Key sectors affected: Consumer discretionary and education stocks like Mayfield Childcare, 3P Learning, G8 Education, Think Childcare, and Kip McGrath Education Centres.

Budget Measure: Electrification incentives for small business, low-income households and renters.

$1.3 billion in the Household Energy Upgrades Fund to incentivise energy saving upgrades for households and social housing. A further $310.0 million in support through the Small Business Energy Incentive.

Key sectors affected: Consumer discretionary retailers such as Breville and Shriro.

Budget Measure: $5.7 billion to strengthen Medicare including bulk billing incentives.

Take pressure off the hospital system; primary healthcare package; GP incentives; boost number of nurses.

Key sectors affected: Healthcare stocks like Ramsay Health Care; Sonic Healthcare; Healthia and Capitol Health.

Budget Measure: $2 billion for the renewable hydrogen sector.

The government is backing the renewable hydrogen sector with $2 billion for the Hydrogen Headstart program to support large-scale projects, in a bid to “bridge the commercial gap for early projects”.

Key sectors affected: Energy and materials. Key green hydrogen producers that could benefit from the transition to green hydrogen include Fortescue Metals, Origin Energy, Global Energy Ventures, Lion Energy, Montem Resources, Province Resources and QEM.

Budget Measure: Businesses writing off assets.

The small business instant-asset write-off has been extended for the 2023-24 financial year. This allows small businesses with an annual turnover of less than $10 million to immediately deduct certain assets worth less than $20,000. New work vehicles could be a popular option for tradies.

Key sectors affected: Consumer discretionary. Could help ASX-listed car dealership and leasing groups like Eagers Automotive, Autosports Group, carsales.com, Eclipx Group and Peter Warren Automotive.

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