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Australia's Treasurer Wayne Swan talks to journalists during a doorstop news conference outside the Parliament House in Canberra - Source: Reuters -
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Following are key measures announced in the Australian
government's 2009/10 budget on Tuesday, as well as listed
Australian stocks likely to be affected by them.
Infrastructure
$AU22 billion port, rail and road improvements, funded through
three existing funds for health, education and building created in
last year's budget. The list of projects contained will improve the
quality and efficiency of transport, communications, education and
health networks, building on $AU52 billion worth of economic
stimulus measures announced since September when the economy began
to stall, the government said.
Stocks to watch: Likely to help engineering
contractors like Leighton Holdings, United Group and
Downer EDI.
First-home buyer experience
The First Home Owners Boost has been extended for six months, but
the government plans to gradually roll it back and halt it entirely
by December 31. For home purchases made before September 30,
first-time buyers will get a grant of $AU7,000 for established
homes and A$14,000 for new homes. Between October 1 and December
31, the value of these grants will be halved. The grants offered
under this plan are in addition to grants from the First Home
Owners Scheme.
Stocks to watch: Should help residential
developers like Stockland Group, Lend Lease Corp, Mirvac Group and
Australand Property Group. Both the infrastructure and
first-home-buyers assistance should also benefit building-materials
firms like Boral Ltd, CSR Ltd, Fletcher Building and James Hardie
Industries NV.
Pensions and retirements savings
The government to lift the single pension by $AU32.49 a week and
A$10.14 a week to couple pensioners, while also streamlining
allowances. The government will restrict the tax break currently
given to people who pay a portion of their salary direct into
retirement savings. The amount of savings contributions eligible
for the concession will be halved to $AU25,000 a year for people
aged under 50 and also halved to $AU50,000 a year for those aged
over 50.
Stocks to watch: The cut in tax breaks on
retirement savings is expected to reduce in-flows into private-
pension funds, which could hit top fund managers AMP Ltd and AXA
Asia Pacific Ltd and listed funds like Argo Investments Ltd and
Perpetual Ltd .
Private health-insurance subsidies cut
From July 1, 2010, tax subsidies for private health insurance will
now be rationed according to income. Those who earn more than
$AU120,000 a year will not get any of the subsidy, which amounts to
a 30% discount on health insurance premiums. For those earning
A$75,000-A$90,000 and aged below 65, the subsidy will be cut to
20%. For those earning $AU90,000-A$120,000 and aged below 65, the
subsidy will be cut to 10%. Anticipating an exodus out of private
health cover, the government also raised a special tax that is paid
by wealthy people who choose to go without private cover and rely
instead on the state health-insurance system. This special tax will
rise to 1.5% of income.
Stocks to watch: Private health insurers like
NIB may be forced to raise premiums, which could then
discourage members further. Morgan Stanley has estimated that
means-testing the 30% subsidy would put roughly four percent of all
private health insurance policies at risk. This estimate was based
on a cut-off income of A$150,000 a year. Private-hospital operators
such as Ramsay Health Care Ltd and Healthscope Ltd could also be
hurt.
Employee share schemes
Employee Share Scheme Available to Lower Income Earners Only
employees with an adjusted tax income of less than $AU60,000 are
now eligible for tax concessions under the scheme. The plan was
previously open to all, and had allowed employees to choose to
defer tax payable on the paper gain of the options. Now, employees
have to pay tax upfront. The change is effective from Monday.
Clean energy
The government plans a public-private investment partnership
whereby the government would provide $AU4.5 billion to fund
clean-energy generation and low-emissions technologies (including
$AU1 billion previously announced). The private sector would invest
twice as much as the government in the partnership, which would
create 2-4 new coal-fired power stations using carbon-capture and
storage technology, each with a capacity of around 1,000 megawatts.
The partnership would also fund 2-4 new power plants using solar,
photo-voltaic or thermal energy, and with similar capacity to the
new coal plants.
