Companies with exposure to artificial intelligence (AI), quantum technology, green energy, childcare and aged care are set to be bolstered by the delivery of Australia’s Federal Budget last evening.
But companies focussed on offshore gas could face a bit more of an uphill battle, as the Government imposed additional taxes on the industry in order to fund its cost of living relief measures.
Treasurer Jim Chalmers delivered the first budget surplus in 15 years and also outlined the country’s plan to be a world-leading hydrogen producer and exporter.
The $2 billion Hydrogen Headstart program supports Australia’s renewable hydrogen sector – putting Australia at the forefront of net zero supply chains.
Andrew Forrest’s Fortescue Future Industries (FFI) – a subsidiary of top 10 ASX company Fortescue Metals Group (FMG) – could benefit from the investment in green hydrogen as it sets out to decarbonise FMG’s mining and shipping fleet, including trucks, drill rigs and trains.
FFI also has a portfolio of renewable hydropower, geothermal, wind and solar assets around the world.
Clean Energy Council Chief Executive Kane Thornton said the budget highlighted that the Albanese Government recognised the crucial role of clean energy in Australia’s economic future.
Government funding would support large-scale hydro projects, aligning with the targets of reducing emissions by 43 per cent by 2030 and achieving net zero by 2050.
There were also Budget sweeteners for companies tapping into technology, particularly AI and quantum technology.
The Government has set aside $101 million to support the growth of these industries. It aims to accelerate adoption of the technologies across the economy, helping Australian businesses innovate and develop new products.
There are Australian pioneers developing these technologies. Nanocap Unith (UNT) is developing digital talking humans – combining AI-based conversation technology with computer-generated avatars for a new type of business-customer interaction.
Singular Health Group (SHG) is developing 3D surgical software, LBT Innovations (LBT) is using AI for efficiencies in laboratory testing and Opyl (OPL) to reduce the cost of running clinical trials.
The Federal Budget also offered greater relief for childcare. Childcare costs are set to be slashed, a key election policy for Labor. Childcare centres continue to be built as parents return to the workforce to supplement family incomes amidst high inflation and interest rate pressures. ASX-listed companies in this space include G8 Education (GEM) and Mayfield Childcare (MFD).
Aged care workers are also set to receive a boost – with Mr Chalmers declaring a historic wage increase for workers, committing a total of $11.3 billion. This measure is designed to ease staffing shortages in the sector and support a low-paid workforce that is mostly made up of women.
Defence is getting more attention, which could be a plus for companies including Droneshield (DRO) and XTEK (XTE).
But time will tell the impact that the increased Petroleum Resources Rent Tax will have on the offshore gas industry which includes ASX-listed energy giants, Woodside Energy (WDS) and Santos (STO).
Increased taxes for the offshore gas industry is how the Federal Government could fund its cost of living relief measures.
But it shouldn’t dampen interest in Perth Basin onshore projects by companies like Warrego which was recently taken over by Hancock Prospecting and Norwest Energy (NWE) which came under Mineral Resources (MIN) control through a recent scrip deal. Other companies working in the basin include Strike Energy (STX), Talon Energy (TPD) and Triangle Energy (TEG).
The government insisted the Petroleum Rent Resource Tax was a minor impediment on the industry compared to recent changes in other countries.
And pharmacies are reportedly unhappy about the Government’s cut to dispensing fees by allowing people with chronic illnesses to buy two months supply with a single script. The change will apply to 320 medicines in a staged introduction.