Although there’s been a heavy focus on the tax policies of both sides of government, there are some key financial considerations for investors who have exposure to four industries that are the subject of reform and funding changes, according to Dermot Ryan from AMP.
The energy sector is shaping up as an opportunity for investors, with both sides of government announcing policies that will shape its future.
For example, both political parties are looking to lower the price of electricity for both businesses and households.
“Lack of investment in both gas exploration and electricity generation, any new government is going to be looking to firm up a policy around this and encourage investment,” said Mr Ryan.
The current government has already announced $100 billion in infrastructure spend over the next 10 years, which is about $25 billion more than current levels.
This represents a clear opportunity for investors to get in early in, for example, property markets that are set for major infrastructure upgrades.
The healthcare market could face new regulations pending the outcome of the election. If the Labor Party wins, health insurance rate increases will be capped at 2 per cent for two years, according to previous announcements.
“Healthcare may have some challenging impacts depending on who gets into power. There may be some changes on health insurance caps, as well as the spending allocation in the healthcare space” said Mr Ryan.
Housing price pain is another election battleground, with another 5 to 10 per cent fall predicted nationally by AMP by 2020.
Labor, if elected, has announced that it wants to tighten up negative gearing and limit it to new properties from 1 January 2020. They also want to reduce or cut in half capital gains discounts for all assets after that date.
The International Monetary Fund has warned that the housing downturn is worse than previously expected, and AMP believes government and policymakers may address these falls.
If so, this will create opportunities on either the retail side or property developers to potentially capitalise on these gains.
In the meantime
The lead up to the election has created significant uncertainty for investors. Ideally for investors, whoever wins gets a strong majority to have the power to mandate policy to create certainty in the market.