The broad thrust of the National-led Government's policies would be positive for businesses and the sharemarket, Forsyth Barr broker Ken Lister said yesterday.
National Party leader John Key was sworn in yesterday as Prime Minister alongside his new Cabinet.
Mr Lister said early policy from National would put more cash into the hands of consumers than Labour had planned.
Cash would come through personal tax cuts funded by clawback of some business tax rebates and lower KiwiSaver contributions.
National would maintain Labour's planned increase in government spending to assist the economy through the recession with the $1.75 billion in annual allowance for new spending initiatives remaining in place.
However, there would be differences in the allocation of the increased spending.
Specific National spending initiatives were.-
• Faster personal tax cuts from April 1, 2009, funded by the elimination of the employer KiwiSaver tax credit and the research and development tax credit for businesses.
• Reducing compulsory employer KiwiSaver contributions to 2%.
• Government infrastructure spending of $3.7 billion over six years, possibly including public, private partnerships (PPPs).
That included National's $1.5 billion broadband commitment - fibre to 75% of households by 2015 - although the rate of phase-in of that spending had been slowed because of the deteriorating fiscal position.
The effect of the tax cuts, KiwiSaver and tax credit changes would put more cash in the hands of consumers by increasing tax on businesses and reducing KiwiSaver contribution levels.
The infrastructure spending commitment would be positive for the construction industry and building materials companies, Mr Lister said.
Proposed changes to the emissions trading scheme were not yet clear but had the potential to impact negatively on electricity generators because their share prices factored in ETS windfalls.
Other changes, like removing the ban on thermal generation plants, reviewing government spending, speeding up resource management consent processes and introducing competition to ACC, should generally reduce costs for businesses and be broadly positive.
"The regulatory outlook improves as we anticipate a more considered approach to industry regulation with regulatory decisions open to judicial review."
That was different from Labour's tendency to regulation by ministerial decree, which had increased uncertainty, he said.
Company specific comments.-
• Fletcher Building: positive impact.
FBU has always said it tended to do better under Labour, but this time National's stated commitment to increase funding for infrastructure was an important positive.
Personal tax cuts were also important for the residential housing cycle.
• Steel and Tube: positive.
Increase in steel for infrastructure projects would be important.
• Optus: infrastructure spending would boost New Zealand revenue which was still well over 50% of total business.
• Contact and TrustPower: a National-led government was probably for the companies neutral but there was the risk that the ETS would be delayed, or shelved and not replaced.
• Vector: the main benefit was the hope of a more business-friendly head of the Commerce Commission being appointed.
It was understood Paula Rebstock's term finishes early next year.
• Auckland Airport: a further regulatory review of airports was less likely under National.
The company was still takeover proof as the new government would also veto any change to foreign control.
• Telecom: small positive.
It was less likely to get clobbered by further government regulatory whim; could see some upside from more benign regulation but separation unlikely to be reversed.
• Tourism Holdings and Air New Zealand: likely to benefit from Mr Key being Tourism Minister.
There was a greater chance the tourism industry would be seen as a major revenue opportunity for New Zealand and given increased funding.
• Fisher & Paykel Healthcare and Fisher & Paykel Appliances: abolition of R & D tax credit will be negative for the companies.
• Methven: abolition of the R & D tax credit likely to be negative on the company.
• Sky Television: positive.
A more measured approach to regulation should sideline the risk of regulation on the company.
• Sky City Casino: a review of the gaming sector regulation and tax was less likely to be a priority for the new government.
• Ryman: planning approvals were a major issue for the rest-home operator and a streamlining of the Resource Management Act, and generally less red tape around the approvals process, would be positive.
• Wellington property: AMP NZ Office Trust and Kiwi Income Property had large exposures to commercial office property in Wellington and the government sector.
Forsyth Barr expected it would be harder to get new design and build developments for government departments approved.
That reduced the risk of new supply which was positive for the large incumbent landlords.
A curtailment of government expansion was unlikely to result in a large increase in vacancy but would adversely impact on demand for space and rental levels in the medium-term, Mr Lister said.
