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Australia: Now open for business

Australia’s new government is set to help spur investment in the troubled mining industry aided by a stable tax and regulation environment.

After Labor’s Carbon and Mineral Resource Rent Tax (MRRT), top mining bosses will be breathing a sigh of relief after the weekend’s election. Rio Tinto (ASX: RIO) managing director of Australia, David Peever, said political certainty will now mean more businesses are now likely to invest.

“For Australia to maximise its potential and to achieve desired growth, we need leadership from our politicians focused on the long-term national interest,” Mr Peever told The Australian, adding, “The resources sector, in particular, operates over long-term horizons, involving substantial investment and infrastructure commitments spanning generations.”

Australia’s biggest mining company, BHP (ASX: BHP), has also welcomed the incoming Coalition government and will work with them to “restore Australia’s productivity and competitiveness”.

While Mr Peever acknowledges work needs to be done by industry, he also points out the government of the day needs to provide stable policies to reassure businesses and investors – something we haven’t had for some time. “While the bulk of the productivity challenge rests with industry, government has a critical role to play in the provision of predictable and stable policy frameworks,” he said.

Although mining companies have been buoyed by resilient commodity prices and will get a boost from the new government, they are not the only industry which stands to gain from the change.

Another sector that stands to benefit from an increase in confidence is the Australian retail sector. It has suffered terribly from the lack of confidence in the past few years, but that could be about to change. Investors could expect stocks such as Myer (ASX: MYR) and Harvey Norman (ASX: HVN) to realise more sales in the next year as consumers are encouraged to spend, thanks to improved confidence, the lower Australian dollar and interest rates.

Foolish takeaway

Australia’s big businesses will be happy they can start getting on with things after a drawn-out election campaign. Investors can also respond positively to the election by grabbing a hold of some great stocks that pay dividends and have a bright future ahead.

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Motley Fool contributor Owen Raszkiewicz owns shares in Myer.   

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