On the surface, the headline numbers from the BRW Rich 200 list look impressive. According to the magazine’s valuations, total wealth increased 23% to $167.25 billion, a rise of $31.41 billion.
But this was far from a vintage year for the rich. The bulk of the $31 billion increase in total wealth was generated by a handful of people.
Gina Rinehart’s fortune soared $5.56 billion to help her take out first spot with a $10.3 billion empire. Ivan Glasenberg, the South African-born, Swiss-based chief executive of newly-listed commodities trader Glencore made a stunning debut with $8.8 billion (a conservative valuation in my opinion). Andrew Forrest’s wealth jumped $1.94 billion to $6.18 billion and Clive Palmer rose $1.03 billion to $5.05 billion.
There’s $1.03 billion — or 55% — of the total rise right there. Add in big jumps in the fortunes of Angela Bennett and Michael Wright, Nathan Tinkler and billionaire debutant Frank Timis and it’s clear that aside from the resources magnates, a big number of list members have experienced something of a lost year.
Eight of the 35 members of the billionaire’s club saw their fortunes declines, with 46 members of the total group of 200 experiencing decreases. Another 24 members were dropped from the list because their wealth fell below the cut-off of $215 million.
Treasurer Wayne Swan probably wasn’t talking about Point Piper, Toorak and Vaucluse when he said that the resources boom wasn’t stretching to every postcode in Australia, but the theory is the same.
Frank Lowy’s fortune fell by $60 million to $4.98 billion, as he plunged from first place last year to sixth place this year. While that fall had more to do with the soaring resources moguls, his shopping centre business has battled sluggish retail conditions.
James Packer increased his pile slightly from $4.10 billion to $4.16 billion, but consumer caution is weighing on his gambling and media interests. Gerry Harvey ‘s fortune was down from $1.69 billion to $1.41 billion, while regional media king Bruce Gordon saw his fortune dip from $1.65 billion to $1.57 billion.
A patchwork rich list indeed, Mr Treasurer.
The interesting question is whether the dominance of the resources sector is cyclical change or a sign of something more structural.
Certainly the resources boom has to end at some stage and domestic conditions will improve. But there is a sense that the three traditional cornerstones of wealth in Australia — media, property and retail — are undergoing huge structural changes.
Certainly media business models are under severe pressure — note John B Fairfax’s wealth has fallen by $82 million to $522 million on this year’s rich list — and the empires of the moguls who once seemed untouchable at the top of the Rich 200 are changing.
James Packer is more reliant on gambling than ever, while Kerry Stokes’ mining equipment business is helping stabilise his fortune.
Retail is in a similar transition phase. The old model — big store networks, lots of media spending, big mark-ups — is being challenged by internet-savvy consumers who have figured out they have been taken for a ride.
How will this affect Gerry Harvey and Frank Lowy in the future? Lowy delivered an upbeat assessment of the medium-term outlook for the Australian economy yesterday, but exactly how long it will take before consumers shrug off their caution is difficult to answer.
Property remains the bedrock of the rich list — even this year, with house prices falling and the commercial property sector still struggling, a quarter of the list members come from this industry. But with many commentators expecting a period of stagnating asset values — and some still tipping a more severe price correction — there are question marks over this sector as well. Note seven entrepreneurs who fell off this year’s Rich 200 list were from the property sector.
Time will tell how the changes in these industries affect the rich list. The entrepreneurs on the list have a happy knack of shifting their empires to stay ahead of the market, but there is a danger that even they cannot dodge the changes hitting sectors such as media and retail.
The rich list in 10 years time may be a very different beast.
Finally, a note on my failed prediction that Ivan Glasenberg would beat Gina Rinehart for the top spot. I clearly underestimated Rinehart’s rise in recent months, although Glasenberg’s estimate seems a touch conservative. It takes into account the value of his Glencore shares, but I would have thought the dividends he has received over the last decade would have been substantial — although they would have been difficult to track.
*This article was originally published at Smart Company
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