The annual celebration of Australian wealth that is the BRW Rich 200 hits the streets today. But many of the people on the list — particularly those not involved in digging rocks out of the ground — are unlikely to be cheering. It has been a difficult year for many members of the Rich 200, and things will only get tougher.
The headline numbers looks good. Total wealth has increased from $128.6 billion to $139.6 billion. The minimum amount needed for inclusion on this list has increased to $200 million, up from $180 million last year and $130 million in 2006. There are eight new billionaires and 35 new names on the list.
But adjust some of these numbers for the mining boom effect and a different story emerges.
The $11 billion increase can largely be attributed to the $5.5 billion rise in the fortune of Andrew Forrest and the debut of a group of 11 resources industry figures. These include Felix Resources trio Travers Duncan, Brian Flannery (jointly listed at $991 million) and recently retired CFO David Knappick ($246 million); Western Areas chief Terry Streeter ($251 million); former coal baron Nathan Tinkler ($426 million); Linc Energy chief Peter Bond ($352 million); and Mineral Resource chief Chris Ellison ($251 million).
There’s also the re-emergence of former jailbird Alan Bond, whose $265 million is based on African mining assets. That’s more than $8 billion of the $11 billion increase right there.
In fact, 60 members of the list lost money this year, compared with only eight members last year. These are not including Platinum Asset Management’s Kerr Neilson (whose fortune has plummeted $1.43 billion) and James Packer (who is down $1.15 billion) and gaming machine doyen Len Ainsworth (who has dropped $730 million).
On top of this, there are 30 people who have fallen off the list completely, some due to the cutoff rising but most because they have also lost money.
There are some obvious departures who have lost the bulk of their fortunes, including Eddy Groves from ABC Learning, Philip Adams and Michael King from MFS, Allco’s David Coe, and City Pacific’s Phil Sullivan.
But the list of lesser-known losers tells a bigger story about the widespread impact of the global economic slowdown. APN Property chief Chris Alyward has lost money. Platinum Asset Management deputy chief investment officer Andrew Clifford is gone, along with hedge fund investors Steven Eckowitz and Jeremy Reid from Everest Babcock & Brown. Chris Scott, director of the renamed MFS, departs, as do furniture retailer Julian Tertini, former Billabong chairman Gary Pemberton and Mortgage Choice founders Peter and Rod Higgins.
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The screws will continue to tighten over the coming months.
The list is now dominated by members from the property sector, who are already struggling with higher funding costs and credit rationing and the diminishing pool of people that can afford to buy property. The fallout from further interest rate rises could be ugly.
The retail sector (23 members) is bracing for a tough 12 to 18 months as consumer confidence sags and inflation cuts household spending. The 29 members from the investment sector couldn’t be confident about generating positive investment returns in 2008-09, given the volatility of global equity markets.
As it has been for 25 years, the Rich 200 provides a brilliant reflection of the dynamics of the Australian economy. The real performance of many members of the list, like the performance of the wider economy, is being masked by the incredible strength of the resources industry. If the mining boom ends suddenly, the list — and the nation — are in for a shock.