Wayne Swan’s now famous “patchwork” economy isn’t just an issue for Australia’s middle and lower classes – even our richest entrepreneurs are feeling this pinch.
This is perfectly highlighted by the very different directions billionaires Clive Palmer and Kerry Stokes find themselves travelling in.
Just months after merging West Australian Newspapers and Seven Media, Stokes announced a profit downgrade yesterday due to falling advertising revenue.
He then used a panel discussion (attended by Prime Minster Julia Gillard) to explain just how tough things are.
“There’s no question we’re in a two-speed economy. There’s no question that outside of major (mining) activities and infrastructure activities our economy is not very well at all,” he said.
“Retailers, people who are involved in all sorts of activities, are finding it really tough.”
“In fact, it has got all the feelings of a major downturn in the economy.”
No arguments here, Kerry.
While declaring a “major downturn” could be underway isn’t a bad way to cushion the blow of a profit downgrade for your shareholders, there wouldn’t be too many entrepreneurs that could argue with this statement.
While business confidence remains relatively firm, actual business conditions are patchy at best, and depending on your sector, poor at worst.
It’s almost as if the executives that respond to these sentiment surveys are willing things to get better with the power of positivity.
But there are some entrepreneurs who have plenty to be positive about and chief among them today is Clive Palmer.
According to reports, he is to finally float his Resourcehouse company on the Hong Kong Stock Exchange in the coming weeks.
According to terms sheets doing the rounds, he will float about half of the shares in the company for $3.6 billion, with a total market capitalisation of $7.1-7.8 billion.
Palmer is expected to retain half of the business, giving him a personal stake around $3.6 billion and dispelling any doubts about his difficult-to-calculate fortune.
The resources sector has dramatically reshaped the Australian economy in the last few years – we’re now starting to get a sense of how it’s going to change the rich list.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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