Australia’s richest man, Fortescue Metals Group executive Andrew Forrest, has $400 million worth of reasons to be very angry with Kevin Rudd, and didn’t it show yesterday.
Fortescue shares – and Forrest’s fortune – has taken a battering since the Government announced its resources sector super profit tax on Sunday, with Forrest’s stake falling from $4.5 billion to just over $4 billion over the course of the week.
Yesterday, he let his supposedly good friend Kevin Rudd have it, painting him as a leftists leader by accusing him of trying to “nationalise” the mining industry.
“The wisest thing the PM can do is immediately take it off the table. It is abhorrent and it should be eliminated immediately.”
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“If he (Rudd) tells the truth then this tax will disappear quickly. This is a 40% nationalisation, not a tax of super-profits.”
Clive Palmer, a long-time supporter of the Coalition, also managed to get a few tasty shots in too.
“Whatever it takes to defeat this tax or to remove it if it ever is introduced, it’ll be an ongoing campaign for me for the rest of my life,” he told ABC television last night.
“I’m that committed to it, as I’m sure everybody else is, because we’re committed to Australia – we want to see this country prosper, we want to create jobs.”
The colourful pronouncements of Palmer and Forrest are hardly surprising. These billionaires see their fortunes, their companies and their industry under attack, and fighting words are clearly called for.
Indeed, Forrest and Palmer are particularly hard hit by the tax, given their operations are mainly focused on mines in Australia – at least companies like BHP Billiton and Rio Tinto can switch their focus to offshore projects to some extent.
While all entrepreneurs fear new government regulations that can affect your business, it is hard to think of another policy change that has had such a direct and immediate impact on the fortunes of Australia’s richest people.
In a matter of days, hundreds of millions of dollars have been wiped from the fortunes of miners including Forrest, Palmer, Tony Haggerty, Peter Bond and a host of other entrepreneurs.
It’s hard to think of another legislative change that has had this big an impact on the wealth of our richest entrepreneurs.
The most recent example I can think of is the Howard Government’s decision to change the tax treatment of managed investment schemes, which resulted in a sharp fall of the value of Great Southern Plantations founder John Young. Great Southern would eventually collapse and Young’s fortune was all but gone.
Whether you agree with the miners’ stance or support the Government – and it’s worth noting from a small business point of view that failure to proceed with the super profits tax could result in the abandonment of the cuts to the corporate tax rate and the new investment write-off rules – there is a good lesson for entrepreneurs.
However strong your industry might look, you should never totally discount the risk that the Government could shift the goalposts.