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Who is getting richer from the budget?

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The federal budget has been criticised for closing some wealth options – but a few have opened too. JAMES THOMSON reveals which filthy rich are looking to clean up, and which are looking a little leaner.

By James Thomson

Filthy rich infrastructure deals

The federal budget has been criticised for closing some wealth options – but a few have opened too. We reveal which filthy rich are looking to clean up, and which are looking a little leaner.

Wayne Swan’s first budget contained precious little for Australian businesses, but that doesn’t mean there were no winners and losers among our wealthiest entrepreneurs.

The centrepiece of the budget (besides the tax cuts for Labor’s precious working families) was $20 billion in seed funding for the Building Australia infrastructure fund. While the fund will not start making investments until 2009-10, and the priority projects for the fund remain something of a mystery, the sheer size of the amounts involved will create an infrastructure boom that is likely to last for more than a decade.

That’s great news for Australia’s engineering impresarios, such as WorleyParson’s managing director John Grill, executive Peter Meurs and former executive Bill Paterson. WorleyParsons shares have soared in the last four years (the company floated at $2 in November 2004 and is trading around $41) thanks mainly to the company’s involvement in big mining projects. And while the stock has been under pressure this year, dropping around 20% since January, the creation of the Building Australia fund could turn that around. Grill’s stake is currently worth $1.3 billion.

Queensland-based engineering firm Ausenco is much smaller than WorleyParsons, but its recent performance has been good; since listing in June 2006 the shares have increased more then eight-fold. The prospect of an infrastructure boom will no doubt please chief executive Zimi Meka (who owns stock worth $251 million), director Robert Thorpe (who owns shares worth $188 million) not to forget chairman and former Queensland premier Wayne Goss (who has a $20 million stake).

Australia’s mining millionaires will also benefit from the infrastructure boom, which is likely to pump money into crucial mining infrastructure such as ports and rail. Expect Australia’s heavily congested coal ports to get special attention – after the coal contract prices doubled recently, the Government will be keen to maximise its tax take by helping coal producers ship as much as product as possible.

Coal barons such as Macarthur Coal founder Ken Talbot (who is shopping his stake around at present) and Felix Resources chief Brian Flannery will be likely to benefit as the market boosts the prices of their companies.

Any entrepreneurs involved in education – such as husband-and-wife team Kip and Dugnija McGrath from Kip McGrath Education Services should benefit from the Government’s new 50% tax rebate on household education costs.

Embattled child-care king Eddy Groves of ABC Learning Centres will have been pleased to see the Government follow through with its decision to increase the child-care tax rebate from 30% to 50%. ABC is widely tipped to increase its fee structure in the next few months.

There are some losers from the budget too. Harvey Norman founders Gerry Harvey and Ian Norman will be disappointed to see the changes to fringe benefits tax exemptions for laptops and digital organisers, although the education tax rebate could mean more students are on the lookout for computers. The men from Harvey Norman have had a shocking year so far – the stock is down 35% since January and the value of Gerry Harvey’s personal stake has fallen from $1.9 billion to $1.2 billion.

Sydney luxury car entrepreneur Neville Crichton would have been most unhappy to see the luxury car tax rise from 25% to 33% in the budget. His company Ateco distributes luxury car marques including Alfa Romeo, Ferrari and Maserati. And while the luxury car market remains reasonably robust, sales are sure to slow in the coming months. Crichton, who departed BRW’s Rich 200 list last year after the cut-off leapt from $130 million to $180 million, is still worth well over $120 million.

Transport billionaire Lindsay Fox’s joy at increased infrastructure funding would have also been tempered by the luxury car tax rise – his family company owns Brisbane’s biggest BMW dealership and Sydney’s biggest Audi dealership. Fox is also an avid collector of luxury and exotic cars and even has his own car museum in Melbourne’s Docklands precinct. Unfortunately for Fox, that next museum piece just got a little bit more expensive.

 

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