Login
iscover
The amount of JobKeeper payments made to profitable firms has now surpassed $13 billion, as the Senate closes in on an accountability play.
Newsletter
$13bn in JobKeeper pocketed by profitable businesses
30 August 2021
•
13 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
New data from the Parliamentary Budget Office (PBO) shows that more than $13 billion in JobKeeper payments was given to nearly 195,381 large companies that went on to turn a profit over the course of the first six months of the scheme, the AFR reported on Monday.
More than 13 per cent of the $98 billion wage subsidy, which expired in March this year, went to businesses that recorded increased turnover between 1 April and 30 September 2020, compared to the same period the year before.
The latest PBO analysis of confidential ATO data, which was commissioned by shadow assistant minister for Treasury Andrew Leigh, comes just one month after an earlier PBO analysis, which found that $12.5 billion in JobKeeper payments were made to businesses that didn’t record a shortfall in revenue between April and June last year.
The PBO also found that $4.6 billion was paid to 157,650 firms whose turnover actually increased over the same period.
Both PBO analyses follow the emergence of an Ownership Matters report released in March which showed that 58 of the 66 ASX 300 companies that received JobKeeper between July and December last year reported positive earnings.
The 58 companies to report positive earnings, via their preferred earnings metrics, received a total of $741 million in JobKeeper payments, accounting for approximately 30 per cent of wage subsidy payments received by ASX 300-listed companies in 2020.
==
==
In the half-year ended 31 December 2020, 34 of the 66 companies that received the wage subsidy reported a boost in their underlying earnings metrics relative to pre-pandemic levels, accounting for 20 per cent of all payments made in the second half of the year.
Dr Leigh said the Morrison government was made aware of early red flags, and had the opportunity to make changes to the program to prevent profiteering, but chose not to.
“By mid-2020, Scott Morrison and Josh Frydenberg already had a report from Treasury warning that billions of dollars of JobKeeper were going to firms with rising revenue,” Dr Leigh said.
“Red flashing lights should have gone off at that moment.”
It’s a sentiment which is shared by some in the accounting profession, too. Institute of Public Accountants general manager of technical policy Tony Greco said that, while the subsidy’s design flaws are understandable, the Treasury ignored early warning signs.
“In the mid-point review, it was noted [that] ‘since its introduction, the rate of decline in employment has slowed, then stabilised, and towards the end of May was showing tentative signs of recovery’,” Mr Greco said.
“[The] Treasury had an opportunity to tighten the eligibility so that entities that did not experience an actual decline in turnover would not continue to receive the Jobkeeper payment for the full six months, particularly in cases where projected turnover was the avenue for meeting eligibility.”
New PBO analysis emerges amid a heated Senate effort led by independent senator Rex Patrick to publicise the names of large firms that received JobKeeper, how much they received, and whether they’ve moved to repay any of the wage subsidy.
Late last week, Treasurer Josh Frydenberg made an eleventh-hour attempt to claim public interest immunity over the publication of details related to the payment of JobKeeper to large companies, which he believes would undermine public confidence in tax law and administration.
The Senate order, moved by Senator Patrick, would have required the ATO to table the list in the Senate at 4.30pm on Thursday, publicising the names of businesses with a turnover of more than $10 million that received the JobKeeper wage subsidy.
Mr Frydenberg said businesses and taxpayers provide the government with private tax details on the basis that the government won’t publicise it. He said businesses would expect his government to take the necessary steps to keep it confidential.
“Crucially, the confidential information that is the subject of this order has been collected by the Australian government under strict tax secrecy laws which restrict both the use and sharing of that confidential information,” Mr Frydenberg said.
“Upholding these laws is therefore vital to the continued confidence of Australians in government and the assurances it provides about the protection of their confidential information.
“Almost every aspect of government would be significantly and adversely impacted were Australians to lose confidence in the protection of the confidential information they provide to the Australian government.”
The Treasurer’s public interest immunity claim was described by Senator Patrick as an interference effort launched to cover up “JobKeeper misuse”.
“Australians have a right to know which large employers have received taxpayer money and how much they received,” Senator Patrick said.
Senator Patrick argued that the information sought by the Senate isn’t related to an employers’ business or tax information, but instead, the amount of public money they were provided.
“It is no different to grant money or the total amount of money received under a government contract, which is already published information,” Senator Patrick said.
“There is huge controversy around the abuse of the JobKeeper scheme, a program set up to assist struggling businesses during the pandemic.
“JobKeeper was a wage subsidy scheme for businesses significantly affected by COVID-19. And yet some businesses took it, improved their profits and then paid larger dividends to their shareholders and bonuses to their executives.
“Those companies that abused the taxpayers’ goodwill should pay it back.”
You are not authorised to post comments.
Comments will undergo moderation before they get published.