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20 Oct 2021 10:09
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  •   Home > News > Politics

    JobKeeper a $6.2b 'sugar hit' for larger businesses that didn't take a big revenue hit during the pandemic

    Although the government and Tax Office continue refusing to release data about individual companies that claimed JobKeeper, data compiled by the Parliamentary Budget Office is shedding some light on how much went to larger companies that grew profits.


    About $6.2 billion in JobKeeper wage subsidies were paid to businesses with more than $10 million in turnover that did not experience a minimum 30 per cent fall in turnover in the first six months of the scheme.

    To receive the fortnightly $1,500 wage subsidy for each employee for six months to September 2020, firms with less than $1 billion in annual turnover needed to have recorded an actual downturn in March (when compared to the prior year) or tell the Australian Taxation Office (ATO) that their revenue would decline by 30 per cent or more in April or the June quarter.

    Firms with more than $1 billion in sales required a 50 per cent turnover decline.

    Labor, independent senator Rex Patrick and the Greens have called for a public register which shows how much firms with more than $10 million turnover received in JobKeeper, a move that the federal government has to date resisted.

    Analysis of Parliamentary Budget Office (PBO) data by governance advisory firm Ownership Matters, suggests that businesses with more than $10 million in turnover represent about 2 per cent by number of recipients, but may have received up to 20 per cent of the payments made under the scheme.

    "We estimate that the transparency register before the Parliament would disclose the recipients of around $20 billion of JobKeeper payments, across 20,000 businesses employing an average of 40 employees each," Ownership Matters director Dean Paatsch said.

    Treasurer Josh Frydenberg says JobKeeper was an economic lifeline that helped keep about 1 million businesses afloat and 3.8 million Australians in a job at the height of the pandemic.

    He said when the federal government introduced JobKeeper, "Australia was staring into an economic abyss".

    Mr Frydenberg has consistently defended the $89 billion JobKeeper scheme, saying it was "well targeted" and that, if payments had been based instead on a business's actual decline in turnover or a percentage of a person's actual wage, "it would have taken months to deliver the support" and as many jobs would not have been saved.

    "Additionally, updated Treasury analysis shows businesses which did not experience the fully anticipated decline in turnover in the June quarter were still forced to shed staff, with some 85,000 employees stood down on zero hours," he told ABC News.

    He said that 99 per cent of these businesses were small businesses, with an average of just four employees.

    "Without JobKeeper, many more jobs would have been lost and businesses forced to close their doors."

    While Labor MP Andrew Leigh was supportive of the JobKeeper scheme, he has described its implementation as the biggest waste of taxpayer money in Australian history.

    PBO data shared with Dr Leigh showed that more than $13 billion in JobKeeper payments were given to businesses (all sizes, not just those under $10 million in turnover) that recorded increases in revenue.

    Ownership Matters based its estimates on turnover data disclosed by the PBO and new information disclosed at a Senate Economics Committee hearing into the proposed Bill that would establish the register.

    Treasury officials revealed that approximately $10 billion in JobKeeper (11 per cent of the program) was paid to not-for-profits, which were excluded from the analysis.

    During the first six months of JobKeeper, in which $70.9 billion was spent, PBO data revealed that 18 per cent went to firms with rising sales.

    Analysis of the PBO data by Ownership Matters estimated that a further 22 per cent was paid to businesses that did not experience the anticipated 30 or 50 per cent decline in sales.

    Very few not-for-profits exceeded forecasts, so the PBO data suggests that firms with more than $10 million in turnover received about $6.2 billion — or just over 22 per cent — of the estimated $28.8 billion that was paid to firms that did not experience a 30 or 50 per cent downturn, Ownership Matters found.

    'I find it astonishing … it's the public's money'

    Mark Heydon runs a picture-framing business out of Melbourne and has been one of the millions of small businesses that benefitted from JobKeeper.

    "When the pandemic first hit, I felt that we had two or three months in us to survive," he said.

    "Then the government announced the JobKeeper package, which was fantastic. At the time, it saved our staff. It kept us moving.

    After September 2020, the JobKeeper payment was tapered down — to $1,200 fortnightly and again, in January, to $1,000 fortnightly — and the federal government required firms to show an actual decline in turnover to be eligible.

    The scheme ended on March 28, 2021.

    Mr Heydon claimed the wage subsidy for his staff between March and November 2020, but then stopped claiming as his business was no longer experiencing significant revenue declines.

    "We got very busy through November and we realised, projecting forward, that we weren't going to be under 30 per cent [turnover]," Mr Heydon said.

    "In fact, we're going to make some money in December. So, at the end of November, we let the tax department know that."

    While he acted honestly, Mr Heydon is frustrated that other firms, including foreign-controlled companies, have been legally pocketing JobKeeper while increasing wages and profits.

    Mr Heydon also fears some firms may have cooked the books to qualify for the wage subsidy, although the ATO has given evidence to parliamentary hearings that it has gone after firms that it suspects acted dishonestly, while not recouping $180 million paid to businesses it deemed had made "honest mistakes".

    "I find it astonishing … that we're paying pandemic emergency sums out of taxpayers money out of Australia to foreign companies who then, in turn, pay themselves bonuses and dividends," Mr Heydon said.

    "It's not even the government's money. It's the public's money."

    "We're at a competitive disadvantage, because we don't receive the amount of tax concessions that large businesses seem to be able to find. We stick by the rules."

    While Mr Heydon is appreciative of the scheme, and understands the government needed to get the money out the door quickly, he says that, after the first few months, there should have been a requirement to show an actual decline in turnover in order to keep receiving the money.

    "You've got to rein it in and put some parameters on it," he said, adding that he is in support of a public registry that gives greater transparency for firms with more than $10 million turnover that claimed JobKeeper.

    He says those firms that claimed the wage subsidy while making profits during the pandemic should be forced to pay it back, in the same way that single mothers who have received extra COVID-19 support payments from Centrelink are being made to pay back.

    "We're talking billions of dollars here that we've lost to the Australian economy," he said.

    "Chase it — get the money back. Get the money back from the people who you've overpaid. Simple as that."

    'It's really frustrating, it's really irritating'

    He's not the only small business that is frustrated.

    Aimee Brown runs a chiropractic business out of Perth. She personally worked extra hours during the pandemic to keep her business afloat and, as a result, saw an uptick in turnover, meaning she never qualified for the JobKeeper scheme.

    She said she only received a one-off, state government grant during lockdowns when she had to stand down her staff.

    While she has been able to survive and grow her business by personally working longer hours, she said, "Things have absolutely been tough".

    Seeing other businesses that qualified for JobKeeper, despite lifting their revenue and profits, she said she felt a "whole range of emotions".

    "It's really frustrating. It's really irritating to know that there's so many small businesses out there that are suffering that aren't eligible for anything, and are having to close down because they couldn't get support," she said.

    "And then there's these big businesses that weren't necessarily eligible, and there's just no repercussions for them."

    Like Mr Heydon, Ms Brown also wants the government to make those firms pay the money back.

    Earlier this month, the ATO told the Senate Economics Committee that $180 million of the $470 million owed to the agency in wrongful payments, mostly from small businesses, was never recouped because employers had made "honest mistakes" — they had claimed JobKeeper "in good faith" and had already passed it on to their employees.

    However, the ATO did recover $194 million in "overpayments" from other entities it found were ineligible. 

    Meanwhile, more than 11,000 individuals on Centrelink who were overpaid COVID-19 support payments are being forced to pay back about $32.8 million in debt.

    "There needs to be accountability — these [firms] have to pay it back," Ms Brown said.

    "The people [who] get paid Centrelink [wrongly] have to pay it back.

    "If I was to claim my childcare benefit wrongly … I'd get a letter in the mail saying I've got to pay it back. To me, [JobKeeper] is no different."

    'Sugar hit' when economic Armageddon never eventuated

    Ownership Matters co-founder Dean Paatsch said that about 90 per cent of the $240 million of JobKeeper that had been returned or pledged for return has come from public companies who have bowed down to public pressure to pay back the money if they made profits during the period.

    "The benefit of transparency is that it gives people a behavioural nudge, to do the right thing," he argued.

    "These companies, it has to be said, were absolutely legally entitled to receive that benefit. But it turned out that, as the pandemic eased, it was just simply a sugar hit to their profits.

    "And some of them have decided to do the right thing and return it."

    He said that New Zealand already had a public transparency register.

    "In New Zealand, we know that every single recipient of the JobKeeper scheme was listed on a public website.

    "New Zealand [firms] repaid JobKeeper at a rate 22 times higher than Australian [ones].

    "If Australian businesses had repaid JobKeeper at the rate of our New Zealand cousins, we would have received $4.9 billion … by now."

    Mr Paatsch said that, while JobKeeper was a good scheme that kept many businesses afloat and workers in jobs, it could have been designed better.

    He suggested that, at the three-month mark, the government could have, like its New Zealand counterparts, retested and said that only businesses that had experienced a 40 per cent decline could remain in the scheme.

    "That could have been implemented in Australia. But we chose not to," Mr Paatsch said.

    "JobKeeper was the system that was designed for an Armageddon that never occurred in Australia.

    "For the vast bulk of businesses, except those in Victoria, pandemic restrictions eased after June, yet, [the government] kept paying JobKeeper through July, August and September."

    Mr Leigh said that, while he supported the concept of JobKeeper, the scheme was "put together very hastily".

    "The government should have been able to monitor the money that was going out the door to firms with rising earnings.

    "[The government] knew within a few months that billions of dollars was being paid to firms that didn't need the money. It should have stopped that money going out the door.

    "When you are spending taxpayer money, you need to be careful, prudent and frugal. You need to treat taxpayer money with the same respect that you would treat money coming out of your own wallet. And that just didn't happen in this instance."

    © 2021 ABC Australian Broadcasting Corporation. All rights reserved

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