ABC CANBERRA BREAKFAST
THURSDAY, 21 JANUARY 2021
SUBJECTS: Companies using JobKeeper to pay out executive bonuses; Companies repaying JobKeeper payments after reporting huge profits.
LISH FEJER, HOST: You might have noticed in the news over the past few months that there are calls for thriving businesses, businesses that have been posting record profits this year, to hand back JobKeeper payments that they received during the pandemic. Particularly as some companies have done really well during the pandemic. So we're looking at winding JobKeeper back, JobSeeker back at the end of March, and also pouring money still into sectors that really need it like the tourism sector. The announcement yesterday from Chief Minister Andrew Barr that there's going to be a $2 million injection into the tourism sector here in the territory. Joining me this morning is Shadow Assistant Minister for Treasury and Charities, and Federal Member for Fenner in the ACT, Andrew Leigh. Good morning.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Good morning, Lish. Great to be with you.
FEJER: You too, thanks for joining me. This trend of record profits in many JobKeeper recipients, how common is it?
LEIGH: We don't know because the government hasn't disclosed the data. But we certainly know that there's a few firms that are in this situation. Premier Investments – which owns Smiggle and Portmans and Just Jeans - was one of those that closed its doors for a month in March last year, which made it eligible for JobKeeper. But then as soon as it opened up its stores, it saw sales roaring back. Between online sales and face to face sales, they had their best year ever last year, and yet received more than $40 million from the taxpayer in the form of JobKeeper. So the case I've been making is that for a firm like that, which was doing well enough to pay its CEO a $2.5 million bonus and pay its shareholders substantial dividends, they don't need government handouts. They’d do well to pay the money back, as indeed other firms have chosen to do.
FEJER: Yeah, but they got that JobKeeper initially because we just had to swoop in and do something. And so it's very good that they pay it back. But it's expected, isn't it, as it's the right thing to do. Do we need to be praising them?
LEIGH: It's not a legal responsibility, but I think it's an ethical one. If you just take the view that firms are only there for their shareholders, you're really operating in an old fashioned Gordon Gekko approach to corporate values. These days, corporate responsibility is not just about throwing a few bucks to charity. It's also about making the right ethical calls on the big questions. So Toyota Australia has handed back $18 million worth of JobKeeper, and their CEO said very clearly that that was ‘the right thing to do as a responsible corporate citizen’. Super Retail Group, which owns Rebel and BCF, has handed back nearly $2 million in JobKeeper for the same reason. So there are firms that have done the right thing and there are other firms that appear to think that if they can get, through a legal loophole, access to taxpayer money then they should just hang on to it.
FEJER: Do we know how many firms do sit in that pocket, that they're getting around it and how much money is in their pocket?
LEIGH: I'm trying to find out right now. JobKeeper has been an immensely important program for the Australian economy. It's the biggest and most effective program, saving hundreds of thousands of jobs. That doesn't mean we shouldn't also look at the questions of integrity around it, and make sure the money is well spent. As Andrew Barr has said, the tourism industry is struggling. The university sector is doing it tough. The arts sector is doing it hard. There's a lot of people that were excluded from JobKeeper, including a million casual workers. We need to make sure that JobKeeper isn’t going where it shouldn't be, so that there's more money available for the parts of the economy that really need it.
FEJER: My guest this morning on ABC Radio Canberra is Andrew Leigh, Shadow Assistant Minister for Treasury and Charities, Federal Member for Fenner here in the ACT. I wonder what your thoughts are on this. Have you been watching this and thinking of the injustice, and is this just a moral issue and ethical issue, that they should return it. Or could it be legalised? Are they at all required to return the money if they're posting record profits, Andrew Leigh?
LEIGH: There's no obligation at the moment. New Zealand has a repayment scheme. Other countries put things in place, but Australia doesn't have a scheme at this time. Yet this is the sort of moment at which you would hope that some of the largest shareholders would put pressure on the company. We've got billionaires such as Solomon Lew, Gerry Harvey and James Packer who've directly benefited because they own large stakes in firms that have received JobKeeper. And over the course of the last year, the collective wealth of Australia's billionaires went up 52 per cent. So a billionaire who started 2020 with $1 billion, finished the year with $1.5 billion. That's an astonishingly large increase in wealth. I don't imagine most of your listeners have seen their income or their wealth go up 50 per cent last year. So those billionaires, I think, ought to be saying to the firms in which they have a big stake, ‘Do the right thing - if you don't need the government handouts, give it back, so people who are really struggling can be helped out.’
FEJER: How many shareholders does it take to change something like that, that increase in profits? Does it make a difference?
LEIGH: I think it certainly would. The large shareholders - I suspect if someone like Solomon Lew was to say to Premier Investments it was the right thing, then they’d do that. If Nigel Austin was to say to Cotton On this ought to happen, then it would happen.
FEJER: Would they say that though? Because they’ve equally got invested profits in it?
LEIGH: It's a question as to whether a firm is just there for shareholders, Lish, or whether it's also there for customers, workers and the broader community. There's an old shareholder theory of value, championed by Milton Friedman back in the ‘60s and ‘70s, that says that the only business of businesses is to make a profit. But these days, people do talk about corporate social responsibility. Ethical firms do believe that they've got an obligation to the community. The Business Council of Australia has said you shouldn't take JobKeeper and pay executive bonuses. So firms that have chosen to do that, in contravention of what the Business Council Australia and the tax office have done, should really take a hard look at themselves and consider repaying the taxpayers for the handouts they’ve received.
FEJER: In Canberra, are we affected by this? Are many businesses doing brilliantly - initially struggled with coronavirus and needed JobKeeper to keep them going, but then did brilliantly? Have we got any businesses here?
LEIGH: Many of these retailers have Canberra outlets. Look around Canberra stores and you'll say see Smiggle, Portmans and the like-
FEJER: Are you only targeting the big end of town here, or smaller businesses as well?
LEIGH: I think it’s those largest firms which had the cash flow to be able to see the pandemic through, and many national brands have seen a significant increase in retail sales. As people have spent less on services, they've spent more on goods, and so the retail sector has to a large extent had a pretty good 12 months. But we've got a million people out of work, another million people who'd like more hours. Wages growth is lacklustre and unemployment’s not expected to return to 2019 levels for a number of years. So the economy really does have a number of weak points and the way in which to give it that additional support is to make sure that we're freeing up money where it's not needed.
FEJER: Thank you so much for joining me this morning, Andrew Leigh.
LEIGH: Thank you, Lish. Take care.
FEJER: Andrew Leigh, Shadow Assistant Minister for Treasury and Charities, Federal Member for Fenner here in the ACT.
Authorised by Paul Erickson, ALP, Canberra