ABC NORTH QUEENSLAND DRIVE
TUESDAY, 1 SEPTEMBER 2020
SUBJECT: JobKeeper payments.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: JobKeeper was designed for battlers, not billionaires. It was designed to keep people in work during the biggest economic downturn since the Great Depression. Wage subsidy schemes like this have worked well around the world, and most firms have done the right thing. But there's a small number of firms who have taken the taxpayer handouts and used them to fund bonuses for executives. I think that fundamentally breaks the social contract between firms and the rest of the community.
ADAM STEPHEN, HOST: How did you work out that some of the companies that had taken JobKeeper subsidies, wage subsidies for their workforce, had subsequently either paid out executive bonuses or given dividends to shareholders?
LEIGH: Yeah, it's interesting question. If you're an unlisted company, no one knows whether or not you’re getting JobKeeper. But if you're a listed firm, then ASIC’s asked people to disclose to the share market the amount of JobKeeper they're receiving. So as we're now in the annual reporting season, a range of firms are reporting that they received taxpayer handouts and that they’ve paid executive bonuses.
STEPHEN: Are there any examples that you found in regional Queensland?
LEIGH: There’s a small number of firms that are affected by this, but as you know, one of the firm's that shows up here is 1300SMILES. They got $2 million in JobKeeper and paid out $3 million to shareholders. Their founder Daryl Holmes owns two thirds of the company. So he'll take home about $2 million of that additional payout, which is roughly what taxpayers have put in to subsidise the company.
STEPHEN: When companies were taking the wage subsidies or signing up, was there any requirement on them that they had to kind of explain what they might do with bonuses or with shareholder payouts?
LEIGH: Not in Australia. In other countries, there's been stricter rules around this. The Bank of England said you can't pay dividends and get their special loans. Denmark has said if you want business support, then you can't be paying dividends. But in Australia there's only been guidance that banks should go easy on dividends. For the rest of the firms in the stock market, it's been laisser-faire, just left up to them.
STEPHEN: You mentioned 1300SMILES. So, they needed JobKeeper, they said they needed it and they got the wide subsidy. But you said that paid out more than what they received in shareholder payouts. Why is that questionable conduct to your mind?
LEIGH: I think when Australians supported the wage subsidies scheme, as people overwhelmingly did, they did so because they recognised that it was about keeping people in jobs - not about padding executive profits. We know that in Australia about half the shares are owned by people in the top fifth of the distribution, so shareholders are much more affluent than the typical Australian. This is not the right use of the money, in terms of the social contract we expect of firms.
STEPHEN: So you've been discussing 1300SMILES, which you say has paid out $3 million to shareholders whilst getting $2 million in JobKeeper. But you also identified SeaLink as another business that you taking umbrage with there, another business with a footprint in regional Queensland. What's your concern with SeaLink’s conduct?
LEIGH: They paid out an executive bonus as well. A decision of the board, not the CEO, and it's the board which I think has erred in judging community standards. No one’s asking CEOs to forego their base pay, but I don't think it's appropriate at the moment for CEOs to be receiving executive bonuses if the firm has been receiving taxpayer support. That taxpayer support is there for one purpose only – it’s to sustain jobs during this massive economic downturn. It's not there to better remunerate executives.
STEPHEN: These were obviously decisions that were made completely within the rules. Is your suggestion that it might be within the rules, but it doesn't necessarily pass the pub test?
LEIGH: Yeah, I think that's right. I think if you look around the world, you see examples of firms which have chosen to pay the money back. In some cases, they’ve decided that they don't deserve the money, they don’t need it, it can be put to better use. I'd like it if we saw more of that sense of corporate social responsibility. There's a great Australian egalitarian ethos, the notion that we're all in it together, and people spoke about that a lot as the downturn began. Overwhelmingly firms have displayed that in their conduct, but there's just a few firms that haven't followed through with that culture of giving back to the community.
STEPHEN: There is a real need for JobKeeper to continue, particularly in parts of regional Queensland that are so tourism dependent - they might not be back on their feet even well into next year. What is your concern if we've given money to businesses that maybe could have done without it?
LEIGH: Labor’s consistently been urging the government to better target the JobKeeper program. At the moment it’s a flat rate scheme, rather than subsidising people's actual wages as occurs in other countries. Even after September, the program won't be well enough targeted. Now when it's not well targeted, when it's being used for dividends or executive bonuses, then that means the money doesn't go as far. So you have a whole lot of people who are short term casuals just excluded from this scheme entirely. One million casuals left out of this scheme at the same time as some firms are channelling JobKeeper through to executive bonuses.
STEPHEN: The argument’s been made that we just can't sustain this level of wage subsidy into the long term. Australia, it will take way too long to pay back if we do continue it at its current rate. This is a big week for debate around JobKeeper. What's your stance? What would you like to see come out of this week in federal parliament?
LEIGH: It can't be forever, and it's got to be better tailored. The better you tailor it, the more you're able to extend it, both in duration and eligibility. But don't forget when JobKeeper was introduced on the 30th of March, Scott Morrison was saying that the whole system would snap back, that the economy would be back to normal in six months. That very clearly hasn't happened - not just in Victoria, but right around the rest of Australia. This is a much longer downturn than the government was expecting in March, so it needs to be flexible enough to adapt the policy response to the circumstances we find ourselves in.
STEPHEN: You mentioned you've already started to sort of collate some of these data and you've given a couple of examples. Is this an ongoing project for you, where you continue to call it out where you see it?
LEIGH: I'd love it if the government was calling it out as well. You know, this oughtn’t be a partisan issue. In fact, we had Treasurer Josh Frydenberg last year saying that he thought companies were paying out too much in dividends. What's been strange is that now, in this environment in which we've got a whole lot of money being paid out in dividends from firms that are getting taxpayer handouts, the Treasurer has been completely silent.
Authorised by Paul Erickson, ALP, Canberra.