WEDNESDAY, 3 FEBRUARY 2021
SUBJECTS: Auditor-General conducting an audit of the JobKeeper scheme; Companies using JobKeeper to pay out executive bonuses; Companies repaying JobKeeper payments after reporting huge profits.
LEON BYNER, HOST: This is a really interesting story out of something that we've talked about a lot. And that is that the Auditor-General - this is the federal Auditor-General, he's basically the umpire of the Parliament - is going to probe JobKeeper, because it appears that it was used to pay dividends and executive bonuses. Now, an audit of the scheme is going to examine issues including whether the tax office has put in place effective measures to protect the integrity of JobKeeper payments. And again, the bloke who's asked for this has done it for good reason, so I thought we'd get him on this morning because it's clear that this money was never intended to be a bonus for someone. It was never there for that purpose. So let's talk to the Shadow Assistant Minister for Treasury, Andrew Leigh. Good morning. What do we know?
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: G’day, Leon. Great to be with you. What we know so far is that JobKeeper is the most expensive program the federal government's ever put in place and it's been effective, saving around 700,000 jobs. But that doesn't mean that every dollar has been well spent. We do know that there's a number of firms - among them Premier Investments which owns Portmans, Just Jeans and Smiggle - which have seen their profits go up in 2020 rather than going down. They paid an executive bonus of $2.5 million to their CEO, more than most of your listeners would earn in a lifetime, and then paid out a significant dividend, a large chunk of which will go to their billionaire shareholder Solomon Lew. Good luck to them for their success, but they've also received millions of dollars of taxpayer handouts in JobKeeper. I don't think that's why the JobKeeper program was designed.
BYNER: Let me just get this right. I thought that to get JobKeeper, you wouldn't universally get it, but you would get it on the basis of your need. Is that not the case?
LEIGH: Great question, Leon. So what Premier Investments did was they closed their stores in March of last year, and that made them eligible for JobKeeper because they had that temporary downturn. But then when they reopened the stores, sales came roaring back. They also benefited from an uptick in online sales.
BYNER: So anybody that ran a business that does anything doing well could shut it down for a period, claim a loss of over 30 per cent and then get this money?
LEIGH: Well, you couldn’t artificially make the changes. The reason that Premier closed their stores was the COVID pandemic. But overall, their 2020 sales were up. It was the best year ever, and there's a range of other firms that are in that position. Harvey Norman has also had a cracker year in 2020, and a big chunk of that went to Gerry Harvey. Again, good luck to Gerry, but he's a billionaire benefiting from JobKeeper.
BYNER: But isn't there a criteria, though, about you have to lose a certain amount to get it? I mean, because I know for example there are many sectors whose business has gone up.
LEIGH: You did have to lose, but the aim was to get the money out the door quickly. So the period over which you had to have a downturn was fairly short. Unlike New Zealand, Australia didn't have a repayment system in place. Some firms have said, ‘look, voluntarily, we're going to pay the money back’. So Domino’s, Toyota Australia, Iluka, a mining company, are among the firms that have said, ‘look, we think the right thing to do to the taxpayer is to hand back money that we really didn't need’. I think they've benefited in the eyes of the public and people recognise that they're putting their corporate social responsibility into action - not just flicking a few dollars to charity here and there, but actually living their values. Unfortunately though, a lot of firms don't seem to have done that, including firms that have used JobKeeper to pay executive bonuses.
BYNER: Well, I'll give you an example. We've just had one employer call us to say that they've got seven staff on JobKeeper and would probably shut over winter if it isn't extended. What do you say?
LEIGH: Again, that Leon goes straight to the point as to why we need to crack down on the rorts. Because while you've got firms that are misusing JobKeeper, it's a more expensive program. Labor believes that JobKeeper shouldn't be suddenly shut off, and in that we're not alone. The International Monetary Fund has said that assistance to the economy shouldn't be withdrawn prematurely. So we're really worried that firms like the one that your listener runs could well hit the skids if JobKeeper’s withdrawn. JobKeeper can be made more economical if firms are pressured to hand back money that they didn't need after enjoying their best ever profit year.
BYNER: Isn’t it better to not give them the money in the first place if they don't need it, rather than give it and then ask for it back? Surely we could target this JobKeeper a bit better, couldn’t we?
LEIGH: I'm sure with the benefit of hindsight, it could have been better designed. And one of the things I hope the Auditor-General will go to is exactly how a program like this could have been better put together. But we also need to make sure that the Auditor-General's looking there at the rorts. We know that some firms have claimed for employees who were deceased, who were living overseas, who were in jail. We know that there's firms that have been handing out significant dividends at the time in which they were also saying to the taxpayer that they’re in so much strife that they needed government handouts. It just can't be consistent.
BYNER: Alright. Well, we'll keep an eye on this. That's Dr Andrew Leigh.
Authorised by Paul Erickson, ALP, Canberra.