ABC ADELAIDE MORNINGS
WEDNESDAY, 2 SEPTEMBER 2020
SUBJECT: JobKeeper payments.
DAVID BEVAN, HOST: Andrew Leigh is making headlines. He’s the Labor MP for the ACT seat of Fenner. He's making headlines because he had a good look at the JobKeeper scheme, and he says ‘you know what? I'm not happy with where some of this money is ending up’. Andrew Leigh, good morning to you.
ANDREW LEIGH, SHADOW ASSISTANT MINISTER FOR TREASURY AND CHARITIES: Good morning, David. Great to be with you.
BEVAN: What's the problem?
LEIGH: Most firms did absolutely the right thing when the downturn hit. They received government subsidies if they’d had a big drop in revenue, and they used them to support jobs. But there's a small number of firms that appear to have done the wrong thing - paying out substantial bonuses to executives, paying out significant dividends, which in some cases have ended up lining the pockets of billionaires. The thing about JobKeeper is it was designed to support the jobs of battlers, not to benefit billionaires. It's there in order to reduce inequality, but some firms seem to be using it to increase inequality.
BEVAN: Is the argument here though - look, that JobKeeper is there to support that individual person's position within the company, but the overall management of the company still remains a business, the business of the board and the shareholders. And so they're entitled to handout a bonus if they think the CEO has done a good job in difficult circumstances, notwithstanding the fact that the company's been propped up by the taxpayer.
LEIGH: There’s nothing illegal about this behaviour, but I certainly think it stretches the bounds of corporate responsibility beyond breaking point. The fact is, if you're asking for taxpayer subsidies, then your CEO shouldn't be getting a bonus. You ought to be recognising at that moment that the firm is going through tough times, and the Australian taxpayer is stepping in to ensure that people keep their jobs. JobKeeper was absolutely the right thing to do. I mean, we're going to be going into recession formally in an hour, but JobKeeper has ensured that the downturn was milder than it would have otherwise been. But the thing is, a small number of firms - and I stress, a small number of firms - have done the wrong thing, making significant payouts. So you look at 1300Smiles - they got $2 million in JobKeeper, paid out $3 million to shareholders, of which about two thirds will go to the founder who himself is pretty well off.
BEVAN: You've also used the example of SeaLink, a well-known South Australian company. They, according to one article quoting you and what you've said in federal parliament, they received $8 million dollars in JobKeeper and gave the CEO a $500,000 bonus. Is that correct?
LEIGH: That's right, and that's the decision of the board, which I don't think is appropriate. You look at Star Casino - got $64 million in JobKeeper, and paid out a significant equity bonus to their CEO. IDP Education - $4 million in JobKeeper, paid out a substantial CEO bonus. IDP Education CEO Andrew Barkla was the best paid CEO last year, so I'm not sure that he needed effectively to have his salary boosted as a result of that firm’s JobKeeper payment.
BEVAN: Okay. Now we've invited a host of companies mentioned by Andrew Leigh in his speech to federal parliament - including SeaLink and Harvey Norman and Nick Scali - we've invited many, many of them to come on and respond to this. Your basic point, though, is that if you're getting a taxpayer subsidy, the CEO should not be getting a bonus?
LEIGH: Yeah, that’s right, and nor should you be paying out excessive dividends.
BEVAN: How would you regulate that though? Because if the government said ‘okay, any company that's getting JobKeeper, you can't give your CEO a bonus and you can't send out nice dividends to your shareholders’, then those companies might turn around and say ‘well, we don't want the JobKeeper’. In which case, people will be laid off.
LEIGH: You might make an interesting point there, David. It's difficult to legislate morality. But in some cases, firms have decided that they don't need the money. So there's a New Zealand company called Mainfreight that was entitled to their equivalent scheme to JobKeeper and said ‘we didn't deserve it’ and decided to pay the money back. In other cases, countries have decided that firms have to choose between getting a taxpayer handout or else paying dividends. We in Australia have looked to put public pressure on this, and that's why I've given these couple of speeches in Parliament. Because I think firms can do this, but they're also up for judgement - not only by their shareholders, but also by their customers, their employees and by taxpayers who have stumped up the money in the first place.
BEVAN: Now we put in a request at the start of the week to speak to the federal Treasurer, Josh Frydenberg, and I hope we will get that interview in the next few days. What are you saying he should be doing? Should he just be applying moral pressure on them, as you are trying to do through your speeches, or do you think he could change the JobKeeper scheme so that companies getting taxpayer subsidies CEOs can't get a bonus?
LEIGH: Josh’s position on this is interesting, because a year ago he was arguing that Australian firms were paying out too much in dividends, and not doing enough investment. Yet, when firms are taking taxpayer handouts and using that to fund dividends, he's been entirely silent. He hasn't said boo. Indeed, when the Finance Minister Mattias Cormann was asked about it this morning, he simply said that he wasn't going to provide commentary on that. But I think there is a role for government to provide a bit of moral leadership on issues like this, to call on companies to act in the collective interest. Increasingly, people who look at corporate governance hard are recognising that it's a mistake to just see firms as being about the self-interest of the shareholders. It's really important that we recognise that firms are playing a broader role in the community. That's why we give them the corporate veil, and their social licence to operate, and I think that's imperilled when a small number of firms do the wrong thing like an instance like this.
BEVAN: Now, we're only minutes away from the news, but what about the argument which says look at the self-funded retirees, Mum and Dad shareholders rely on that dividend income?
LEIGH: It's important to have some level of dividend payouts over the long run, but it's also important to remember that half of Australia's shares are owned by the richest fifth in the community. And so when you're paying money out to shareholders, you're increasing inequality. JobKeeper was meant to be a program that was designed to reduce inequality. It was designed as a program to support the jobs of low and middle income workers, not to give the most to those who already have the most.
Authorised by Paul Erickson, ALP, Canberra.