The Government gave $13 billion to firms with rising earnings
23 September 2021
What could your household do with $1300? Maybe you’d get the car fixed, or donate the money to a homeless shelter, or pay down the mortgage. I’m guessing what you wouldn’t do is to find a business whose profits are growing, walk in and plonk 13 $100 notes on the counter.
Yet, thanks to Scott Morrison and Josh Frydenberg, your household just did exactly that.
Recently I asked the independent Parliamentary Budget Office to tally up the total amount of JobKeeper that went to firms with rising revenues. It estimated that in the first six months of the scheme, $13bn went to companies whose turnover was higher last year than it had been in the same period before the pandemic. With about 10 million households in Australia, that equates to $1300 for every household.
When the pandemic hit, countries around the world implemented wage subsidy schemes.
The Prime Minister initially was reluctant. On March 25 last year he said a new wage subsidy scheme would be a dangerous idea. But five days later, after pressure from Labor, business and the union movement, he announced JobKeeper. As with vaccines and quarantine, the idea was good but the implementation was bungled.
Unlike Britain, Canada, New Zealand and the US, Australia’s wage subsidy scheme did not require the names of recipients to be published online. It was only when corporate watchdog the Australian Securities & Investments Commission required publicly listed firms to disclose JobKeeper that we began to get a clue something might be amiss.
As the corporate reports started to roll in, company after company disclosed they had got JobKeeper despite rising revenues. Australia’s biggest pastoral landholder, AACo, increased its profit fourfold last year yet got $7m in JobKeeper. Car dealer Peter Warren’s earnings went up 20 per cent in June last year, yet it got $14m in JobKeeper. Donga maker Fleetwood’s profits grew 35 per cent last year, yet it got $3m. Flower seller Lynch Group experienced a 13-fold increase in its profits, yet it got $3m. Ironically, one of the recipients of the $1300-per-household overpayment was 1300Smiles, which doubled its profits yet got $2m in JobKeeper.
The Business Council of Australia and the Australian Taxation Office warned that JobKeeper recipients should not pay executive bonuses, but not everyone listened. Accent Group, IDP Education and Star Casino claimed they were suffering so much they needed JobKeeper, then gave the boss a bonus.
The resulting outcry can be heard across the political spectrum. Janet Albrechtsen has called JobKeeper “over-hyped and ineptly structured”. Judith Sloan concludes “the wildly expensive JobKeeper will rank as the single most irresponsible and reckless spending program ever undertaken by a government”.
It’s not like the government didn’t know. In June last year, Treasury published a report showing that 15 per cent of JobKeeper was being paid to firms with rising revenues. Morrison and the Treasurer would have known months earlier the program was spraying money around like a Formula One winner showering champagne over the crowd. Yet they made no changes to the scheme until September last year.
Had money not been given to firms with rising revenues, JobKeeper could have supported more businesses for longer.
The response of Morrison and Frydenberg, when asked to explain why they wasted $13bn, has been indignation and obfuscation. In answer to the charge that they wasted some of the JobKeeper money, they respond that they didn’t waste all the JobKeeper money. JobKeeper saved jobs, but not one of those jobs was saved by giving money to firms with rising revenues.
Asked to disclose which large firms got JobKeeper, the Morrison government has stubbornly refused. The Liberals know the more facts Australians discover about their $13bn of JobKeeper waste, the angrier people become. So they’re trying to shroud the scheme in secrecy, claiming that I’m playing “the politics of envy”, or falsely claiming that Labor plans to impose a retrospective tax on JobKeeper recipients.
In his first speech to parliament, Frydenberg said: “We must always remember that whenever we create a new arm of bureaucracy or expand a field of activity, we are not spending our own money; we are spending the money of our citizens who look to us as the guardians of their wealth.” Alas, when rolling out JobKeeper, he behaved more like he was running a carnival giveaway than serving as a prudent guardian of taxpayer finances. The party of Menzies has squandered our money and its reputation.
Authorised by Paul Erickson, ALP, Canberra