JobKeeper payments worth $ 38 billion went to employers who did not suffer sustained downturns below threshold levels, new data shows.
The wage subsidy program was the largest financial aid in Australia’s history and cost $ 89 billion when it ended earlier this year.
However, there are still questions about the billions of dollars that were handed over to companies that increased revenue or where revenue did not fall by 30 percent.
New analysis from the Federal Parliamentary Budget Office (PBO) showed that at least $ 38 billion went to companies where revenue did not fall below the thresholds during the quarter for which they demanded support.
“Of course, JobKeeper was a good idea,” said Federal Labor MP Andrew Leigh.
“But the way it was administered has led to some of the greatest waste in the nation’s history.”
When the federal government announced the wage subsidy program, they said most companies should show a 30 percent drop in revenue.
However, the rules were quickly relaxed to allow employers to qualify based on an estimated reduction in revenue.
Once employers qualified – based on an actual downturn or a projection – they remained in the scheme for up to six months until the end of September, receiving $ 1,500 per month. eligible employee every fortnight.
However, many companies did not suffer as much as feared, and 38 billion. of the 72 billion. dollars, which the independent PBO investigated, went to companies where the quarterly turnover did not fall below the threshold values.
That equates to 53 percent of taxpayers’ cash consumption surveyed.
“Every dollar paid on JobKeeper must be paid by Australians, either in the form of higher taxes, lower services or more debt,” said Dr. Leigh.
Most companies had to prove or estimate a 30 percent drop in revenue, while that figure was 15 percent for non-profits and 50 percent for large companies.
Federal Treasurer Josh Frydenberg said a recent report from his department showed that companies receiving JobKeeper were strongly affected by the pandemic.
“It saved lives and livelihoods and supported more than four million Australians and one million businesses during the biggest economic shock since the Great Depression,” Mr Frydenberg said.
1.3 billion USD to companies where revenue has tripled
PBO has examined revenue during the quarter that employers hit JobKeeper up and compared with the same three-month period the year before.
Its data revealed that 1.3 billion. USD went to companies, where revenue tripled during the quarter for which they claimed JobKeeper.
And a further 1.3 billion. USD was paid to companies that doubled their quarterly revenue.
“We had companies that doubled or tripled their revenue and still got money from Josh Frydenberg,” said Dr. Leigh.
“At a time when he should have been a frugal guardian of the nation’s finances, he sprayed money around like a Formula 1 winner spraying champagne beyond the crowd.”
In total, at least $ 19 billion – or 27 percent of payments investigated by the PBO – went to companies that increased quarterly revenue while receiving taxpayer support.
But in a recent review, the finance department – which designed JobKeeper – claimed that many companies that appear to have done better actually experienced downturns.
The Ministry of Finance said that the turnover could seem higher for companies that had grown compared to the previous year before COVID-19 hit, even though they suffered a hit from the turnover.
The treasurer says the PBO figures “overestimated the value of payments flowing to companies that had revenue increases”.
Small business pays JobKeeper back
There was no obligation for profitable JobKeeper recipients to repay taxpayer support, but some have decided to voluntarily repay the money.
Hipcamp is an online marketplace for camping that connects holidaymakers with landowners and holiday parks.
The company called for JobKeeper early last year to help retain its two existing employees.
However, the business boomed after regional travel reopened, and between July and September last year, revenue nearly quadrupled compared to 2019.
“It so happened that the pandemic, ironically, was actually a big thing for our company,” said Hipcamp Australia CEO James Ho.
Sir. Ho said it was “only right” for the company to repay the $ 51,000 in JobKeeper it received.
“It was less of a financial decision … it was really more in the spirit of what we thought was the intent of the JobKeeper payments,” he said.
Where the money went
Despite mid-year warnings that many JobKeeper companies were increasing their revenue, the government decided not to change the scheme until late September.
The highest rate of JobKeeper paid to companies that increased their revenue or did not reach the thresholds was recorded in the period July-September last year, when most states, with the exception of Victoria, largely remained open.
In that quarter, at least $ 18 billion – about 58 percent of the money analyzed – went to companies that did not dive below the turnover thresholds.
Eligibility was tightened in late September and again in early January 2021, forcing companies to demonstrate an actual downturn to stay in the program.
Still, at least 4 billion. USD earned in the December quarter by companies that did not fall below the thresholds between October and December.
And between January and March, more than $ 2 billion. collected by companies that did not fall below the thresholds during that period.
Companies that qualified for payments in the December or March quarters, based on past downturns, did not also have to suffer declines within those quarters.
There was no repayment mechanism for any period with JobKeeper, although the Australian Tax Office (ATO) prosecutes a small proportion of companies that made claims despite being ineligible.
The scheme did its job, says expert
In its review, the Ministry of Finance said that testing the turnover of companies more quickly risked slowing down the recovery because some companies would reduce production to qualify.
“If it had been designed differently – for example, if it was more tightly targeted or shorter in duration – this would have affected macroeconomic performance and the course of the recovery,” Treasury Secretary Steven Kennedy said last week.
University of New South Wales economics professor Richard Holden said the scheme did its job and that it was the right call not to adjust JobKeeper for six months.
“The idea was to provide certainty in a time of radical uncertainty,” he said.
“And the way you provide security is to do something simple, clear and not subject to change within a specific time frame.
The PBO’s figures were obtained by Labor MP Andrew Leigh, and the PBO obtained its data from the ATO, which administered the JobKeeper scheme.
The analysis excludes certain companies, including those that did not record GST revenue in the corresponding quarter last year and those that did not file a Business Activity Statement.
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