- $934 million worth of JobKeeper payments have flowed to ASX 300 companies since the wage subsidy program was announced.
- New analysis from governance advisory group Ownership Matters has scrutinised companies paying large executive bonuses at the same time they receive taxpayer money.
- Being only required to show a one-off fall in turnover to qualify for six months of JobKeeper payments has allowed some companies to take advantage.
JobKeeper was intended to help keep Australians in work, but some businesses are using it to guarantee executives pay packets instead.
Nearly $1 billion in JobKeeper payments – and $1.8 billion in total government subsidies – have flowed to ASX 300 companies since the subsidy program was announced in March, which includes some of the country’s largest and most iconic businesses.
Qantas, for example, has been the largest beneficiary, claiming $267 million in subsidies. Quite rightfully too, considering the carrier has seen turnover plummet as domestic flights slow and international flights disappear altogether.
Those wage subsidies have helped aviation workers on the payroll, even if they’ve been largely unable to fly or steward, handle baggage or check-in passengers. It also did not pay any executive bonuses or dividends this financial year.
Other businesses, however, appear to be taking advantage of the system. Those that haven’t had their turnover disrupted during the pandemic and still managed to pocket subsidies and pay bonuses regardless.
New data from governance advisory Ownership Matters has put those companies in the spotlight.
JobKeeper has a giant loophole
Analysis of the recent reporting season showed that around one in three ASX 300 companies received JobKeeper payments, worth at least $934 million.
To be deemed eligible, a business needs to show a fall in monthly or quarterly turnover. However, once approved companies were able to use the taxpayer to subsidise their payroll for the full six months, no matter if their turnover recovered.
In other words, a company may have sailed through, and even grown over the last six months and still received millions in government support.
Companies however have a tendency to treat it differently in their balance sheets making it often difficult to see how their profitability has been affected.
But that doesn’t mean there aren’t some red flags.
Some companies paid out their subsidies as bonuses
There’s an obvious conflict, for example, if a company receives millions and their turnover never fell. Or if a business recovered and paid out bumper bonuses to existing executives with plenty of help from the taxpayer.
Shadow Assistant Minister for Treasury Andrew Leigh pointed this out in Parliament.
“A scheme designed to reduce inequality is being misused by a small number of firms, who are channelling it to executive bonuses,” he said.
He goes on to name footwear retail chain Accent Group, which owns Athlete’s Foot, HypeDC, and Platypus stores.
It received more than $21 million in JobKeeper money according to the latest Ownership Matters analysis but despite a small fall early in the pandemic, bounced back to make record earnings. It paid its CEO and CFO 100% bonuses, or $1.2 million, for the result.
Accent is hardly alone. Star Entertainment, the operator of Sydney’s Star Casino, was the fourth biggest recipient of JobKeeper payments, some $65 million in total. It paid out executive bonuses that ran into the millions of dollars.
Leigh goes on to name IDP Education and Sealink as well as businesses helped by JobKeeper but who paid executives into the hundreds of thousands of dollars.
“If you’re getting taxpayer subsidies, the CEO should not be getting a bonus,” Leigh said.
Ownership Matters also notes that another 17 companies paid out 20% or more of their subsidies in the form of dividends to shareholders. Leigh names furniture maker Nick Scali and dentistry company 1300Smiles as two such beneficiaries.
The problem is there’s nothing to stop companies from doing either. Disclosures are generally not forthcoming in company results and unlike New Zealand, there’s no public register disclosing who has received what. In other words, there’s little transparency governing the program.
But while not against the letter of the law, it may violate the spirt of the program.
In some instances, it appears it has effectively been used to take money from taxpayers and give it to company executives, among Australia’s richest.
In the midst of a recession, the optics aren’t great.