$280 million in JobKeeper payments ‘wasted’ on profitable companies

Hundreds of millions of dollars in JobKeeper payments were “wasted” on companies that actually made a roaring trade during the pandemic.

An estimated $280 million in government support was given to companies that made a roaring trade during the COVID-19 pandemic, new analysis has found.

The report, from corporate governance advisory firm Ownership Matters, showed that 66 of the ASX’s top 300 companies claimed a total of $1.38 billion in JobKeeper payments in the second half of 2020.

Of those, 58 entities which received the subsidy “reported positive preferred earnings metrics”, while roughly half (34) of the companies “reported an increase to their underlying earnings metrics from pre-pandemic levels”.

“The figures show that 20 per cent of all JobKeeper that was given to ASX300 companies went to organisations who were trading better on 31 December 2020 than at the same time in 2019,” Ownership Matters director Dean Paatsch told news.com.au.

For those shareholders, “80 per cent of JobKeeper helped companies when they needed a boost, but 20 per cent – at least in the last six months – was a tailwind to profits.”

The findings have renewed concern that the $83 billion scheme – which was announced last March and provided businesses with $1500 fortnightly payments for each eligible employee – has been abused by parts of corporate Australia.

Citing the report today, Labor MP Andrew Leigh – a major critic of the program – told Question Time that the findings demonstrate “waste on a colossal scale”.

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With $10-20 billion of JobKeeper potentially going to firms with rising profits, this is corporate welfare on an industrial scale https://t.co/Bjm6wuuCHH#auspol#BonusKeeper#DividendKeeperpic.twitter.com/ZXO6Tvbfzj

— Andrew Leigh (@ALeighMP) March 18, 2021

“The reports suggest that $10 to $20 billion in JobKeeper may have gone to firms with rising profits. Firms that never needed it. Firms that gave it to billionaire shareholders and millionaire CEOs,” he said in an impassioned speech.

“The Morrison government say Australia can’t afford to keep it going, but if they hadn’t put JobKeeper into the pockets of billionaires … Australia could keep the program going. “Racehorse and yacht sales might be down, but that $10 to $20 billion in wasted JobKeeper would sustain the program for another six months.”

Mr Leigh said that the Coalition had “presided over the biggest blowout in corporate welfare in Australia’s history”.

“We’re talking about hundreds of dollars for every single person in Australia, this is money raised from the taxes of hardworking Australians,” he added.

“Never before has so much been given by so many to so few.”

Treasurer Josh Frydenberg, meanwhile, has staunchly defended the program, saying earlier this month that it “has helped save jobs. That is what it was intended to do”.

His words were echoed today by Prime Minister Scott Morrison, who said “there are more jobs in the Australian economy than there were before the pandemic”.

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Treasurer Josh Frydenberg has consistently defended the subsidy. Picture: NCA NewsWire/Gary Ramage

Ownership Matters director Dean Paatsch. Picture: David Geraghty/The Australian

“JobKeeper must come to an end. It has done its job,” Mr Morrison said, adding that the companies who claimed it before positing record profits “is a matter for those companies” and that he commends them for refunding the money.

“I am absolutely certain that JobKeeper has saved lives in this country and so it has been a tremendously successful program, but even tremendously successful programs must gear into the next phase and that is where we are heading now.”

In recent months, major companies have faced increased pressure to repay JobKeeper payments after recovering from the coronavirus crisis.

And while Nine Entertainment, Domino’s, Super Retail Group and Toyota are among the companies who have contributed to the $100 million committed to be repaid among ASX300 entities, others have been less forthcoming.

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Harvey Norman has controversially ignored pressure to pay back an estimated $22 million in JobKeeper, despite more than doubling its first-half net profit during the pandemic. Picture: NCA NewsWire/Andrew Henshaw

Despite the retailer’s profits more than doubling during the pandemic, billionaire Harvey Norman chairman Gerry Harvey has defied political demand to pay back an estimated $22 million in JobKeeper.

Car dealership group AP Eagers is among other companies who have not returned the money, after receiving $130 million from the program.

Companies like Harvey Norman, Mr Paatsch said, have “no legal obligation to return a cent”.

“Eligibility was tested in March but the payments went to September. If you turned out to be unaffected, $19,500 per employee would flow to your bottom line,” he said.

“For those companies it must have been one hell of a Christmas party.”