By Jennifer Duke and Dominic Powell
The small business lobby boss has lashed out at corporate giants taking taxpayer-funded JobKeeper payments while reporting huge profits and delivering shareholders dividends instead of paying it back.
Council of Small Business Organisations Australia chief executive Peter Strong said many large companies had been “disgraceful” during the recovery from the coronavirus pandemic-induced recession and they should repay taxpayers’ money.
COSBOA CEO Peter StrongCredit: Alex Ellinghausen
“It’s not theft but it’s pretty close to it,” he said. “Those people who made huge profits on the back of the taxpayer are a disgrace ... They have no regard for Australia.“
Major corporates have been under increasing pressure in recent months to repay their JobKeeper subsidies if the company’s profits rose over 2020, with some businesses even issuing dividends to shareholders while accepting millions of dollars in government aid.
The government announced the $90 billion JobKeeper scheme in March last year amid fears about the impact of the COVID-19 pandemic on the economy. Businesses that demonstrated or forecast a 30 or 50 per cent decline in revenue were eligible to receive a $1500 a fortnight payment for each eligible employee.
But many companies that applied for the subsidy after fearing a massive downturn in sales at the beginning of the pandemic instead experienced a change in fortunes. The subsidy, which was reduced to $1000 for full-time workers and $650 for part-time, is due to end on March 28.
Retailers such as Harvey Norman and footwear seller Accent Group are some of the larger businesses targeted by governance advocates and politicians, along with automotive dealer AP Eagers, which reported profits of $156 million after taking $130 million in JobKeeper.
If they’re taking a profit, they’re not honouring the intent of the scheme... It’s giving the rest of the business community a bad name.
COSBOA CEO Peter Strong
Critics say the repayment of the subsidies is largely a moral issue rather than a financial one, with companies urged to pay back the stipend as an act of corporate goodwill.
Numerous businesses have already agreed to pay back their amounts, including Toyota, Iluka, Super Retail Group and Nine (the publisher of this masthead). Mr Strong applauded those who repaid for “setting the example” and defended the scheme overall as a crucial emergency measure in a time of crisis, but said it had been abused by too many self-interested corporates.
“My members are livid. It’s not Australian. They belong in their own world,” Mr Strong said. “This is some big businesses, not all of them. If they’re taking a profit, they’re not honouring the intent of the scheme... It’s giving the rest of the business community a bad name.”
Publicly listed companies represent just a fraction of the businesses who participated in the $83 billion scheme, with 99 per cent of the payments going to private companies who do not receive the same level of scrutiny over their accounts. Mr Strong acknowledged many small businesses had received the payments, but said they were more likely to have smaller cash buffers and profits.
Australian Shareholders Association policy and advocacy manager Fiona Balzer said there were difficulties judging whether a profit figure was “significant” and it should be considered on a “case-by-case basis”.
“We support companies repaying the wage subsidy if they are financially comfortable to do so,” Ms Balzer said.
“The grey area is the judgment about significant profit ... There are a number of businesses with weird and wonderful outcomes [because of COVID],” she said.
Governance Institute of Australia chief executive Megan Motto said directors needed to consider more than just “reputational risks” in the JobKeeper debate.
“They should weigh the pressure to be a good corporate citizen alongside their fiduciary duty to shareholders, keeping staff employed, and the role of companies in stimulating the economy,” Ms Motto said.
“If boards return these payments and there is another economic shock, there may be more worker lay-offs, a greater destruction of shareholder value, and the need for more government stimulus,” she said. “The pandemic simply isn’t over yet and the future is highly uncertain.”
She said profitable companies could show good governance and corporate citizenship by choosing to invest in innovation and job-creating projects rather than simply repaying the wage subsidy.
“Every dollar that flows into the economy during this crisis could mean more Australians stay employed.”
Australian Centre for Corporate Responsibility director of workers’ rights Katie Hepworth said she was concerned about the way some companies appeared to be using JobKeeper funds.
“Companies risk losing their social license if they skim the money from taxpayers to executives and shareholders via bonuses and dividends, rather than protecting their workforce through the crisis. These companies must consider returning their stimulus payments,” Ms Hepworth said.
“Companies must disclose how they are using government payments to maintain the employment of the existing workforce, so that investors can assess whether they are using these payments to secure the long term performance of the company, or the short term benefit of shareholders and executives.”
Treasurer Josh Frydenberg said on Wednesday that businesses received the JobKeeper payment based on the law at the time, which required a significant anticipated fall in turnover.
“Now, some of those businesses have been successful on the other side of COVID, and a lot of those businesses have graduated off JobKeeper in the back half of last year. I would welcome any business paying back JobKeeper if they are in the position to do so, I have been abundantly clear about that,” Mr Frydenberg said.