Businesses can keep nearly $20 million in mistaken grants

Almost $20 million was mistakenly paid to businesses and commercial landlords that were not eligible for grants during COVID-19, and the Victorian government is still writing off the losses.

The Department of Jobs, Skills, Industry and Regions has progressively forgiven the funding paid in error, an analysis of its annual reports shows, after deciding the cash was unlikely to be recovered from almost 2000 recipients.

Credit: Louie Douvis

The department wrote off $1.385 million in 2020-21, $13.65 million the following year, then another $212,000 in 2022-23, plus $3.644 million in 2023-24, the most recent reporting period. That adds up to $18.891 million worth of grants that should not have been awarded.

A footnote in the latest annual report said these grant applications paid in the rush to keep the economy afloat “were paid in error in a prior period and ... have been written off as there is little likelihood of recovery”.

The Business Cost Assistance Program and the Business Support Fund, which were both for small and medium-sized businesses, were affected, as was the Commercial Landlord Hardship Fund. The grant streams awarded funds of between $2000 and $20,000 throughout COVID-19 restrictions.

Of those mistakenly doled out, 1964 grants have been written off by the government.

The department identified processing errors during a review of its grants. Most cases of grants being wrongly awarded were because applicants gave incorrect details, identified as user error. Attempts to recover more grants awarded due to user-error continued, and those believed to have made fraudulent applications were being pursued.

Opposition spokeswoman for economic growth and industry Jess Wilson said the Coalition would refer the grant payments to the state Auditor-General’s Office for further review.

“Whilst Victorian businesses were struggling to stay afloat during the pandemic, Labor was handling out dodgy grants to ineligible recipients – taking desperately needed money away from those in genuine need,” Wilson said.

“It is unacceptable $19 million of taxpayers’ money is lost without any proper explanation or assurances the same mistakes will not occur again. The Victorian Liberals and Nationals will be referring Labor’s erroneous grant payments to the Victorian Auditor-General for a comprehensive and independent investigation.

“Labor cannot manage money, and Victorians are paying the price.”

The auditor-general, in a 2021 report into the state’s COVID-19 spending, previously found the department did not have effective fraud controls at inception because grant programs had to be quickly established.

“Although they later tried to improve controls, an internal review found [the jobs department] still had gaps that risked fraud and waste,” the auditor-general said at the time.

The department referred The Age’s questions to the premier’s office.

“When a once-in-100-year pandemic hit, the Victorian government invested $11 billion to protect jobs and support businesses, making sure they were in a strong position when the economy reopened,” a government spokesman said.

Victorian Chamber of Commerce and Industry chief executive Paul Guerra said government grants were a necessary lifeline during COVID-19 shutdowns and uncertainty.

“The speed at which the support was rolled out was critical, and while the program had a significant positive impact, it’s understandable that some errors may have occurred,” Guerra said.

“If the debts being written off relate to those small and medium businesses that were later deemed ineligible but acted in good faith, then this is a smart and compassionate move by the government. These businesses bore the brunt of the pandemic, and many are still recovering – chasing minimal amounts through lengthy processes serves little purpose.

“However, where there is clear evidence of fraudulent activity or businesses knowingly taking money they weren’t entitled to, we expect those matters to be dealt with appropriately. Integrity in the system is important, but so is supporting businesses to get back on their feet and rebuild with confidence.”

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