Most of the ASX-listed companies that received JobKeeper subsidies didn’t need it, and the great majority of those are keeping the money.
The governance advisory firm, Ownership Matters, has detailed the way in which corporate Australia has rorted the federal government’s pandemic support scheme and is not being held to account.
The study, released on Thursday, confirms a report in The New Daily earlier this month that found more than $1 billion had been paid to companies that subsequently reported increased profits or funnelled money to shareholders, with $3.6 billion going out in dividends and $20 million in executive bonuses.
The Ownership Matters study has now laid bare the extent of the gravy train.
Seventy-five ASX300 companies received $2.4 billion in JobKeeper subsidies in calendar 2020 – $1 billion went to 75 companies in the first half and $1.4 billion went to 66 in the half year to December 31.
Of those 66, 58 reported positive underlying earnings in the December half year. Those businesses received $741 million, or 30 per cent of the total paid to the top 300 ASX-listed companies.
To qualify for a JobKeeper payment of $1500 per employee per fortnight, companies had to report or credibly forecast a 30 per cent drop in sales in any single month between March 2020 and September 2020, compared to the same month in 2019. For companies with more than $1 billion in sales, it had to be 50 per cent.
It was a very good support scheme in many ways, because the money flowed quickly to businesses that needed it, because it used the existing systems of the Australian Tax Office, and it kept employees connected to their employers.
But because it was rushed, it had significant flaws that unscrupulous companies were able to exploit, and the government now doesn’t seem to be interested in holding them to account.
Most of the businesses suffered the qualifying drop in sales immediately, in March 2020, because they had to close entirely for at least six to 10 days (30 per cent of the trading days that month).
Their sales weren’t checked again until September, and that meant six months’ worth of JobKeeper for many businesses, or $19,500 per employee, was paid no matter what happened to their sales after the lockdown.
For businesses such as car dealer AP Eagers, with 6500 employees, that meant they got $129.7 million, even though car sales took off after the lockdowns ended and the company reported an underlying profit of $209.4 million.
Crown Resorts reported underlying earnings of $137.2 million in the December half year and $143.6 million in JobKeeper. The other main casino group, Star Entertainment, reported earnings of $225.7 million and JobKeeper payments of $87.9 million.
Southern Cross Media reported half-year earnings of $75.3 million and JobKeeper payments of $31.9 million – 42 per cent of profit. And so on.
Only 15 of the 66 companies that received JobKeeper payments but increased their profits because trading picked up after the lockdown have said they will pay back the money.
The paybacks will total $100.25 million, 4 per cent of the money received by the ASX-listed companies.
The $2.4 billion JobKeeper payments received by those listed companies represent 2.9 per cent of the total of $83 billion spent on JobKeeper up to December 31, according to the ATO. Another $10 billion-or-so is expected to be paid between December 31 and March 28, when the scheme comes to an end.
If the same amount of rorting happened with the whole scheme as Ownership Matters and The New Daily have identified with the listed companies, the unnecessary payments to profitable companies would be close to $30 billion.
In fact, it’s possibly much more than that because private companies don’t have to report their financials publicly, and are operating behind a curtain of secrecy – so there’s likely to be a lot more misconduct.
The sports rorts affair, which cost then minister for sport Bridget McKenzie her job, involved $102. 5 million of arguably misallocated money. The JobKeeper rorts are at least 290 times that amount.
The sports rorts were uncovered by the Auditor-General and then the head of the Department of Prime Minister and Cabinet, Philip Gaetjens, was asked to bury that report under another nicer report, which he did.
The Auditor-General announced an investigation into JobKeeper in February.
Far better would be a Parliamentary inquiry, or better still a royal commission into the whole handling of the pandemic, including lockdowns, all the fiscal and monetary support, hotel quarantine and vaccines.
Breath is not being held.
Alan Kohler writes for The New Daily twice a week. He is editor in chief of Eureka Report and finance presenter on ABC News