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After questions were raised about the fact that the Porirua City Council was claiming $ 2.6 million in wage subsidies, the council now says it will reimburse the amount.
Employers had to have experienced a 30 percent drop in income as a result of Covid-19 for a month between January 2020 and June 9, compared to the previous year, in order to qualify for the subsidy.
Executive Director Wendy Walker previously said the council applied for the grant based on April earnings, which showed a 44 percent decrease compared to April 2019.
The board did not include fee income in its application, as it was recognized as a statutory annual charge under accounting principles. Revenues from fees were recorded in full in July of each year.
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Ross Giblin / Stuff
The Porirua City Council will reimburse the $ 2.6 million it claimed in wage subsidies.
However, Walker said Tuesday that the council’s revenue losses were just below the required threshold, after criteria set by the Ministry of Social Development (MSD) were clarified.
The drop in council revenue was 26 percent, below the 30 percent threshold, once revenue losses were assessed in cash.
“Despite being slightly lower than the threshold, 26% was a significant drop in revenue, caused by the closure of Te Rauparaha Arena, our aquatic center, gym, libraries, landfill, the application of rental subsidies and reduced licensing fees and subsidies for sports clubs, “Walker said in a statement.
“Fortunately, with the closure ending and without a resurgence in this part of New Zealand, the impact on our city has not been as severe as we feared.
“As our recently released annual report shows, we are in a stronger position than anticipated, which means we can repay the subsidy without affecting jobs.
“Although we will have to borrow to make up for lost revenue, this will not significantly affect rates.”
Walker said the council prepared and applied for the wage subsidy in good faith, and MSD approved the payment after council staff explained why the fee income was excluded.
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The closure of Te Rauparaha Arena and other facilities affected the council’s revenue during the closure.
The request was made to protect the jobs of workers in the city of Porirua without imposing a burden on taxpayers, he said.
However, the council’s financial advisor previously said that he personally disagreed with the council’s request.
In a correspondence dated May 29, published under the Official Local Government Information and Meetings Act, Stephen Woolley said: “While I personally disagree with the council asking for it, the general opinion is that ‘if we have the right to do so, then we owe it to the taxpayers to apply it. ‘
While the council had cash in the bank in May, that was tagged as capex until the end of the year.
“Due to falling revenues, we had to borrow additional funds to make sure operating costs could also be covered,” Woolley said in the email.
Porirua Mayor Anita Baker said Tuesday she supported the council’s actions.
“The application of the wage subsidy was part of a general approach to lessen the impact of Covid on the people of Porirua who were going through uncertain and challenging times,” said Baker.
The council’s fee income increased by $ 3.9 million to nearly $ 68 million for the year through June, according to its draft annual report.
Total revenue for the year increased 14 percent to $ 125 million in the year through June, according to the report.
MSD received a complaint about the Porirua City Council accepting the grant, along with complaints about the other three tips to do so: Northland Regional Council received around $ 1.5 million, Tauranga City Council received 3, $ 7 million and the Waikato District Council received $ 143,000.
There have been calls for large, profitable companies to return the subsidy, which was aimed at rapidly supporting jobs and incomes amid the economic fallout from the coronavirus pandemic.
Roughly 750,000 companies have claimed $ 14 billion in Covid-19 wage subsidies, of which around $ 440 million have been returned in refunds.
Auckland lines company Vector said last week that it planned to reimburse $ 1.6 million in wage subsidies it claimed for 230 employees because it was the right thing to do.
