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Large companies that have made a profit this year despite the impact of Covid-19 should return the wage subsidy they received from the government, says one commentator.
The plan was launched in March to help New Zealand businesses overcome the impact of the lockdown. The original tranche of the subsidy required a company to have a 30 percent revenue drop year-on-year due to Covid.
The plan was successful in getting money to businesses quickly. In the week ending September 11, $ 13.9 billion was paid through 756,649 applications. Most New Zealand jobs have been supported by wage subsidy at some point.
But while companies are required to pay back the money if it turns out that they did not meet the income drop criteria, some large companies that post profit this financial year, particularly those that send dividends to shareholders, are being asked to pay the dividends as well. his. .
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So far, $ 442.3 million has been reimbursed.
Some that have drawn attention include Harvey Norman, who reported a year-on-year increase in profits of nearly 20 percent, and an increase in New Zealand sales of more than 28 percent. For July and August, earnings were up 185.8 percent, Australian shareholders were informed.
Another is Briscoe Group, which posted a slightly reduced profit of $ 27.9 million this year and paid a dividend of 9 cents a share to shareholders, up from 8 cent last year.
Harvey Norman received $ 12.7 million in salary subsidy and Briscoe Group, more than $ 11 million in all his businesses.
Michael Gousmett, an associate fellow at the University of Canterbury School of Humanities, who also acts as a consultant to charities and nonprofits, has criticized what he sees as a misuse of the scheme.
Ross Giblin / Stuff
Harvey Norman’s luck has skyrocketed after the shutdown.
He said the subsidy scheme was meant to support struggling businesses, and those who had made a profit should pay it back.
He said that, as a shareholder in the Briscoe Group, he expected the subsidy to be repaid. “I don’t want the taxpayer to subsidize me in any dividend that I may receive due to the wage subsidy.”
It has been suggested that companies are simply doing the right thing for their shareholders, as required. But Gousmett said these were not normal times and that it was a matter of integrity and fairness.
He said that the problem was about a sum of money greater than simply the amount awarded to companies in the wage subsidy.
“It is very good to talk about the amount granted as a subsidy, but let’s think about the cost spread to the taxpayer over time for the amount of money that the Government has to borrow to pay the subsidy in the first place, which are now sitting in.”
Briscoe Group Managing Director Rod Duke said he did not want to comment. Harvey Norman did not reply.
George Van Ooyen, general manager of the customer service support group at the Ministry of Social Development, said companies were eligible for the subsidy if they met the criteria.
“Employers make a formal statement when applying for the subsidy. They are responsible for returning any amounts received to which they are not entitled, and are also notified that they may be subject to civil proceedings to recover any amounts received to which they are not entitled ”.
