Lockdowns were a busy time for Covid-19 testing centres, but hardly anyone else - and lots of businesses took a Government wage subsidy to tide them over. Photo / Alex Burton
Lockdowns were a busy time for Covid-19 testing centres, but hardly anyone else - and lots of businesses took a Government wage subsidy to tide them over. Photo / Alex Burton
Ten New Zealand companies have made voluntary repayments of almost $200 million after receiving the pandemic wage subsidy.
The Ministry of Social Development disclosed the 10 biggest voluntary repayments tallied up so far.
And the top 10 repayments, all voluntary, amount to nearly one-quarter of all wage subsidy repayments nationwidesince Covid-19 arrived.
As of June 30, The Warehouse Ltd, which operates the group’s flagship Red Shed stores, had repaid $51.9m, the biggest repayment in the country.
The Warehouse repaid more than $50 million in Covid wage subsidies.
Grass-fed red meat company Silver Fern Farms repaid $39.9m.
In the same sector, farmer-owned meat company Alliance Group Ltd repaid $32.5m.
Engineering and consulting firm Beca Consolidated Group, Warehouse subsidiary Noel Leeming, and pulp and paper manufacturer Oji Fibre Solutions made repayments ranging from $15.8m to $10.2m.
Mainfreight, Coca-Cola Amatil and SkyCity have repaid amounts ranging from $6.7m to $8.0m.
The top 10 amounted to at least 23.5 per cent of all wage subsidy money paid back.
The Warehouse, which made the biggest repayment, has been approached for comment.
The MSD statistics account for individual repayments, so some corporate groups receiving separate subsidies for different entities might not make the cut.
For example, the Briscoe Group has reportedly paid back more than $11m. The group includes Briscoes Homeware and Rebel Sport.
Noel Leeming is part of the broader Warehouse Group but MSD counts its wage subsidy separately.
The group, which also included Torpedo7, Warehouse Stationery, and TheMarket indicated in 2021 it would repay $67.6m in wage subsidies.
The Work and Income employer search tool website only showed the amount of wage subsidies companies have kept.
The search tool today showed some of the top 10 companies had not repaid all the subsidy but there is no indication or suggestion they were obliged to.
In addition to amounts paid back, Alliance Group received $1.85m, and SkyCity Management Ltd received $41.305m.
SkyCity’s payments were in three rounds - the first during the 2020 national lockdown, an extension, and then the August 2021 subsidy when Auckland was plunged into the Delta lockdown.
The subsidies in those three rounds were for 3272 SkyCity employees, 2219 and then 2645 employees.
University of Auckland researchers Emeritus Professor Jilnaught Wong and Professor Norman Wong previously studied wage subsidy payments and recipients.
SkyCity took a hit from border closures as well as lockdowns, with hotels, the casino, restaurants and high rollers from overseas largely out of action. Photo / Fiona Goodall
They found some NZX 50 companies receiving the wage subsidy were justified to get it from legal, ethical and moral perspectives.
But the researchers said some non-NZX 50 companies, while legally entitled to the wage subsidy, “took advantage of the wealth transfer when they were profitable” and paid dividends.
Jilnaught Wong today told the Herald some of those non-NZX 50 companies had since made repayments.
“If you’re in a position to pay dividends, you’re not cash-strapped,” he added.
He said it was probably fair to say SkyCity was in an unusual position.
SkyCity in 2020 and 2021 took a beating from lockdowns and border closures impacting its casino, restaurant and hotel operations.
SkyCity was also contending with the fallout from the destructive 2019 convention centre fire when the pandemic arrived.
Researchers at the Department of Accounting and Finance at the University of Auckland Business School assessed the wage subsidy payments. Photo / Dean Purcell
Jilnaught Wong said questions remained over how rigorously some recipients were audited.
He said some macroeconomic data including an analysis of GST payments and sales across wage subsidy recipients indicated a less than 30 per cent downturn during relevant periods.
He stressed that did not mean individual companies weren’t entitled to the subsidies in the first place.
A condition of receiving the first 2020 wage subsidy was to experience at least a 30 per cent decline in revenue over a month related to Covid-19.
Total repayments approach $1 billion
MSD said nationwide, as of mid-July, 24,801 repayments had been made, totalling $820m.
Almost 7000 allegations of wage subsidy misuse were resolved by June 30.
But at least 37 people have been brought before the courts for alleged wage subsidy misuse, in relation to around $3m in subsidy payments.
The Herald in June revealed the biggest MSD wage subsidy fraud allegation yet.
Meanwhile, 31 businesses had civil recovery action underway against them to recover payments.
The MSD said it referred 11 cases of significant and complex alleged wage subsidy fraud to the Serious Fraud Office, which generally handled allegations exceeding $1m.
The wage subsidy scheme has attracted renewed attention since philanthropists Grant and Marilyn Nelson launched a campaign calling on the Government to investigate and recoup payments made to companies not entitled to the subsidy.
The Nelsons’ Integrity Institute claimed $10b was overpaid but after complaints to the Advertising Standards Authority (ASA), acknowledged that number was an “estimate”.
MSD has repeatedly rejected claims $10b had been overpaid, and the ASA last month ruled the “$10b overpayment” claim was misleading.
John Weekes is online business editor. He has covered courts, politics, crime, and consumer affairs. He rejoined the Herald in 2020, previously working at Stuff and News Regional, Australia.
