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Home / New Zealand

Editorial: Kindness extended to wage subsidy scheme

NZ Herald
29 Dec, 2020 04:00 PM3 mins to read

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Finance Minister Grant Robertson announcing an extension to the wage subsidy scheme in August, 2020. Photo / Mark Mitchell, File

Finance Minister Grant Robertson announcing an extension to the wage subsidy scheme in August, 2020. Photo / Mark Mitchell, File

Editorial

EDITORIAL

We now know that not a single case of wage subsidy fraud has yet been referred for prosecution, despite the Government fielding almost 4500 complaints asserting the system was being exploited.

As revealed by the NZ Herald today, the Ministry of Social Development received 4478 complaints about the wage subsidy. These include workers who believed bosses were taking the subsidy when they didn't need it or suspicions employers were over-egging their plight.

Of those complaints, 973 were referred for investigation, and 354 are still under way. But the Ministry of Social Development figures show — so far — not one single case has been referred for prosecution.

READ MORE:
• Wage subsidy questions raised after more than 10,000 audits
• Covid 19 coronavirus: The Warehouse Group to repay $68m wage subsidy
• Coronavirus: Up to 10,000 retail jobs at risk over next few months: Retail NZ
• Covid 19 coronavirus: Kiwi ad agency paying back $200,000 wage subsidy

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It could be the threshold for mounting a case — or for being confident of success with the likely costs involved — has been deemed too high to warrant action.

As of late November, an estimated $525 million wage subsidy payments were returned to the Government by 17,401 companies, businesses and individuals.

One of the more high-profile recipients, The Warehouse Group, announced on December 21 it would repay its $68m wage subsidy.

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The group faced criticism for taking the money, then laying off staff and reporting a full-year profit of $44.5m.

Chief Nick Grayston defended taking the subsidy, which allowed the firm to commit to paying 11,000 team members "quickly, and in full, during a time of great uncertainty".

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That is exactly what the subsidy was devised for, and to criticise companies for the success of the scheme appears to be missing the point.

The generous scheme, which forked out $14 billion and subsidised 1.7 million jobs at its peak, didn't save every business.

Some businesses, particularly in tourism and travel, simply could not tread water long enough to wait for the lifebuoy of vaccine and resumed international customers.

Some have survived by adapting to the domestic market with greatly revised bottom lines.

When it is looked at from some distance, it's clear the wage subsidy scheme achieved what it set out to do — to save New Zealand's economy from pitching headlong into meltdown.

Were companies to begin folding — taking with them smaller operators such as suppliers and subcontractors, not to mention triggering economic panic — the expense to the country would have been enormous.

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By contrast, our economic performance has been incredible, as the third-quarter GDP figures showed with a year-on-year GDP rise.

By that measure we are among the strongest economic performers in the world. Economic growth rebounded by 14 per cent in the three months to September 30.

The "evidentiary basis" has it that the scheme was generous but not widely plundered by those who didn't need it.

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