Taranaki celebrate after winning the NPC final. Photo / Photosport
Taranaki celebrate after winning the NPC final. Photo / Photosport
New Zealand’s 14 premier rugby provinces have been served notice by the Ministry of Social Development (MSD) that they collectively must repay almost $3m of Covid Wage Subsidy payments.
The ministry, which has told the unions they must respond to the request by early next month, is adamantthat $2.9m of a total of $9.7m of wage subsidies, were effectively claimed twice – by New Zealand Rugby and the provinces.
MSD group general manager client service support George van Ooyen, in an emailed statement to the Herald, said: “Our decision to seek partial repayment of some of the wage subsidy payments has been through MSD’s review process, at the request of the union, and the Ministry’s decision was confirmed.
“The decision to seek partial repayment is based on the eligibility criteria for the wage subsidy not being met in some instances.
“MSD is continuing to engage with NZR and the Provincial Unions as part of its normal recovery process.”
It is not known how much each individual union is being asked to repay, but an even split of $2.9m would require each province to find about $200,000 to give back to the MSD.
Unions spoken to by the Herald say any sum in excess of $80,000 would present them with significant problems trying to repay.
Some provincial unions argue they would face significant problems paying on their own. Photo / Photosport
The unions are collectively fighting the demand – arguing that they were advised by NZR to make the applications, and that the national body had sought assurance from the MSD prior to doing so, that the claims were compliant.
The unions contend that either the MSD has misinterpreted how professional players are contracted and paid and is wrong to be asking for the subsidies to be returned, or that if it is correct that money was wrongly claimed, then it should be NZR that is required to repay it.
The unions also say that they voted in 2022 in favour of a private equity deal with Silver Lake which enabled NZR to put $100m into cash reserves to help manage unforeseen events – and that these reserves should now be used to make the repayment to the MSD.
The Herald understands that the provincial unions and NZR have held several tense and unproductive meetings in recent months trying to reach agreement on how to resolve the issue.
MSD first contacted the unions and NZR in July last year, informing them that it would look to claw back some of the $9.7m that was collectively claimed between 2020 and 2021.
At the request of NZR, MSD agreed to review its initial findings, but has concluded that it was right, and has now made formal demands for repayment.
New Zealand Rugby chief executive Mark Robinson. Photo / Photosport
The unions and NZR remain hopeful, however, that they will win a reprieve by taking the MSD through their application process step by step and detailing why they think there was no double-dipping.
Under the terms of the collective agreement, the players are employed by NZR but are effectively seconded to Super Rugby clubs and provincial unions.
Players who hold both Super Rugby and provincial contracts are paid – by NZR - the total annual value of those contracts across 12 months to reduce their tax commitments.
Those players who are only contracted to a provincial union may be paid the value of that contract across 12 months, or some may opt to be paid the full value during the four months in which the Bunnings Cup is played.
Due to the relative complexity and lack of uniformity to these player payment arrangements, NZR is continuing to engage with MSD.
If the MSD can’t be persuaded to withdraw its request for payment, or significantly lower the amount in question, the unions could pursue their case through the courts, but the concern would be that the legal bills would end up being higher than the amounts they have been asked to repay.
NZR in a statement said: “Like many organisations New Zealand Rugby and our provincial unions applied for and received Covid wage subsidies from MSD.
“NZR is aware that MSD has made a formal request of provincial unions for repayment of wage subsidies relating to certain player wages.
“NZR is supporting our provincial unions as they consider their options.
“We will not make any further comment at this stage, other than to note there is no suggestion that these wage subsidy payments were obtained fraudulently.”
Gregor Paul is one of New Zealand’s most respected rugby writers and columnists. He has won multiple awards for journalism and has written several books about sport.
