$13 billion in JobKeeper payments went to companies that saw increased revenue in 2020, according to new data

$13 billion in JobKeeper payments went to companies that saw increased revenue in 2020, according to new data
  • New analysis of ATO data has uncovered new details around the number of Australian companies that received JobKeeper payments but posted increased revenue in 2020. 
  • Labor claims the government should answer for what it considered wasted spending, however Treasurer Josh Frydenberg has defended the scheme. 
  • $13 billion in funds were awarded to businesses that turned a profit, the analysis found. 
  • Visit Business Insider Australia’s homepage for more stories.

More than 13% of the government’s $98 billion JobKeeper wage subsidy went to businesses which posted a profit in 2020. 

Parliamentary Budget Office (PBO) analysis of confidential ATO data found that these companies saw increased turnover between April 1 and September 30 in the first year of the pandemic.

Andrew Leigh, Labor’s shadow assistant minister for Treasury – who commissioned the PBO research – said the findings showcased a waste of government funds by the Coalition.

However, Treasurer Josh Frydenberg has defended the wage subsidy, and said its success has led to increased scrutiny.

The new figures revealed almost 200,000 businesses that received JobKeeper payments posted rises in business revenue during the first six months of the program last year.

The wage subsidy was set up in late March 2020, after the governments ordered businesses to close in the first national lockdown.

It was targeted at businesses which forecast a 30% decline in revenue in any single month or quarter out of six months in order to ensure speed of payments. 

The required decline in forecast revenue was 50% for large businesses turning over more than $1 billion.

Furthermore, businesses which did not ultimately suffer the forecast falls in revenue remained eligible for the $1500 fortnightly payments for each worker over the program’s initial six months. 

The analysis found that around 195,381 businesses, which were expected to lose revenue and were therefore eligible for JobKeeper, recorded rises in turnover for the six months compared to the same period in 2019. 

Previous PBO research for Labor released in July showed that $12.5 billion was paid to 365,477 businesses that never actually suffered the forecast 30% and 50% thresholds during the program’s first three months. 

This equates to at least $25 billion in payments in the scheme’s opening six months, before the eligibility criteria was revised to actual revenue for the program’s final six months between late September 2020 and March 2021. 

Reserve Bank of Australia research suggests JobKeeper “saved” 700,000 jobs last year out of the three and a half million workers who received the pay subsidies via their employers. 

While publicly listed companies have disclosed their JobKeeper subsidies, thousands of privately owned businesses have not.

Media scrutiny of publicly listed entities forced some companies to repay all or part of the subsidies, including Domino’s Pizza, Super Retail Group, Coca-Cola Amatil New Zealand, Toyota, Nick Scali, Iluka Resources, Universal Store, Dusk, Healius, Nine, CIMIC and Cochlear.

Of these, retailer Premier Investments repaid $15.6 million of at least $69 million it received last fiscal year.

Around 65% of voters said in a recent poll conducted for The Sydney Morning Herald and The Age that they support the government forcing companies to repay JobKeeper if they did not need it.

Labor says government should answer for JobKeeper payments

Leigh said the government did little to stop the JobKeeper waste.

“By mid-2020, Scott Morrison and Josh Frydenberg already had a report from Treasury warning that billions of dollars of JobKeeper were going to firms with rising revenue,” Leigh said.

“The Morrison government is yet to explain how it saved jobs by giving money to firms such as Best & Less, AP Eagers, Premier Investments and Accent Group,” he said.

“Giving corporate handouts to firms with rising turnover is waste, pure and simple.”

Treasurer Josh Frydenberg said in a statement on Sunday that Treasury had found JobKeeper was “well targeted”.

Frydenberg said JobKeeper was an economic lifeline which helped keep around a million businesses in business and 3.8 million Australians in a job at the height of the pandemic.

The $98 billion JobKeeper payments also injected massive stimulus into the economy, with positive spillovers to consumer spending and employment, he said. 

“A Treasury review of JobKeeper also found it met its objectives, namely it supported businesses and job survival, it preserved the employment relationship and it provided much-needed income support,” Frydenberg said. 

“Entities received JobKeeper based on the law at that time,” the Treasurer said, but added that the government would “welcome any entity paying back JobKeeper if they are in the position to do so.”

Innes Willox, chief executive of the national employer association Ai Group, told the Australian Financial Review that “naming and shaming” JobKeeper businesses was a “misguided and dangerous precedent that must be rejected.

“Ironically, it was because JobKeeper was such a success that these companies are now facing accusations that they are undeserving,” he said.