As firms face mounting pressure to repay the wage subsidy after reporting boosted earnings, Treasury secretary Steven Kennedy told a Senate economics committee on Wednesday that clawback measures weren’t incorporated into JobKeeper because they didn’t want businesses to be deterred by having to repay subsidies.
“The more we try and pin these sorts of targets down,” Dr Kennedy said, “and the more a firm is then uncertain whether it should apply, because it doesn’t know whether it’s going to remain in it or not, the less effective they are.”
Dr Kennedy said that the Treasury’s advice not to introduce clawback measures was consistent with advice given to government over the course of recessions past, and that they didn’t want to risk rolling out a scheme that underperformed.
“So we certainly considered… whether you should have clawback-type mechanisms,” he said. “But in a global pandemic, our advice to government was that, frankly, during a recession, it’s always better to be doing a little more, than a little less.
“That advice has been consistent from Treasury through past recessions. And secondly, we did not want to diminish the positive impact this might have on economic activity.”
Companies that received the wage subsidy have no obligation to pay it back, though some have reported intentions of doing so in the face of mounting public pressure. Among the companies committed to repayment are Super Retail Group, Cochlear, Toyota, Nick Scali and Domino’s.
However, others, like Premier Investments, have defied calls to pay back almost $20 million in wage subsidies, despite doubling profits in the January half to $237.8 million — a rise of 88.5 per cent — beating profit forecasts for the entire year.
According to the ATO, 33 companies have now agreed to voluntarily repay JobKeeper payments in the order of $180 million.
An Ownership Matters report released last week showed that 58 of the 66 ASX 300 companies which received the government’s $93 billion JobKeeper wage subsidy between July and December last year reported positive earnings.
The 58 companies to report positive earnings received a total of $741 million in JobKeeper payments, and the highest among them, Qantas, which secured $726 million, accounted for 30 per cent of all JobKeeper payments nationwide.
Companies that received the wage subsidy have no obligation to pay it back, though some have reported intentions of doing so. According to the ATO, 33 companies have now agreed to voluntarily repay JobKeeper payments in the order of $180 million.
Finance minister Simon Birmingham told the committee that the boosted earnings recorded by major firms have already had a positive impact on employment growth, as business confidence grows, and major companies are able to create more jobs.
“The reasons for strong job growth are, in part, because businesses are doing well and have the confidence to employ,” he said. “Successful businesses with confidence, doing well, [are] achieving the outcomes that we want, which is to get that jobs growth, which we’ve achieved, and for it to continue.
“And so as we’ve canvassed already today, the removal of JobKeeper, as has long been planned, will see some recipients lose employment. But [they will] lose employment in numbers that are anticipated to be in the normal flows of the economy, leaving some jobs while other jobs are created.
“We need strong businesses to go and create those jobs, and to have the confidence.”
Prime Minister Scott Morrison last week commended businesses opting to repay the JobKeeper funds they’ve received, defending the $90 billion scheme’s design.
Labor has called for a parliamentary inquiry into the profits made by firms that received the subsidy.
John Buckley is a journalist at Accountants Daily.
Before joining the team in 2021, John worked at The Sydney Morning Herald. His reporting has featured in a range of outlets including The Washington Post, The Age, and The Saturday Paper.