Private school pays back some of wage subsidy but should it be all?

A prestigious Auckland school has paid back 90 per cent of the Government’s wage subsidy after it fared better than it expected during the Covid-19 lockdown.

But there are questions about whether it should have paid back all of the money.

St Cuthbert’s College in Epsom says the Ministry of Social Development gave it approval to keep some of the wage subsidy payment.

MSD, on the other hand, says any business which did not make a loss had to repay everything it received.

The school applied for Government assistance in March after forecasting revenue losses of more than 30 per cent for the month of May — the threshold required to qualify. It received $1.92m to cover the wages of 302 staff.

In May, the Epsom school said it would pay back “the bulk” of the subsidy because its losses were “far less than anticipated”.

A Ministry of Social Development database shows it kept $225,837 of the money.

A St Cuthbert’s spokeswoman said this was because the school was still projecting a 30 per cent loss for its boarding facility and a 100 per cent loss for its swim school.

“The ministry confirmed that we were still eligible for the subsidy for these parts of the business and advised us of the amount of the original subsidy that we could keep, and the amount to be paid back.”

MSD Group General Manager Employment Jayne Russell said the ministry could not comment on a specific business.

“Generally, a business that applied and was granted a sum based on a predicted revenue loss is allowed to wait to see if a predicted loss actually occurs over the period January to June 2020 before deciding whether it should repay,” she said. “If the loss is never realised, the business would need to repay the whole amount because they were never eligible.”

The Herald is seeking further clarification on how the school was led to believe it could keep $225,837 of the subsidy.

Legal experts said this appeared to go against the Government’s advice on the wage subsidy. Companies could not get support based on losses in just one division or area of the business.

“The Government made it quite clear that companies or entities couldn’t do internal accounting,” said employment lawyer Michael O’Brien.