Ryman called to repay $14.2m wage subsidy
New Zealand’s largest retirement village operator Ryman Healthcare is being called on to repay the $14.2 million in wage subsidies it received after paying out $44m of dividends to its shareholders.
Auckland University professor of financial accounting Jilnaught Wong said Ryman taking the wage subsidies and paying out $44m in dividends to shareholders was ‘‘appalling’’.
Ryman had tried to justify that by saying it had spent three times as much as the $14.2m wage subsidy on PPE gear and other procedures like extra cleaning and extra staff to protect residents and staff.
Wong said they should be spending that anyway. That was part of the service and what was required of Ryman to protect the health and safety of its residents.
‘‘But, essentially the fact that they are in a position to pay the dividends suggests to me that they do not need the wage subsidy, otherwise all that wage subsidy is tantamount to is a wealth transfer from people like you and me to the shareholders of Ryman.
‘‘I think the model is Mainfreight where Don Braid the chief executive said that integrity is everything and that morally receiving the wage subsidy did not sit well with them, even though they were legally entitled to it. I think he’s on the right path. It’s just unacceptable, in fact it’s disgusting that people like Ryman are now trying to justify that it’s the right thing for them not to pay it back.’’
Asked if Ryman should repay the wage subsidy, Wong said ‘‘most certainly. Why shouldn’t they. They don’t need it.’’
Businesses had to have at least a 30 per cent decline in revenue or have a predicted decline of at least 30 per cent over 30 days, compared with the same period a year before, and it was related to Covid-19, to be eligible for the wage subsidy.
One of the key reasons for the Government funding the wage subsides was to protect jobs at risk of being made redundant.
Extra costs was not given as one of the eligibility criteria. Also, businesses had to try to lessen the Covid impact by taking such actions as using their cash reserves (as appropriate) and engaging with their bank.
‘‘My view, as an ethical investment specialist, is that companies, such as Ryman, that are profitable and paying dividends ought to seriously consider repaying the wage subsidy,’’ Money Matters ethical investing specialist and managing director Rodger Spiller said.
Ryman chairman David Kerr said at its half-year result last Friday that is had ‘‘quite a lengthy discussion’’ over both paying dividends to shareholders and about applying for the wage subsidy. It has 6100 staff and 12,000 residents in New Zealand and Australia.
Its policy for several years has been to pay its shareholders 50 per cent of its ‘‘underlying’’ profit, and it stuck with that for the six months period to the end of September 2020.
Summerset, the second largest retirement village operator, like Ryman, applied for the wage subsidy for all its staff of 1300. It declined to be interviewed on the issue. Summerset Management Group received $8.63m in wage subsidies and Summerset paid out $13.68m in dividends to its shareholders in September this year for its first half of the year.