10,000plus companies audited over wage subsidy

WELLINGTON: More than 10,000 companies have been audited to check they have met the rules of the Government’s wagesubsidy programme.

More than $14 billion has been paid in wage subsidies, with some of the larger recipients since reporting profits and paying dividends.

That has raised questions about the eligibility requirements.

As the scheme comes to an end, latest figures show nearly 24,000 jobs are being subsidised, down from 52,000 a week before and 1.7 million since it was rolled out in March.

But the wage subsidy’s bill will be felt for some time yet, and work is under way to drill into where the $14 billion worth of payments went.

The Ministry for Social Development (MSD) has completed 10,000 random and targeted audits of the nearly 760,000 businesses that received the money. There have been 844 cases referred for investigation, with 335 under way.

Victoria University of Wellington tax professor Lisa Marriott said that was relatively low.

‘‘I think that does need to be much higher, particularly because there are around 8% of those cases that are being referred onwards for some level of investigation.’’

She said there were grounds to look for more.

‘‘The fact that they have got 844 cases being investigated tends to suggest that there are at least some businesses out there that perhaps are struggling to establish that they have followed the rules as they should have done.’’

Plenty of people are giving the money back. More than 16,000 payments have been received, with MSD requesting a total of nearly 19,000. Most of those have been initiated by businesses.

Like some of the other top recipients, Mainfreight’s Don Braid said the decision to return its $10.6 million was a moral one, despite being eligible to receive the money.

‘‘That could well be right from a monetary point of view but we would be poorer morally for doing it and it just did not sit with how we act and behave as a business, our integrity is everything, and morally it didn’t sit right with us even though we qualified to receive it,’’ he said.

The largest payback to date has been Silver Fern Farms, which returned the nearly $40 million it initially claimed.

While Air New Zealand was the largest recipient of the scheme — receiving $113 million — it has also paid back $3.3 million it was not able to allocate under the wagesubsidy rules.

It is something chief executive Greg Foran did not know about when RNZ asked late last week.

On Friday, the airline clarified why it has repaid money, despite being on its knees financially.

It said there was money left over from employees who left the business before the end of the 12week period, employees who went on ACC or parental leave during the 12week period or employees initially thought to be eligible to receive the wage subsidy but were subsequently found not to be.

Other top repayments include engineering consultant firm Beca. Managing director DarrylLee Wendelborn said the company gave back $15 million.

‘‘I think moral is always in there, we are always a valuesbased and employeeowned organisation.’’

Doug Johnson is the managing director of the Tonkin and Taylor Group, which returned more than $5 million.

‘‘We didn’t know whether we needed it or not — our forecaster said that we would. But we did enter into the application on the basis — and we did confirm with MSD when we applied for it — that if we didn’t need it we could pay it back. And that’s what we did,’’ Mr Johnson said.

Jilnaught Wong, a professor of accounting at the University of Auckland, has criticised companies that received the subsidy and went on to pay a dividend.

‘‘If companies are able to pay dividends, obviously they were in a cash position to do that, then they really didn’t need to draw on the wage subsidy,’’ Prof Wong said. — RNZ