Not off the hook
Agriculture minister warns primary producers with ‘privilege’ of operating in lockdown must not rort wage subsidy.
Agriculture Minister Damien O’Connor says the size of wage subsidy claims from some primary sector companies allowed to keep operating in the Covid-19 crisis has prompted him to ask for extra policing by government officials.
O’Connor said he had been surprised by the size of claims by some meat, timber and fishing companies given they have had the “huge privilege” of operating throughout lockdown levels, albeit with restrictions.
While the $10 billion taxpayerfunded wage subsidy scheme does not come under his portfolio, he had asked administrator the Ministry of Social Development to ensure there was “no obvious abuse”.
He had also asked his ministry, MPI, to monitor payments to primary sector players “on the basis there should be some consistency across the claims that justify both the amount and the sector requests”, he told the Herald.
“The ability to carry on has been a huge privilege and opportunity that I would not expect them to exploit.
“Taxpayers and future generations of taxpayers are all going to be paying the bills from this Covid-19 crisis and any company that exploits that hightrust model is abusing future generations of New Zealanders.”
Concerns have been raised within the meat, dairy and kiwifruit industries, all classed as “essential services” in the Covid-19 response, about some players claiming large wage subsidy payments. O’Connor said he had been approached by concerned industry participants and their farmersuppliers.
The loudest criticism has been directed at meat processors, which have claimed around $84 million — $77.7m of which went to just two companies, Silver Fern Farms and Alliance Group for 11,000 employees — while several other big-name operators have not claimed.
Silver Fern Farms, half-owned by Shanghai Maling (Hong Kong) and half by a New Zealand farmer co-operative, was paid $43.3m. Alliance, a farmer cooperative, was paid $34.4m.
Several smaller meat companies have also been paid subsidies, but some larger players in the industry, which employs around 22,000 people, have not applied.
They include Affco, Greenlea and Hellaby, which between them employ more than 6000.
Meat industry critics of the claims said meat prices were good and expected sector revenue this year to hold steady on last season and probably exceed it.
The Herald on Monday asked Silver Fern Farms and Alliance if they intended to pay back any or all the money.
Silver Fern Farms responded: “We are still monitoring our operating conditions, honouring our commitments to our staff and will follow through on our commitment that we will pay any unneeded funds back.”
But O’Connor said he had been informed by “ministerial colleagues” that Silver Fern Farms had elected to pay back its claim.
“I would hate to think that the ultracompetitive environment that is the meat industry has forced them to reconsider given there are other meat companies that have received funding also.”
Alliance said: “Alliance applied for the wage subsidy in accordance with the purpose of the Government’s policy, which is to keep people in jobs and preserve income ...
“In our case, the wage subsidy saved a large number of jobs from an earlyseason termination due to the physical distancing rule reducing our processing capacity and allowed equivalent daily pay for people whilst operating at reduced levels.
“Covid-19 has meant it is substantially more costly and inefficient to operate at a time when farmers need significant livestock volumes processed. Given plants have fixed operating costs, we are generating significantly lower revenues as the world economy slows in response to Covid19. As we have said from the start, if we don’t continue to meet the criteria, we will return any unused funds to the Crown.”
The criteria for eligibility is a business must have experienced a minimum 30 per cent Covid-19-related decline in actual or predicted revenue over the period of a month, or 30 days, when compared with the same period last year.
MSD has confirmed to the Herald that claimants do not have to specify the month.
The wage subsidy scheme, which as at last week had paid out more than $10.3b, covers January to June this
year. It was established to maintain income for Kiwis who were laid off because of the virus emergency response.
MSD said because claim months don’t have to be specified, it has no record of how many companies had claimed for actual or predicted revenue loss in January and February, long before level 4 lockdown began on March 26.
O’Connor said he’d clearly told the primary sector that operating in level 4 was “a privilege which demanded a level of responsibility to the rest of
New Zealand” to ensure it didn’t contribute to the spread of the virus.
That had been achieved “pretty much without fault” due to the safety changes made by primary sector operations.
He said employees of companies which had claimed wage subsidies could keep those companies honest.
MSD’s website offers a search tool to find which companies have claimed.
“Employees can . . . work out how much money they got paid and if all that money was indeed paid out to employees. If it wasn’t then that money should be paid back.”