The Timaru Herald

Rocket Lab may pay back wage subsidy

- Debrin Foxcroft

Space company Rocket Lab is conducting an internal audit to assess whether the company was eligible for the $2.85 million wage subsidy it received.

The company claimed the subsidy for its 408 New Zealand employees last year. But Rocket Lab’s financial statements, sent to the Companies Office on Friday, noted it was ‘‘unlikely the conditions of the grant have been met’’. A Rocket Lab spokeswoma­n said the company would pay back the subsidy if the audit found it was ineligible. The spokeswoma­n said the company had experience­d significan­t uncertaint­y due to Covid-19. ‘‘Unable to launch, and with our manufactur­ing operations suspended, our ability to generate revenue was impacted.’’

The wage subsidy enabled Rocket Lab to keep more than 400 people employed through a period of economic uncertaint­y, she said.

But Rocket Lab had commission­ed an audit to assess its eligibilit­y for the wage subsidy against the company’s full financial results. Rocket Lab’s status as a captive service to its United States parent introduced ‘‘accounting complexiti­es’’ and required additional assessment, the spokeswoma­n said. ‘‘This potential ineligibil­ity was outlined in recent financial statements. If the final determinat­ion concludes the wage subsidy conditions were not met, Rocket Lab will repay the subsidy,’’ the spokeswoma­n said.

The Government set up the $14 billion wage subsidy scheme early in the pandemic as a cash injection for businesses to help keep people in jobs. At its peak it supported 1.8 million jobs.

To access the first round, companies had to have experience­d a 30 per cent revenue drop over a month between January and June, compared with the same month in 2019, and that decline had to be related to Covid-19.

It was a ‘‘high trust’’ system and businesses that did not meet the revenue drop criteria were encouraged to repay the money.

Some high-profile big businesses have done so as their profits recovered sharply after lockdown, including The Warehouse, which repaid almost $70m.

The number of refunds hit 21,465 in early April. As at May 14, $708.8 million had been repaid.

Rocket Lab’s financial statements showed it made a $1.1m profit on $90m revenue for the year to December 31. The previous year it made a $32,000 loss.

Rocket Lab was started in 2006 and is directed by Peter Beck.

It has powerful US investors and is headquarte­red in the US, but employs most of its staff in New Zealand, launching its rockets from Ma¯hia Peninsula near Gisborne.

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