Features Australia

JobKeeper – far worse than Pink Batts and School Halls

The new gold standard in wasteful spending

4 September 2021

9:00 AM

4 September 2021

9:00 AM

When the dust on Covid finally settles, we will look back at this period and wonder how the federal and state governments got so many things so wrong. Right up there will be the unproven and unjustified restrictions such as lockdowns, curfews and border closures.

But when it comes to government outlays, the wildly expensive JobKeeper will rank as the single most irresponsible and reckless spending program ever undertaken by a government. Lasting only 12 months, JobKeeper has ended up costing the Australian taxpayer close to $90 billion. It makes the Pink Batts and Building the Education Revolution programs look completely amateurish in terms of government spending for dubious benefit.

While royal commissions can be overdone, there is a very strong case for a future government to bring on a royal commission into JobKeeper to ensure that such blatant and inequitable waste is never repeated.

The underutilised Labor MP, Andrew Leigh – a former professor of economics who holds the very junior position of Shadow Assistant Minister for Treasury and Shadow Assistant Minister for Charities – has squandered a lot of time since being elected to parliament chasing imaginary policy rabbits down holes (recall his plain-wrong analysis of the supposedly large cross-shareholdings of competitor companies and his obsession with inequality.) But he is definitely onto something in his public questioning of the probity and value of the JobKeeper program. He has doggedly sought information about the details of the operation of the program, including the companies in receipt of JobKeeper which suffered no declines in sales revenue.

(By contrast, shadow Treasurer, Jim Chalmers, has looked like a complete goose when calling for the resurrection of JobKeeper at various stages.)

There was no doubt that the federal government was always going to intervene in 2020 to assist businesses affected by Covid-related restrictions and workers who had lost their jobs or had their hours of work cut. But within this principle of intent, there were a number of options that the government could have chosen.

Based on hasty and commercially naive advice concocted by Treasury, Josh Frydenberg implemented a program with an extremely high proportion of pointless spending, snapped up by businesses that were good at working the system rather than being hurt by Covid. We should be thankful to the indefatigable Joe Aston at the Fin for bringing the unfolding story about the rorting of JobKeeper.

Under the first version of the program, which lasted six months, businesses were eligible for JobKeeper based simply on their expectations of the impact of Covid on revenue. Unsurprisingly, large numbers of executives and owners put their hands out and received very substantial payments that required no proof of actually being adversely affected.

And it was not just private sector companies that stood to gain: private clubs, private schools, barristers’ chambers, trade unions and plenty of other chancers took the moolah.

For every full-time and longer-term casual worker, a payment of $1,500 per fortnight was made which was not actually contingent on the worker having been stood down or having had their hours of work reduced. In fact, quite a large number of recipient businesses didn’t actually reduce their workforces but received the payment notwithstanding.

If you just think about it, the scheme was not too hard to game. Uncertain of the shift of sales to online, businesses could always claim that the enforced closure of retail outlets would significantly affect their bottom lines. In some cases, this is what happened; in other cases, overall sales actually increased.

And for anyone working in a professional services line of work, it’s not too hard to delay the sending out of invoices to show a fall in revenue and to demonstrate commercial damage caused by Covid should the Tax Office make inquiries (which seemed about as common as a warm day in Hobart in August).

We now know through the research of the Parliamentary Budget Office that in the first thirteen weeks of the scheme, around $12.5 billion was paid to businesses that did not suffer any decline in sales revenue. Some actually saw sales increase.

Given that the terms of the scheme did not materially change for another thirteen weeks, it’s fair to assume that around $25 billion (out of a total outlay of close to $90 billion) was completely wasted – at a minimum.

Of course, that would be wasted from the point-of-view of the taxpayer. For those lucky businesses, it was like winning the lottery, leading to higher reported profits and executive bonuses.

K&S Corporation, a transport company, received close to $20 million from JobKeeper in 2020 but only had to spend around $350,000 standing down workers. Happily, the company was able to declare a $19 million increase in dividends for the year.

But here’s the thing: the tenured, well-remunerated dolts in Treasury never thought to include a claw-back provision whereby businesses that had received payment but had not experience commercial damage would be required to repay the grant.

To be sure, a small number of businesses has opted to pay back some monies – Adairs, Nick Scali, ARB to name a few – although others have resisted. In any case, we are talking about a few tens of millions of dollars being returned to government coffers which is peanuts in the scheme of things.

This is where transparency comes in. Notwithstanding the fact that other countries that operated schemes not dissimilar to JobKeeper – think here New Zealand, the UK, the US – have no problem in publicly releasing all the details about scheme recipients, including the sums received and the number of workers affected, in Australia, it is complete darkness.

Recently, crossbench senator from South Australia, Rex Patrick, put forward a motion that the details of all JobKeeper business recipients with sales over $10 million should be made publicly available. The information would include the number of employees that benefitted.

Both the Commissioner of Taxation, Chris Jordan, and Treasurer, Josh Frydenberg, have lost their minds at the prospect and are trying their darnedest to ensure that the information is not released. Jordan tried to invoke ‘public interest immunity’ to prevent the Senate order from being carried out but failed.

If those other countries can do it, it’s not clear why Australian taxpayers shouldn’t be able to see which businesses received monies and how many workers were assisted. It’s the least that we should expect from government.

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