Companies repay $536m of the Covid-19 wage subsidy
Wednesday, 30 December 2020
Businesses have repaid more than $536 million in wage subsidy money, the latest government figures show.
As of mid-December, the Ministry of Social Development (MSD) had been repaid $536.4m by businesses that claimed the Covid-19 relief wage subsidy earlier in the year.
The wage subsidy scheme was announced in early March to ensure people didn’t lose their jobs during the Covid-19 pandemic.
Over the scheme’s lifetime, about 750,000 businesses claimed $14 billion worth of Covid-19 wage subsidies.
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But there was mounting pressure on companies paying out dividends and recording record profits to repay their wage subsidy.
The country’s GDP grew 14 per cent in the September quarter.
Prime Minister Jacinda Ardern and leader of the Opposition Judith Collins both said it was immoral for companies that posted a profit and paid dividends to have held on to the wage subsidy.
Briscoe Group came under fire when it went on to pay a dividend to shareholders, despite having received the subsidy.
It posted an after-tax profit of $28m for the six months to July 30, compared to $28.4m for the first six months in the previous year, a mere 1.3 per cent decrease.
In October, Briscoe announced it would pay back the subsidy, with managing director Rod Duke saying it was the right thing to do.
The company later announced a special dividend of 6 cents.
Another major retailer, The Warehouse Group said earlier this month it would repay the $67m wage subsidy it received after copping flack for posting a $70m half year profit.
A Stuff survey of the top NZX50 companies found about half had not used the wage subsidy scheme.
Others had since paid money back, either partially or in full, while a smaller group retained it.
Ryman, the country’s largest retirement village operator, paid $44m in first-half dividends to its shareholders after taking $14.2m in wage subsidies. It has since said it would repay the money.
The company justified the payments by saying it had spent three times the subsidy amount on PPE gear and other procedures such as extra cleaning and more staff to protect residents and staff.
Construction giant Fletcher Building said ongoing uncertainty of the Covid-19 pandemic meant it would not repay its $68m wage subsidy.