The ProfitKeeper dilemma
They are calling it the shame game – exposing companies that received JobKeeper last year, but subsequently made a profit. When the government introduced payments designed to help firms pay their employees and run operations, there was no expectation it would be paid back. They only had to prove turnover was 30 per cent less than the year before.
But – surprise! – some companies have reported profit rises. This means that the Australian taxpayer dollars that funded JobKeeper payments could end up being paid off as executive bonuses or reinvested into the businesses. Pizza chain Domino’s experienced a surge in profits during 2020 as the demand for takeaway food rose, so it stopped accepting JobKeeper payments last October and has now decided to return the payments it received.
However, many companies have not followed suit. The Parliamentary Budget Office has identified 65 that either made excessive profits or paid out executive bonuses while receiving JobKeeper payments. If these companies all returned their payments, more than $1 billion would be returned. Greens leader Adam Bandt commented, “It’s not enough to just ask them to pay back JobKeeper, Parliament has to make them do it.
“While everyone else was suffering during the pandemic, billionaires and big corporations took government handouts and got even richer. If you’re making enough to buy a private jet or pay executive bonuses, then you can pay back JobKeeper.”
An interesting example is Solomon Lew’s company, Premier Investments. Premier Investments initially faced much scrutiny for paying out a $2.5 million bonus to its chief executive and $57 million in dividends to shareholders, despite having not paid back any of its $40 million in JobKeeper payments.
However, Premier Investments has now decided to repay $15.6 million to the government. Andrew Leigh, federal Labor’s shadow assistant minister for Treasury doesn’t see this as enough, telling The Sydney Morning Herald, “given the extraordinary profitable year they’ve just had, nothing less than full payment is appropriate”. Leigh also told SmartCompany that a solution to issues of repayment could be to create a public register of JobKeeper recipients.
“It would be appropriate for firms of, say, over $100 million to have their JobKeeper receipts disclosed on a publicly available database,” he said. “It's just a matter of good corporate ethics. I thought the chief executive of Toyota Australia Matthew Callachor put it really nicely when he said returning JobKeeper payments was ‘the right thing to do as a responsible corporate citizen’. He recognises that firms aren’t just there for their shareholders – they’re there for their customers, for their workers and for the broader community. Acting as Toyota and Super Retail Group have done builds faith with the community that you’ll take government handouts when you need them, but you'll give the money back when you don’t.”
Harvey Norman CEO Gerry Harvey, who received $6 million in JobKeeper payments despite doubling profits, refused to hand back the money. He told The Sydney Morning Herald the payments were a “tiny amount of money” and the company will repay it through higher taxes.
“If you’re making enough to buy a private jet or pay executive bonuses, then you can pay back JobKeeper.”