6 May 2020

Law firms repay millions of dollars in unneeded wage subsidies

From Checkpoint, 5:38 pm on 6 May 2020

Three of the country's largest law firms have paid back the millions of dollars they claimed in government wage subsidies.

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Photo: 123RF

About $10.5 billion has been paid to more than 420,000 employers through the scheme, which is being audited by the Ministry for Social Development. 

Simpson Grierson has returned its $2.3 million payout, which it applied for based on a forecast drop in revenue. It said it is now forecasting a smaller impact and repaid the subsidy on Monday.

MinterEllisonRuddWatts said it is also performing better than forecast and repaid its $2 million payout on Wednesday.

Bell Gully said it will also give back its $1.8m payment, following a decision by its board.

Audits are being done on the businesses which have received subsidies that total $10.5 billion.

The government said the vast majority of businesses have been playing by the rules - but investigations are ongoing.

Meanwhile, some businesses which have taken a hit during the lockdown say they've opted not to take the subsidy as they wanted to leave the money for those who really needed it.

Kalpesh Patel owns the Superhero Superette in Ōtara with his brother. Their local dairy regularly pitches in to help the community, and managed to continue doing so during the lockdown.

Despite their business dropping by more than 30 percent - as is required to access the wage subsidy - they opted not to take it.

"I think some people are just taking it because they can take it. Some people actually really need it, so we felt that we didn't need it, so would leave it for somebody that actually needs it," Patel told Checkpoint.

"We were struggling in the middle a bit to get our own supplies but when we've got extra supplies we've donated bread and stuff into the community."

The wage subsidy has been a lifeline for thousands of businesses, but now that the effects of the lockdown are becoming clearer, some are reviewing whether they actually needed the cash.

Inconsistencies among some businesses are notable, University of Auckland Professor in Ethics Tim Dare said.

"I've been surprised at some of the large professional groups, whose members I would have thought can probably work from home. Some of those groups seem to have applied for large subsidies.

"And there seems to be quite a difference for instance, between the subsidies applied for by some law firms and not by others, so I would be interested to see in the end how those differences are justified."

How businesses approach the wage subsidy will show their true colours, he said.

"In an environment where the community as a whole has taken the 'we're in this together' view, have tried to act responsibly, and have tried to act in ways which look after one another, businesses which stand out as being selfish, as trying to take advantage of these schemes - not passing money on to people who require it, applying for money inappropriately - I think will suffer serious reputational damage."

The Ministry for Social Development does not have updated figures on audits of the scheme, but said in a statement that in many cases where entitlements had been wrongly claimed, it was due to uncertainty about eligibility criteria, rather than deliberate attempts at deception.

The Ministry said applications for the subsidy are slowing, with the 12-week period it covers due to run out on 9 June.

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