11 Sep 2020

Mowbray slams big profitable companies taking wage subsidy

From Checkpoint, 5:22 pm on 11 September 2020

A New Zealand entrepreneur is naming and shaming businesses he says are abusing the government wage subsidy scheme and should pay it back immediately.

Nick Mowbray of Zuru toys says large corporates have been taking millions from the scheme, despite still turning significant profits and some even paying share holder dividends.

And while they might meet the criteria for the wage subsidy that pays up to $585 a week for each qualifying employee, he says ethically and morally it is wrong.

Nick Mowbray says he will donate to charity $1000 for every corporate that is found to be taking unfair advantage of the government scheme he says has been abused.

"So many companies are happy to privatise profit in the good times and some of their bad times they really want to socialise any kind of potential losses and take a hand-out," Mowbray told Checkpoint.

"So many of these companies are reporting profits but taking the wage subsidy at the same time, and I just think the wage subsidy was not designed for these large corporate companies. If you look at the NZX50 in the last two years it's up almost 30 percent, in the last 12 months it's up 7 percent.

"A lot of these companies are reporting large profits and then taking this wage subsidy at the same time, and ultimately there has to get paid or repaid by New Zealanders.

"I just don't think it's fair. Capitalism isn't a one-way street. You just don't get to take the profits in the good times and when you have bad times put your hand out and have hard working Kiwis pay for that.

"There are lots of companies, I mean take for example Somerset Villages, they're a retirement home business, of course the business is not going backwards. They reported $170 million in net profit last year, they have over $3 billion of assets. Their stock price more importantly in the last 12 months is up, 34.9 percent, that's about $460 million in market gains for their shareholders in the last 12 months.

"It's almost a record high, there's only one time in history before this where it was higher, and that was only for a few weeks. And they've taken almost $9 million from the government and from Kiwi taxpayers. How is that fair?

"I just feel like this is abusing the intent of the system. The intent of the system was to look after the builder out of work, the restaurant owner that couldn't open, the tourism business that was shattered," he said.

Another example of a major company claiming wage subsidies that Mowbray describes as "even more horrific" is Estée Lauder.

"A global conusmer goods company with a market cap of US77 billion, over NZ$100 billion. They reported revenue this year of $14.6b... They're in the consumer goods business which is on fire through Covid, especially things like skincare.

"The US-listed company on the New York Stock Exchange, and it took almost $900,000 from the New Zealand taxpayer, which is being siphoned effectively offshore."

Briscoe Group boss, Rod Duke, declined to comment to Checkpoint. SkyCity did not respond to requests for comment. Somerset has declined to comment. Checkpoint made several attempts to contact Estee Lauder and were unsuccessful.