9 Oct 2020

Emergency accommodation providers claim thousands in wage subsidies

From Checkpoint, 6:06 pm on 9 October 2020

Motels and accommodation providers receiving millions of dollars in emergency housing payments from the government have also claimed tens of thousands of dollars in wage subsidies.

One Auckland property management company has been paid more than $12 million to house the homeless over the past 18 months.

But it also managed to get more than $50,000 in wage subsidies - with the Ministry for Social Development now looking into a formal complaint made about the money.

As the country scrambled into Level 4 lockdown back in March, making sure everyone had a place to stay was a priority.

Housing Minister Megan Woods announced $107 million to house rough sleepers during and after the pandemic

That money added to Ministry for Social Development funds already flying out the door to house the homeless.

Emergency accommodation suppliers.

Emergency accommodation suppliers. Photo: Supplied

Among the recipients was Silver Fern Property Services - an Auckland property management company which teed up accommodation for people in private rentals.

Between January 2019 and the end of June 2020 it received more than $12 million in payments.

Auckland social worker at ME family services Alastair Russell said many of the properties were in terrible condition and the costs were huge.

"Income that these companies have accrued at the expense of exploiting the homeless issue and needs of the community - this is, at that level, deplorable."

More than $50 million was paid out to the top 10 providers in the 18 months to June.

While Silverfern property services received the largest payout during that time period, four of the top 10 accommodation providers claimed the wage subsidy as well as their emergency housing grants.

"There's an ongoing reliance on a free-market to sort out social housing need, and how many times do we have to see examples where that model of free-market solution simply enriches a few and continues to leave people without housing resources and sources for permanent housing."

Businesses receiving the government's wage subsidy had to have a predicted or forecast drop in revenue of 30 percent - that increased to 40 percent during the wage subsidy extension.

Independent tax researcher Michael Gousmett says he struggles to see how the motels, hotels and property managers which have been taking in rising numbers of homeless, qualified.

"There seems to be an element of morality that's missing from some people's thinking here about what this process was all about."

He hoped businesses that found they didn't need the money would return it - with interest.

"The wage subsidy, I think, was a great idea but at the end of the day it's certainly been taken care of and there's certainly a need to take care of smaller businesses."

Silver Fern property services is no longer in business - it said after the first lockdown lifted the Ministry for Social Development moved all of its clients out of their properties.

Speaking to RNZ, the company defended the condition of the properties they provided MSD and said they planned on paying back the wage subsidy after they realised they no longer met the criteria needed to receive it.

In a statement MSD confirmed it had received a complaint in regard to Silver Fern Property Management - they also audited two other accommodation providers in relation to the wage subsidy but say no action was required.