Christchurch couple challenges Auditor-General to investigate businesses who received wage subsidy
Marilyn and Grant Nelson / Photo: Supplied
The Auditor-General is being challenged over his decision to not take any action over the need for businesses to be asked to repay billions of dollars of wage subsidies.
The Gama Foundation, a Christchurch-based philanthropic organisation has today filed a Judicial Review application in Wellington’s High Court.
The Foundation is run by former Christchurch businessman Grant Nelson and his wife Marilyn. Over the past 25 years, they’ve donated more than $50 million to charity.
Mr Nelson has been investigating the wage subsidy scheme for over two years. He’s concerned that Auditor-General John Ryan has failed to do all within his power to help retrieve an estimated $5 billion that was overpaid and $2 billion that was wrongly obtained or retained by businesses.
“If these billions of dollars are not repaid, taxpayers will each have to contribute thousands of dollars through their taxes to help repay the debt that was incurred in making these wage subsidy payments.”
Nelson said the wage subsidies were paid out really quickly and being built on a high-trust model the scheme was wide open to abuse.
“There are people out there who are doing it really tough and some wage subsidy repayments could be used to help those who are in greatest need.”
Nelson wants the Auditor-General to recommend to the Ministry of Social Development that they write to all recipients and ask them to provide evidence of eligibility, as well as compliance with their post-payment obligations.
“If they can prove that they are entitled to the wage subsidy, they can retain part or all of it. Otherwise, the money should be repaid.
The Auditor-General states that he has to act as the watchdog and guardian of taxpayer money, but when it comes to billions of dollars of wage subsidies, he hasn’t done enough to ensure that all businesses return to the taxpayer any money they are not entitled to retain.”
Since receiving the wage subsidies in 2020 and 2021, many companies have recorded a significant growth in revenue. Reserve bank data shows that in October 2020 businesses had $22.7 billion more in the bank than in October 2019.
“In the two years since the wage subsidy scheme was introduced, there’s been a huge transfer of wealth to businesses who didn’t experience the drop in revenue they might have anticipated.”
The Auditor-General released a report in 2021 which criticised the Ministry of Social Development (MSD) for inadequate post payment checks of recipients, but didn’t go as far as recommending that the MSD write to all recipients of the scheme in an effort to recover the money that’s owed.
Nelson said “the fact that over $750-million has voluntarily been repaid is a good indication that many times more would be repaid if recipients were asked to make repayments.
Earlier this year the Auditor-General took a much stronger stance over the cost of living payments – within weeks of the first round of payments being made Mr Ryan had written to the IRD, recommending it "consider what steps it can take to identify how many ineligible people have received payments".
He also advised IRD to make its expectation clear to ineligible people who got the payment that they should repay it immediately.
“We’re really just wanting him to do something similar with the wage subsidies because vastly more money is involved.
I’m calling on the Auditor-General to do everything in his power to put matters right. Taxpayers are totally reliant on him to ensure the good stewardship of public money so if he fails to carry out his statutory duties, a dangerous precedent will be set.”
