There are moments when only the word gobsmacked is appropriate. One of them is reading Professor Judith Sloan’s recent Spectator piece about JobKeeper.
Sloan is an Honorary Professorial Fellow at the Melbourne Institute of Applied Economics and Social Research at the University of Melbourne; Spectator columnist; Murdoch media columnist; and, normally reliable culture warrior ready to excoriate the ALP and progressives.
Neither reading Murdoch publications (other than the TLS) nor the Spectator it was, however, delightful to read a crikey reference to a Sloan article, The new gold standard in wasteful spending, published in the Spectator (4 September 2021).
The article said: “……when it comes to government outlays, the wildly expensive JobKeeper will rank as the single most irresponsible and reckless spending program ever undertaken by a government. Lasting only 12 months, JobKeeper has ended up costing the Australian taxpayer close to $90 billion. It makes the Pink Batts and Building the Education Revolution programs look completely amateurish in terms of government spending for dubious benefit.
“While royal commissions can be overdone, there is a very strong case for a future government to bring on a royal commission into JobKeeper to ensure that such blatant and inequitable waste is never repeated.”
It should be said, however, that despite a Royal Commission and the fact that both home insulation and the education program having problems – magnified by the News publications and Tony Abbott – they also had significant long term benefits. The difference in Murdoch media coverage of Rudd stimulus spending and Morrison’s is, nevertheless, instructive in this context.
Professor Sloan gives credit to Labor Shadow Assistant Minister, Andrew Leigh for ‘doggedly’ pursuing the issue although giving him a side-swipe for his ‘obsession with inequality’.
The AFR’s Joe Aston also gets well-deserved credit for his relentless exposure of JobKeeper rorts.
She also gives an excellent summary of the JobKeeper rort policy development as: “Based on hasty and commercially naive advice concocted by Treasury, Josh Frydenberg implemented a program with an extremely high proportion of pointless spending, snapped up by businesses that were good at working the system rather than being hurt by Covid.”
“We now know through the research of the Parliamentary Budget Office that in the first thirteen weeks of the scheme, around $12.5 billion was paid to businesses that did not suffer any decline in sales revenue. Some actually saw sales increase.
“But here’s the thing: the tenured, well-remunerated dolts in Treasury never thought to include a claw-back provision whereby businesses that had received payment but had not experience commercial damage would be required to repay the grant.”
A key scheme failing was – as is typical of the Morrison Government – was its secrecy. Labor Shadow Assistant Treasurer Andrew Leigh (a remarkable intellect often wasted by a directionless Opposition) points out that the UK, New Zealand, the US and Canada all set up job retention schemes.
“But whether it was Johnson or Ardern, Trudeau or Trump, other countries’ wage subsidy schemes had one thing in common: full transparency. Taxpayers could log on to a website and find out the names of every firm that got wage subsidies,” Leigh said.
Leigh also points out that Morrison had, in his inimitable style, described wage subsidy schemes as a ‘dangerous idea’ before blithely claiming he had never had that view and implementing one.
The only reason we know a little about JobKeeper recipients is because ASIC required listed companies to disclose how much JobKeeper they had received.
Leigh said: “This wasn’t part of the design of the scheme. It happened after the JobKeeper legislation passed parliament.”
Clearly ASIC considered the issue material so we know, as Leigh identified, that luxury car dealer AP Eagers got $130million despite increasing profits; jewellery seller Lovisa, part owned by Monaco-based billionaire Brett Blundy, that got $23 million in JobKeeper and other subsidies despite sparkling profits; and, Monash IVF got $10 million and almost doubled its CEO’s salary to $1 million.
“Giving corporate welfare to firms with increasing turnover cannot have saved a single job. It was waste on a gargantuan scale,” Leigh said.
Leigh got the Parliamentary Budget Office to do the research – cited by Sloan – which showed that $13 billion in JobKeeper went to firms with increasing revenues. That’s almost $1,000 for every Australian adult.
However, the situation is obviously much worse than the available figures indicate. Listed entities account for just 3% of all JobKeeper, according to analysis by Ownership Matters, meaning that almost 97% of the payments are a state secret.
The Morrison Government – surprise surprise – resisted (with surprise, surprise the support of Pauline Hanson) a Senate move to create a transparency register.
The Morrison-Hanson alternative was a register of listed companies thus duplicating information which is already public. Add the cost of that register to the waste of taxpayers’ fund even if it is only a rounding error in the billions wasted on this and other rorts and subsidies.
In the film Casablanca, after the Rick’s clientele’s spontaneous rendition of La Marseillaise, the infuriated Nazi Strasser demands that Rick’s be shut down. Louis (Captain Renault) says: “I’m shocked, shocked to find that gambling is going on in here!” A Rick’s croupier approaches: “Your winnings, sir.” Captain Renault says: “Oh, thank you very much…… Captain Renault: “Everybody out – at once!”
It is easy to imagine a similar feigned ignorance when some of the companies which rorted JobKeeper hand over significant donations to the Morrison Government’s election campaign.
Effectively we will have subsidised their earnings and therefore their donations. Sadly under our secretive electorate laws – unlike other countries where continuous disclosure applies – we won’t get to hear about the donations until long after the next election. We may hear about JobKeeper sooner if Senator Patrick gets his way.