Coronavirus: Hundreds of wage subsidy claimants asked to pay it back after 'audits, allegations, investigations'

The Ministry of Social Development (MSD) has requested 750 employers accessing the wage subsidy return the money "following audits, allegations or investigations" - a tiny fraction of the total number of businesses which have accessed the scheme. 

According to data provided to Newshub, accurate to the week ending July 17, there have been 781,994 applications received under the Wage Subsidy and Leave Payment Scheme, with $13 billion paid out.

But some of that cash has been given to businesses which have since realised their downturn was not as severe as initially expected. Businesses could access the scheme, which began in March, if they could show a 30 percent decline in revenue or projected revenue for any month between January and June 2020 compared to the year before.

Many employers to pay back all or some of their subsidy voluntarily came forward to MSD.

"We have requested 13,163 refunds from employers who contacted us voluntarily and 10,114 of those had been received as of the week ended 17 July," said George van Ooyen, group general manager of client service support. 

The total value of voluntary refunds received is $316.8 million.

Van Ooyen said 750 employers have been "requested to pay refunds following audits, allegations or investigations". The value of refunds received from these employers sits at $6.8 million of a total $11.5 million requested. MSD has received 3094 allegations about applicants.

Of the overall $323.6 million in refunds received so far, $28.3 million was given back over the previous week. 

"We are encouraged that a number of businesses that have incorrectly claimed for the wage subsidy have contacted us and begun repaying any outstanding amounts. Others have refunded money because their situation has changed," van Ooyen said. 

He says 586 cases have been referred for investigation, of which 272 remain underway and 54 have been resolved. At this stage, there have been no prosecutions. 

"Our auditing to date has found that in the vast majority of cases, employers are doing the right thing," van Ooyen said.

"In many cases where entitlements have been wrongly claimed, it is due to uncertainty about eligibility criteria, rather than deliberate attempts at deception."

'Vast majority' doing right thing

Kirk Hope, chief executive of BusinessNZ, told The AM Show on Tuesday that the 750 employers asked to pay money back was a "small amount" of the total number of applicants. 

He echoed van Ooyen in saying that some businesses were unsure about eligibility.

"We fielded thousands of calls across the BusinessNZ network from businesses looking to get advice about what they should do and what they could do in terms of meeting the requirements.

"They were worried about themselves, they were worried about getting money to their staff. They were worried about their future."

Hope said the scheme relied on trust and that was shown by the number of businesses coming forward voluntarily.

"It's that trust component. People said 'actually we didn't need that money. We probably didn't meet those requirements. We are going to pay it back'. The design of the scheme enabling a high amount of trust, that has been reciprocated by businesses," he said.

"This is taxpayers' money that they were being given to help run their business at a time when circumstances were pretty remarkable if you cast your mind back to lockdown."

Minister of Social Development Carmel Sepuloni told Newshub that she was heartened most businesses were playing by the rules. 

"The reality is that the vast majority of businesses have been doing the right thing," she said. 

She is happy with the checks and balances in place when issuing the subsidies, noting that the scheme needed to be as "uncomplicated as possible to ensure that the scheme would work and have the effect that we needed it to".

With the scheme having supported 1.7 million jobs since March, Sepuloni said the subsidy was at a scale never seen before. 

"We have got a robust auditing process in place and we have got the pre-audit checks. We then ramped up to make sure we had a more robust auditing process for larger businesses and then we've got the, not only targeted, but random auditing that is going on as well," she said.

If businesses were successful in accessing the subsidy scheme, $585.80 per week was paid for full-time staff or $350 for part-time staff. Initially, there was a cap of $150,000 per business, but that was quickly lifted.

The first scheme ran until June, with an extension now accessible until September for the most severely affected businesses. Of the total amount of money paid out, $1.9 billion has been granted under the scheme's extension.

New Zealand went into lockdown in late March for nearly two months, but now has virtually no restrictions in place outside of quarantining Kiwis arriving into the country. 

However, with the pandemic raging on globally and international tourism cut off, Hope said another wage subsidy may be needed past September to help those businesses currently in "hibernation". 

"If you went with a further wage subsidy it would need to be targeted to those industries that are in hibernation. We will need an international tourism sector at one point. 

"There are viable businesses in there and we will need the skills and capabilities that those people deliver to our economy going forward. However, they are going to be in a much smaller form for the foreseeable future until the border opens up."

The Government has introduced the Strategic Tourism Assets Protection Programme, which provides support to specific tourism operators significantly impacted by the pandemic.