Labor is mounting pressure on the Morrison government to call an inquiry into the $90 billion JobKeeper scheme, as another firm repays millions in wage subsidies after recording strong sales.
“Iluka received $13.6 million in JobKeeper subsidies from the Australian government following a significant decline in zircon demand and associated revenue in Q1,” the company said in its latest quarterly review to shareholders.
“Given the company’s subsequent financial performance, Iluka has decided to return this voluntarily,” the review said.
Iluka reported net cash of $50 million and free cashflow of $36 million as at December 31, as well as an increase in closing inventory of $191 million since the start of the year.
Lack of transparency
These voluntary acts by large firms to return JobKeeper have prompted Andrew Leigh to demand Treasurer Josh Frydenberg establish an inquiry into JobKeeper.
“JobKeeper is the most expensive program the Australian government has ever rolled out, so it needs a high level of scrutiny,” Leigh tells SmartCompany.
The key issue Leigh wants addressed is the lack of transparency and accountability in the wage subsidy program, which he thinks could be achieved with a public register, similar to what New Zealand adopted.
“It would be appropriate for firms of say over $100 million to have their JobKeeper receipts disclosed on a publicly available database,” Leigh says.
It is also crucial there is more clarity regarding which firms received JobKeeper and then saw an increase in profits over 2020, as well as the payment of executive bonuses by firms who received JobKeeper, Leigh says.
Leigh is not alone in saying it is inappropriate for firms to pay executive bonuses if they received JobKeeper.
Both Business Council of Australia chief executive Jennifer Westacott and ATO second commissioner Jeremy Hirschhorn have said it is wrong for firms to have paid bonuses if they received wage subsidies from the federal government in 2020.
A question of social responsibility
Toyota announced this month it would return $18 million in JobKeeper subsidies after it sold 30% more vehicles in the fourth quarter of 2020 compared the same period in 2019. The company said in its statement it was “the right thing to do as a responsible corporate citizen”.
Super Retail Group, the owner of brands including Rebel and Macpac, pledged this month to return $1.7 million of JobKeeper after recording a record $170 million net profit after tax for the second half of 2020.
Leigh says all large firms have corporate social responsibility policies, which in practice, should involve more than making donations to charities.
“Corporate social responsibility, at its heart, is about understanding that firms are there for their customers and workers and not just their shareholders,” he says.
When asked what small businesses might think about large firms holding onto millions of dollars in JobKeeper payments while recording record profits, Leigh says he imagines they would be “frustrated”.
“I think small businesses would be immensely frustrated by this, particularly those who are about to see their JobKeeper lifeline taken away.”