It’s estimated that JobKeeper delivered $6 billion to businesses that increased turnover during both the June and September quarters in 2020. Australian businesses qualified for this taxpayer money based on projected falls in revenue that never happened. Now, as listed companies reveal their financial results to shareholders, we’re seeing more examples of questionable self-regulation and in some cases, a blatant lack of integrity in the management of JobKeeper funding. These actions cut to the heart of what it means to be an Australian business.
In Australia, we’re known for our ‘fairness’ and ‘just give it a go’ attitude. What has shifted under COVID-19, it appears, has been the values of the leaders of some of Australia’s largest businesses, and an ever-growing integrity void in making good and ethical decisions.
In 2020, CEOs were thrust into an arena with an opponent the world was grappling to control, and because of this, decisions were being made solely on the back of personal integrity and ‘doing the right thing’ until the controls around the economic response packages could be ironed out.
But if CEOs and boards knew from their forecasts that they would thrive during the lockdown rather than just survive COVID-19, why take the JobKeeper payments in the first place? These big companies spend millions of dollars a year on marketing to build a positive brand story, so why would they risk their businesses brand equity and reputation on receiving taxpayer money they weren’t morally entitled to?
A case in point is retailer Harvey Norman. After sustained criticism amid a growing public backlash and after revealing profit figures, Harvey Norman repaid $6 million in JobKeeper payments it should never have received. Why would a company that claims to place high importance on its customers, product and service quality choose to take payments it did not need? Harvey Norman has both retail and online business and can pivot from one to the other; in fact, that is its strategic strength.
As time went on, Harvey Norman faced an ethical dilemma. The company posted a bumper increase in profit of over 78%. That is not a forecast many CFOs could get wrong. So, the question comes down to one of integrity: if a company knows it would not need the emergency job safeguard support, why continue to take it?
It appears one of the by-products of the pandemic is that it’s brought about ethical or morally questionable management decisions across some of Australia’s most iconic organisations, especially those that used JobKeeper as their own shareholder safety net. As we observe the integrity void continue to widen, Australian business owners, boards and management alike must recalibrate their own internal integrity compasses back to true and ethical governance. In other words, if you don’t think you need the support, don’t take it.
Kudos can be given to those 33 companies that self-corrected and repaid their JobKeeper subsidies, totalling more than $159 million, and the further 14 entities that intend to to repay an additional $66 million, as identified by governance advisory service Ownership Matters. Over 26% of companies that are publicly listed on the ASX300 and which received JobKeeper payments have announced their intention to repay nearly $140 million.
But did they do this because they are a publicly listed company, and their results would be a matter of public scrutiny? Companies like ADBRI, Dominos, CIMIC, ILUKA Resources and Santos all repaid the entirety of their JobKeeper payments, while others made only partial repayments.
The question of integrity sits squarely in the laps of businesses’ management team’s decision to access an ‘emergency’ subsidy knowing their company could weather the pandemic. This isn’t a question around the efficacy of the JobKeeper program, but the integrity of the decisions made at an individual company level, as to whether they should have sought to access the funding in the first place.
I would argue that businesses small and large, listed or private, which have flourished during the pandemic and were propped up by JobKeeper largesse they weren’t entitled to, have a moral and ethical duty to repay that taxpayer money.
If they don’t, or only do so after succumbing to public pressure, I fear the integrity void in Australia will continue to widen and this type of behaviour will not only go unchecked but become the norm.