Taxpayers forked out $27 billion in JobKeeper payments to businesses that didn't meet criteria: report

The federal Treasury has confirmed $27 billion in JobKeeper payments were paid to businesses whose turnover increased or did not decline by the criteria set.

But Treasury has defended the finding, saying the analysis – included in a report released on Monday – did not necessarily cast these businesses as ineligible and a claw back measure could have damaged the economic recovery.

The report, titled Insights from the First Six Months of JobKeeper, revealed $13.8 billion was paid to businesses whose turnovers increased.

A further $13.2 billion was paid to businesses whose turnovers declined but not by either the 30 per cent or 50 per cent eligibility threshold set.

The wage subsidy was set up in March 2020 after the government ordered businesses to close during the first lockdown in response to the pandemic.

Taxpayers forked out $27 billion in JobKeeper payments to businesses that didn’t meet criteria: report

Camera IconA new report reveals $27 billion of the $70 billion paid out in the first six months of JobKeeper went to businesses who did not meet eligibility requirements. Credit: News Regional Media

To be eligible for the payment, a business had to forecast a 30 per cent decline in revenue. For large businesses with a turnover of more than a $1 billion, it had to forecast a 50 per cent reduction.

Of the $13.8 billion in overpayments, Treasury said $12.1 billion was paid to small businesses with a turnover of less than $50 million.

“Some businesses, in particular, experienced a decline in turnover following the imposition of the Covid-19 restrictions, but because they were growing businesses or had otherwise changed their structure, this is not evident when their turnover is compared with a year earlier,” the report said. .

“Estimates suggest that at least $4.9 billion of the $13.8 billion paid to businesses with higher turnover through the year went to growing or changing businesses.″

At a three month review into the JobKeeper program, Treasury said a decision was taken to keep payments flowing despite “evidence some businesses that were initially heavily impacted were showing signs of recovery”.

“This judgment reflected the still heightened uncertainty surrounding both the pandemic and the economic recovery, the weak economic conditions at the time, and the role that JobKeeper was playing as part of the broader macroeconomic response,” the report said.

Eligibility was then changed to move the assessment of turnover from anticipated decline to actual decline.

Taxpayers forked out $27 billion in JobKeeper payments to businesses that didn’t meet criteria: report

Camera IconTreasurer Josh Frydenberg made changes to the payment after the first six months. NCA NewsWire / Martin Ollman Credit: News Corp Australia

Treasury defends the payment, saying the analysis “does not suggest any of these businesses were ineligible for the JobKeeper payment”.

The report also confirms Treasury considered a clawback clause, but it did not want to risk economic recovery.

“Guaranteed support for six months was designed to provide certainty to businesses. The time frame was linked to the health advice that restrictions could need to be in place for six months and the ongoing evolution of the pandemic was highly uncertain,” the report said. .

“It was understood that this risked making payments to businesses that recovered quickly and may not need support by the end of this period.

“A mechanism to claw back payments from businesses that performed better than expected was not included, reflecting a desire to avoid any disincentives for businesses to adapt and recover.

“The introduction of such a mechanism would likely have reduced the overall level of activity and muted the recovery.”

In total, $70.3 billion was paid out during the first six months of JobKeeper, with 99 per cent of all recipients being those with turnovers of less than $50 million.

More than 80 per cent of JobKeeper payments went to these entities.

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