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JobKeeper’s multibillion-dollar black hole escapes critical sunlight

Patrick, who served on submarines in the Royal Australian Navy before getting into politics, knows how to stay on target. He will keep trying to reveal the JobKeeper details. For now, however, private companies have retained the right to keep the payments secret because of what was missing in the JobKeeper law last year: a disclosure regime and a clawback mechanism to force companies to repay money they did not deserve.

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“An honesty system was put in place,” Patrick told the Senate. “The Parliament said we needed to help companies and nobody begrudged that sentiment. We passed laws on April 8 last year that had no detail – we basically had flyers passing around the chamber talking about what JobKeeper would do, but in actual fact all the legislation that we passed was a head of power and we left all of the rules to the Treasurer.

“He created an honesty system that said: if you predict that you are going to have a loss in turnover you can put your hand up and get JobKeeper. But he made a massive prudential failure that has cost us billions – in fact, it hasn’t cost us billions, it has cost our children billions because it came from debt. And it’s cost our grandchildren. That’s what’s happened here: no safeguards.”

How many billions were not needed? The best estimate comes from the Parliamentary Budget Office, which ran the numbers in response to questions from Labor frontbencher Andrew Leigh. The money was meant to go to companies that expected or experienced a fall in their turnover, but it clearly went to some companies that prospered in the pandemic.

The PBO found that 157,650 companies increased their turnover in the first three months of the scheme but collected $4.6 billion anyway. It found 195,381 companies did the same in the following three months, collecting $8.4 billion.

Leigh, an economist, says the $13 billion was wasted. He dismissed the government’s claim that this money helped save 700,000 jobs. “If those companies were creating jobs, they were doing it because their revenues were rising,” he says. “This was like a government handout to companies that were winning the lottery.”

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There is a broader measure of the JobKeeper largesse. The PBO told Leigh that $25 billion went to companies that did not experience the fall in turnover required under the rules. Companies with more than $1 billion in turnover were meant to show a 50 per cent decline, while the test was 30 per cent for smaller ones. Many saw their sales fall, but not by enough to meet the tests. Most kept the money.

Morrison and Frydenberg treat the criticism as an attack on the entire scheme. They will defend JobKeeper to the end, whether that comes at the next election or beyond, because it has become a brand all of its own. After all, it helped 3.8 million workers at its peak. Without the wage subsidy, the Reserve Bank said last December, one in five recipients would not have kept their jobs – the source of the claim that it saved 700,000.

Frydenberg insists it was right to let companies receive JobKeeper funds when they anticipated a fall in turnover because they could keep workers in the confidence the subsidy was coming. The goal was to provide certainty. Treasury advised him to keep this in the second stage of the scheme, from July to September last year. Only after that point, when the worst of the crisis seemed to pass, did the rules change so companies had to prove an actual fall.

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Would a Labor government force companies to repay some of the $13 billion? “It remains to see how much of it will be left,” Labor treasury spokesman Jim Chalmers told the ABC on Thursday morning. It is an unlikely scenario: a retrospective clawback. Frydenberg is probably hoping it becomes Labor policy before the next election. But the key point about the Labor position is that it supports the scheme while finding fault with the safeguards – or lack of them.

None of this is a reason for leaving Australians in the dark about who received $90 billion in extraordinary help. This week in federal Parliament, the last sitting until late October on the current schedule, was an opportunity for the legislature to insist on its power over the executive. It missed the chance.

This was in the same week the Coalition dismissed an attempt by independent MP Helen Haines to debate her bill to create a national integrity commission that would be much stronger than the government’s own. And the same week the government introduced a bill to shield national cabinet from freedom-of-information law.

Patrick, however, has one thing on his side. Stubbornness, and a lot of it. He will keep trying to force disclosure from the Australian Tax Office on the list of 10,000 companies and the amounts they were paid. The Senate passed an order on August 4 for Taxation Commissioner Chris Jordan to produce the documents. Jordan has refused.

It will be up to the Senate to decide what to do with a statutory officer who is defying its order. On this, at least, Patrick appears to have Hanson’s support. This will be a test of principle for the Senate when it returns in about seven weeks. Load the torpedoes.

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