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Economics Legislation Committee
23/07/2021

MITCHELL, Mr Joseph, Workers' Capital Lead, Australian Council of Trade Unions [by video link]

[11:25]

CHAIR: I now welcome Mr Joseph Mitchell from the ACTU. Thank you for appearing before the committee today. Information on procedural rules governing public hearings has been provided to witnesses and is available from the secretariat. Questions on notice are required to be returned to the secretariat by close of business, Friday 6 August. I invite you to make a brief opening statement, if you wish to do so.

Mr Mitchell : The Australian union movement is proud of its role in advocating for, and the eventual adoption of, JobKeeper as a response to the economic effects of the pandemic. JobKeeper helped millions of workers and small business operators get by during months of restrictions across Australia to ensure we brought COVID-19 under control. More than 3.5 million workers received it to keep them in their jobs, businesses operating and the economy going. The program was necessary then, and we must provide JobKeeper 2 now. As we speak, more than 15 million workers are in lockdown, and more under other restrictions. Workers and small businesses are making sacrifices to protect the community from the consequences of the failed vaccine rollout.

The current measures, as proposed by the government, are a farce. No-one can feed their families on the upper payment of $600 a week. In calling for JobKeeper 2, we're seeking support from the government and measures to address the gaps and flaws in the original scheme. While JobKeeper was necessary, it needlessly excluded swathes of workers as beneficiaries. Casuals, visa workers, university workers, childcare workers, performers and some aviation workers were carved out of the program without cause. Then JobKeeper was unnecessarily tapered, despite millions of workers still in lockdown. That these workers were carved out by the government and workers had their wages cut makes the rorting of the scheme so much more galling.

Many businesses, executives and directors used the opportunity provided by JobKeeper to line their own pockets or shunt millions to shareholders. Throughout the pandemic, the union movement has been campaigning against bosses misusing JobKeeper. We have seen billions of dollars in wage subsidies go to companies, including Qantas, manipulating JobKeeper to push down wages, reduce annual leave loadings and avoid paying penalty rates. Despite billions in public support for Qantas during the pandemic, they sacked thousands of workers and, just this week, are considering standing down thousands more. This did not stop Alan Joyce from receiving his $10 million salary. Other businesses, like Harvey Norman, paid dividends out of JobKeeper they received. The misuse of the lifeline for workers is a moral failing, but that the government has been opaque and has no plan to rectify it is a public policy failing.

As highlighted by Labor, the Greens and, earlier today, by Ownership Matters, there has been a significant proportion of the program rorted by executives and directors. Companies which paid bonuses to executives or issued dividends did not eventually need JobKeeper. The purpose of the program was to ensure that workers had the connection to their job as restrictions eased, not for dividends. The ACTU supports the ending JobKeeper profiteering bill as a measure to ensure both that companies which have abused the trust of Australians by profiting from the program are held accountable and that our single largest administered program is transparent.

The establishment of a transparency register for JobKeeper payments would be an important step in ensuring the public have a clear line of sight of the payments made and who they're made to. Australia is isolated globally for having not only a wage subsidy program but no means of public strict scrutiny of the payments made, with the United States, New Zealand and the United Kingdom affording the taxpayer a clear view of the use of their money. As designed in the bill, it would provide a greater transparency about whether companies that profited from the scheme have done the right thing and returned the money to the taxpayer. If they're not motivated by scrutiny, then the bill has a sensible and not unnecessarily punitive method of recovering the profiteered sum. The use of GST input credits allows for relatively quick repayments to the taxpayer, provided the business is going well. We recommend that the committee and the parliament support the legislation.

CHAIR: Great. Thank you for that. I'll hand over to the deputy chair, Senator Chisholm. Do you have any questions?

Senator CHISHOLM: Yes, I do. Thanks, Mr Mitchell, for joining us. Are you aware of reporting overnight that as much as $13 billion in JobKeeper went to firms whose turnover increased during the period they were claiming JobKeeper?

Mr Mitchell : Yes, we did see that last night. It's disappointing that the shortfalls in the scheme weren't made up for by the overspending of the scheme in other places. While some firms, probably in good faith, claimed JobKeeper, thinking that their firms would go worse during the pandemic, the fact that their turnover or their profits increased showed that they did not need the government support to keep their businesses going, and that government support could have been better targeted to make sure that workers who were doing it tough received the support that they were excluded from.

Senator CHISHOLM: Do you think the $13 billion going to firms whose turnover increased was really the intent of the scheme in the first place?

Mr Mitchell : No. Both in the union movement's advocacy for a wage subsidy and in the government's eventual adoption of JobKeeper as a method of delivering a wage subsidy, we saw the intent was to ensure that workers had connection to businesses, and businesses that were struggling had support. The intent wasn't to give it to businesses which were doing well. We see that because we know that the banks were excluded from JobKeeper, quite rightly, because they had significant resources and they weren't going to suffer hugely from the pandemic. It doesn't make sense to make some exclusions but not others.

Senator CHISHOLM: Is it your understanding of the scheme that the Treasurer did have sufficient powers to take steps to end the flow of taxpayer support to those businesses whose profits were rising?

Mr Mitchell : I don't know specifically. But there were ample opportunities for parliament to meet and reconsider it, and, if the Treasurer did have the unilateral power to re-target the scheme, then he had the opportunity and the information available to him to do that. We saw the re-targeting of the scheme when it ended earliest for childcare workers, which was a really unfortunate exclusion and an unnecessary one. We think that, if he had that power, he probably had the power to review the eligibility for the scheme of firms that were profiting from it.

Senator CHISHOLM: In your experience, in a failure like this, where 15 per cent of the program's funding is effectively the opposite of the intent of the scheme—would you say that's an acceptable failure rate?

Mr Mitchell : No, it's not an acceptable failure rate. It's in stark contrast to how the government treats and prosecutes other programs which it perceives as overspending. We saw workers get scammed by the robodebt scheme. We see people continually having to reapply to and being excluded from the NDIS. The government has its own standards when it comes to making payments to other people, but, when it comes to the treatment of companies paying dividends to their shareholders, it obviously has a whole different standard. Given the constant flow of information to the government, they surely should have had the opportunity to prevent this. Now they have an obligation to ensure that the taxpayers' money is recovered.

Senator CHISHOLM: I understand your support of this legislation, but would it also be the view of the ACTU that a government-wide messaging strategy putting pressure on those companies to repay JobKeeper and recoup some of those taxpayers' funds is appropriate, without having to resort to legislation like this?

Mr Mitchell : Yes. If the government were taking the first steps, then perhaps this requirement wouldn't be necessary. The establishment of a transparency register is critical for ensuring that companies have at least a moral and a public level of scrutiny over repaying JobKeeper. And, if the government were serious about recovering the money, they would be getting on the phone and they would be getting in the media and encouraging companies to repay JobKeeper where it's been misused.

CHAIR: Senator McKim?

Senator McKIM: Mr Mitchell, thanks for your attendance today and thanks for your organisation's support for this legislation. Would you accept that the original design of JobKeeper allowed companies to game the program?

Mr Mitchell : There's a trade-off between ensuring that government support comes out quickly and getting a perfect system. Given the rapidly changing nature of the pandemic, we saw that JobKeeper came out too late in the first instance. The government announced the early release of superannuation before they announced JobKeeper; they were dragged to announcing JobKeeper. At the end of the day, there will be a failure rate or a misallocation when it comes to such a large level of economic support. Perhaps the original design permitted that; however, as you go through implementation, you have opportunities to review and refine. So speed was entirely necessary, to ensure that we didn't have long queues at Centrelink and that we had workers retained with their employer and tethered to their employment relationship. As restrictions eased, businesses could start back up again, effectively with the skilled workforce that they had accrued over the years before COVID. We think there's an opportunity, even if you don't get it right on day one, to continue to work on improving it.

Senator McKIM: We are, to some degree, still in an information vacuum regarding the payment of JobKeeper to profitable companies, save for some of the work that's been done by organisations like Ownership Matters. You note in your submission that there are hundreds more examples of the payment of JobKeeper to profitable companies. Are you able to give a sense of the scale of this? For example, do you think the one-in-five rate identified for ASX 300 companies would be marketwide?

Mr Mitchell : It's hard to say. Listed companies in Australia represent a unique portion of the economy and don't necessarily scale up. A lot of the recipients of JobKeeper would have been small businesses and sole contractors, who, as we know, faced the most significant consequences of the restrictions. So it's very hard to scale up and determine the actual proportion of misallocated JobKeeper. Perhaps around large companies, the ASX is relatively representative. However, we wouldn't be comfortable with saying that it's truly an easily scalable answer.

Senator McKIM: Alright, thanks for that. Without necessarily naming names of companies, is the ACTU aware of any particularly egregious examples of profitable companies receiving JobKeeper? For example, there are stories of concreting companies getting JobKeeper, and they didn't miss a single pour during the whole pandemic. Are you able to perhaps use the fact that you're very close to the ground, that you have a lot of relationships, obviously, with employees? Are there any stories in general that you can share with the committee about particularly egregious examples of profiteering?

Mr Mitchell : The ones we're able to share are the ones that are already in the media. When it comes to some of the most egregious, we think that large retailers like Harvey Norman posting a profit and refusing to pay it back, while campaigning against increases in the minimum wage, are the most egregious. They obviously had an excellent trade selling supplies for workers who were locked down or needed to equip themselves to work from home, if you were lucky enough to be in that cohort. We think that those examples are the ones which the bill would rightly rectify, and we think that it would be a good outcome to see Harvey Norman and those kinds of businesses repay the amount. Other firms which received it and obviously didn't need it include investment managers. It's hard to say. When you have investment managers receiving JobKeeper—these people are probably on north of 200K a year—they obviously didn't need the wage subsidy and probably didn't notice it going into their pockets. It's just a bit galling, especially as, if they were competent, they would have had a north of 20 per cent return over the last financial year and posted an enormous profit. We should have less anecdotal evidence and much more hard evidence. The government know exactly who they paid JobKeeper to. They know exactly their business activity statements. They have all this information at their fingertips and they don't want to allow the government to have public scrutiny over it. We really need to rectify that situation, because it's basic governance to make sure that the taxpayers know how their money is spent.

Senator McKIM: Alright. Thank you. That's a lovely segue into my next question, which is around the transparency provisions in this legislation. Does the ACTU believe that increasing transparency would apply greater pressure to profitable companies to voluntarily repay JobKeeper?

Mr Mitchell : I think that the transparency register would achieve many good things. It would definitely increase public pressure on companies to voluntarily repay. We've seen examples. As the Labor Party and the Greens have highlighted through their public advocacy, pressure on companies does work, because they want to protect their reputations and they want to be shown to be a good corporate citizen. It's a basic team Australia moment to make sure that you're not misusing the Australian taxpayers' goodwill, by repaying the JobKeeper. Providing clarity about how the money is spent is a really important part of governance. We expect it from every government department and every government program so that we can have public scrutiny of the effectiveness of the spend. We should expect it and we should already have it. I'm surprised that we don't on our largest single administered program.

Senator McKIM: Alright. Thanks, Mr Mitchell, and thanks, Chair.

CHAIR: Thank you. Senator Patrick.

Senator PATRICK: Thank you very much. I might add that there are some Independents that have been calling them out as well, Mr Mitchell.

Mr Mitchell : My apologies, Senator. I should have—

Senator PATRICK: But it's a fair call. Just as a slight deviation, but related, we currently have a situation with lockdowns in New South Wales, Victoria and South Australia. Luckily there was only one new case here today in South Australia, but I think New South Wales had more than 130 today. Noting the objective of JobKeeper was to retain the link between the employer and the employee, do you have a view as to whether or not we should reinitiate something along those lines, particularly noting the expectation that New South Wales will stay in lockdown for some time?

Mr Mitchell : You're right. We should immediately restart JobKeeper. That workers are in lockdown as a collective effort to prevent more of their compatriots getting sick is necessary, but the situation that we're faced with now is not different substantively to the situation we faced in early 2020. The majority of the country is in lockdown. People are not getting shifts. They're not getting work. And they're doing it, in many cases, for the first time without the support of JobKeeper, apart from some people in Victoria. JobKeeper was necessary then and it is necessary again now. We can learn the lessons of last year and continually improve the program to make sure that it really does reach the workers that most need it. Workers in hospitality, tourism and construction in New South Wales are all finding it incredibly hard to get by. We need the government to act urgently now, as they did before.

Senator PATRICK: I suspect you're correct in that. But obviously, were we to move down that path, one would expect that we would learn from those lessons. We've got to concede the government did learn as it extended JobKeeper. It did tighten the requirements up. But I presume that you'd want to see some further tightening for a JobKeeper 2.0.

Mr Mitchell : Yes, we would. I think that, when it comes to the eligibility for JobKeeper and the effectiveness of the program, there are always possibilities to continually learn and improve the deployment and increase the targeting. We can put conditions on the payment even, to make sure that it doesn't get paid out as profit, or we can require that, if there are better economic circumstances than anticipated, the difference is repaid prospectively rather than the situation we're in now, where we're trying to clean a mess that has been created. There are also opportunities to make sure that the spend reaches more people and that it reaches the people that need it most now. The fact that casuals and visa workers and some aviation workers and some childcare workers were excluded from the JobKeeper program was ostensibly about fiscal responsibility. If you accept that, then you can accept that, if we've got a budget that allowed for profits and dividends, we could reallocate that budget. Rather than allowing for profiteering, we could reallocate that to make sure that casuals and visa workers are covered by the scheme and aren't left hungry and reliant on handouts to get by.

Senator PATRICK: That's a very good point. I just wonder about the comparison between JobKeeper and robodebt, where the government pursued people to recover debt, which we now understand was not in a lawful fashion—so in effect there had been no breach of the law yet the government determined that it was going to try and recover money. Do you see a parallel line in relation to where the government pursued people who weren't in breach of the law and yet are refusing to seek the return of money from businesses that, again, were not breaking the law but perhaps were mispurposing public funds?

Mr Mitchell : Yes, we definitely see that parallel. It's frustrating when people who are the most vulnerable are the targets of such a punitive government action. Robodebt really exemplified the fact that, when this government believes that money has been misused by recipients who aren't big corporations, it has the capacity to recover that or to get those people to repay it, but it doesn't seem to have the will to ensure that one of the largest expenses is being used properly. The way that robodebt played out was appalling. It should never have happened. There is definitely a startling contradiction between the treatment of the most vulnerable Australians and the most at-risk Australians at the hands of the government, through robodebt, and the treatment of the most powerful Australians and the richest ones who were the beneficiaries of profit from JobKeeper.

Senator PATRICK: So in your view, noting the way that robodebt played out, which was to pursue people who were not in breach of the law but perhaps had received more money than they should have, the proper course is in fact to pass legislation that seeks to recover things in an orderly and fair fashion. I presume you're in support of Senator McKim's bill.

Mr Mitchell : Yes, we are in support of the bill. The way that they've outlined it is quite clever in using cash flow as a method to recover the money and also giving companies that do have the capacity to repay the opportunity to do so immediately, and a lot of companies will have the capacity to repay immediately. We think that doing it in a really transparent way is important. Companies should be encouraged to do the right thing at the outset. If they do not, we should have a method of making sure they do. When we all came together to provide JobKeeper for these businesses we did it on the expectation that the money would be used in a certain way, and in a lot of cases it hasn't.

Senator PATRICK: Obviously you have no issue with the transparency issues that are proposed.

Mr Mitchell : No. We think it's a really good idea to make sure that the government and the public have line of sight of who received the sums, how they received them and how they went. It's a really important way to make sure that any program is transparent. We expect that there's transparency associated with every other expense of government. The government is very proud of the program. We're proud of our participation in it. We should be happy with the scrutiny.

Senator PATRICK: Were registered organisations who are unions in receipt of JobKeeper?

Mr Mitchell : I don't think they were.

Senator PATRICK: That's it for me. Thank you very much.

CHAIR: Mr Mitchell, some of the previous witnesses who supported the transparency aspects of this bill said that they couldn't support the bill overall due to its retrospective nature. Do you have no concerns about the retrospective nature of this bill in saying you support it?

Mr Mitchell : I think it's less retrospective and more asking businesses to commit to a promise they made when they received it. There was an expectation that the money would be used properly and would be used in a way to support the workforce, and that expectation hasn't been met in some cases. It has in a lot of cases. There are a lot of businesses that would not be affected by this and that think that meeting that expectation through the use of a compulsory method wouldn't be too much of a problem.

CHAIR: So you do support the retrospective nature of the bill?

Mr Mitchell : Yes.

CHAIR: Thank you very much for your time today. That's all we have. You go with our thanks. That concludes today's hearing. I thank all those who have made submissions and provided evidence for their cooperation in this inquiry. I note again that the questions-on-notice return date is 6 August. I thank you all.

Committee adjourned at 11:53