The MSD knows that the wage subsidy has been subjected to abuse ranging from school children, couriers, consultants and farmers through to large businesses and an Auckland woman who received over $35,000,000. Some employment agencies were paid up to $23,000,000 for everyone on their books.

In each industry there were many businesses that did not claim or repaid the wage subsidy but there were many others who claimed the wage subsidy when they were working from home. Some went on to claim the extension wage subsidy when they were back to normal and catching up.

For example, Kirk Roberts Consulting Engineers Ltd 113 employees $774,537.60

Extension 107 employees $478,808.

Note Tonkin and Taylor Ltd, engineers repaid $5,253,496 Also Holmes Group and Beca Consolidated Group repaid.

Real estate agents claimed the extension wage subsidy when they were very busy.

Employment agencies claimed up to $23 million for temporary workers they had on their books and one claimed for the extension after the lockdown and when they were very busy.

Some large retail chains claimed the Auckland resurgence wage subsidy for staff working around the country. An Arthurs Pass business claimed for the Auckland lockdown.

Farmers, orchardists and other businesses doing essential work were able to work during the lockdown but many claimed the wage subsidy for their staff. If farm or orchard is entered in the MSD employer search, 5 employers come up with a message that there are more but access is not available. Other businesses include fish poultry meat dairy freight transport courier architect engineer etc. These were essential services or were able to work from home.

The MSD could deal with them and other types of essential businesses but it has not bothered to do this.  Many who claimed the extension wage subsidy were working normally or doing more than normal to catch up so they could not validly claim or retain the subsidy based on a genuine 40% drop in revenue.

Team New Zealand was not a trading business so had no genuine drop in revenue.  However, they claimed over $1,500,000 for the first three subsidies.  The MSD has failed to take any action.

The MSD has basically ignored over four thousand wage subsidy fraud complaints. This includes a few OIA requests we sent in to find out how they justified their decisions.

MSD OIA reply 23 December 2020

REPAYMENTS

The MSD said that it was not considering making changes to the Declaration, which it had been agreed they could make.  Also, they were not considering writing to recipients, even though they had been sent some macro data by us and they had access to a lot of other data showing that there had been a big increase in business activity after the lockdown and so overpayments should be repaid.  The repayments made by over 17,000 recipients indicated that far more would repay if asked to do so.

MSD REPLY 15 FEBRUARY

QUESTION  “The wage subsidy was described by some people as a high trust model and so applicants were required to agree to have their details made public. If individual applicants agreed to waive their privacy rights in return for receiving the wage subsidy, why have their names and other details not been published?”

ANSWER  “The Ministry developed an online Wage Subsidy Employer Search tool (search tool) with close involvement from the Privacy Commissioner to ensure compliance with the Privacy Act 1993. The group the Ministry was particularly concerned about, from a privacy perspective, were sole traders, as the publication of their information on a public register is also the publication of personal information and would reveal that they are personally receiving financial support. The Ministry is conscious that for some, there is stigma around receiving government support.”

NOTE:  The names of individuals should have been published, as agreed, because the MSD knew that school children, farmers, consultants, couriers etc were abusing the scheme and that anyone employing more than one person had their details published.

Evidence of the MSD lack of interest in checking out complaints about recipients, can be found in the responses we have received to OIA requests for information about some companies.

The following files are examples of got the extension or resurgence wage subsidy when staff were working normally or for staff working outside Auckland.

Wage subsidy Real estate agents claims

Anne Norman keeps $35,000,000

Farmers, Whitcoulls, Pascoes and other retail chains.

MSD AWF Limited

EXAMPLES OF MSD FAILING TO PROPERLY DEAL WITH COMPLAINTS

1. Adecco Personnel Ltd

2. Claimed $14 million for temporary workers

3. MSD Adecco Personnel MSD response

4. MSD Fletcher Building     Note that a June 2020 article said that staff had been asked to take pay cuts of up to 70% and that 10% of staff worked during the lockdown.

5. MSD Rainbow Print    These Christchurch printers were paid the extension and Auckland resurgence when working normally.

(MSD REPLY 15 FEBRUARY)

On 15 February information was provided on how to get the latest wage subsidy statistics. At 12 February 2021 18, 225 recipients had repaid a total of $713.90 million. In the two months to 12 February $177 million was repaid as a result of publicity about abuse. This indicates that far more would be repaid if requested by the MSD.

At the end of the 15 February email in Appendix One there were    details of part and full repayments with about a quarter being full repayments.

The initial wage subsidy was mainly paid out in April 2020 but by the end of June 7100  recipients had repaid $205 million.  As three quarters of repayments were part repayments, it is clear that some recipients accepted that being paid for 12 weeks but only being closed for 5 or 7 weeks meant that a partial repayment was required.

There have been over 150 articles and news items about overpayments and abuse of the wage subsidy and these have resulted in a steady flow of repayments. Despite knowing that most recipients were overpaid and that there was widespread abuse of the wage subsidy scheme, Government Ministers have failed to comment on the situation and an email has not been sent to the estimated 700,000 recipients who should be making part or full repayments totalling over $5,000 million.

Auditor-General report May 2020

3.12   There has been considerable media coverage of, and public interest in, some private organisations that received a subsidy payment. This is particularly so for those that, despite experiencing or projecting a reduction in revenue, have nevertheless paid a dividend to shareholders or otherwise shown financial robustness.

3.13   This does not necessarily prevent private organisations from being eligible for the subsidy. We do not audit private organisations, and we have not assessed the eligibility of any private organisation that received a subsidy payment.

The August 2021 Finance and Expenditure Committee report stated that: “During the first two third wage subsidy periods:

• • MSD received approximately 943,100 applications under the wage subsidy scheme;

• • MSD made payments totalling approximately $13.385b in relation to approximately 735,270 applications.

• • MSD closed approximately 75,480 applications; and

• • MSD declined approximately 132,250 applications.

It is not clear what MSD means by 75,480 closed applications but they may have got no response after contacting the applicants and about 20,000 recipients repaid. The total of closed and declined applications is 22% of the total received and this was after making a couple of quick pre-payment checks under a high trust model.  This indicates that if proper post payment checks had been made a huge amount of fraud would have been uncovered.

A researcher with a PhD and inside knowledge has carried out research on how a third of Christchurch firms of consulting engineers and over half of Christchurch law firms claimed and retained the wage subsidy despite working from home during the lockdown and suffering little or no loss of revenue. Law firms had increased revenue due to the high demand for advice. Two well-known law firms did not apply and Publicity about other well-known law firms forced them to repay. Some firms claimed the extension wage subsidy for an extra 8 weeks when they were back in the office and working normally. Other Christchurch firms claimed for the August Auckland lockdown wage subsidy.