Stakeholders influence inappropriate

A December 2020 NZ Herald article revealed that on 2 March 2020 Business New Zealand executives had a meeting with officials and the Prime Minister and the Minister of Finance. Business New Zealand proposed a wage subsidy scheme and two weeks later Cabinet approved a wage subsidy which required businesses to have an actual or predicted loss of revenue for one month.

(It is noted that Business New Zealand has a record of making false or misleading statements to the news media. This included making several false statements about what the ILO said about a New Zealand Fair Pay Agreement.)

About 4 days before the first lockdown was announced on 23 March, the Prime Minister and Minister of Finance had a telephone conference with business leaders and they agreed on what would happen with a lockdown. There was no meeting or telephone conference with anyone representing the interests of citizens.

The December 2020 Herald article also said that the Treasury later repeatedly offered to provide advice on allowing the construction sector and other sectors to work during Level 4 but these offers were not taken up.

The Minister of Finance later in the year said in a Newsroom article that he was sticking to a deal done with businesses but it is not known what the secret deal was and what benefits he got in return.

A 27 November 2020 report prepared for the Minister of Finance and other Ministers provides a lot of details about what Business New Zealand and other stakeholders said at a meeting. They either represented those who received the wage subsidy or they had been paid it. Obviously, they were happy with the big overpayments and the money-making loopholes so they did not suggest any significant changes to the scheme. Trade Unions received the wage subsidy and their representative at the meeting may have had no idea of how MSD officials had allowed the scheme to be abused. No stakeholders were at the meeting representing the interests of those on modest incomes and future generations who would have to pay the $14 billion cost.

The Stakeholders had huge conflicts of interest but the report relied heavily on their views and recommended that they be consulted again before any changes were made.

It does appear that officials have set out to cover up the billions of dollars of mistakes they made.  Instead of meeting with those who could make a lot of money from the scheme, they should have met with independent accounting, tax and legal experts.  These experts could have pointed out the major flaws in the wage subsidy scheme and recommended changes to close the main loopholes.  Others present could have been representatives with accounting and business experience from charities who did not claim or retain the wage subsidy.

Stakeholders complained about the constantly changing rules but this did not happen and they may have just been looking for an excuse to explain widespread abuse. However, if anyone contacted the MSD by phone they may have been told by staff what experience with beneficiaries and common sense dictated rather than used a different approach which MSD said that it had developed.

(Minister of Finance OIA February 2021)


Joint Report: Future of the Covid-19 Wage Subsidy Scheme

Stakeholders emphasised a key factor in the scheme’s success was the certainty and confidence for employers provided by rapid, lump sum payments, and a simple, high-trust application process.

Engagement to date has revealed support for rapid payments and simple settings but also concerns about scheme clarity, consistency, fairness and the interaction with employment law. Frequent changes to the scheme have generated confusion and frustration for applicants.

MSD OIA 26 February 2021 D

(Second half)


“We have considered some potential options for additional repayment rules, should Ministers wish to consider these. All options would need further exploration with stakeholders and would be subject to further advice.”

However, we do recommend some clarifications of the existing obligations including:

1. Working with stakeholders to develop a framework for the existing recovery approach (including civil proceedings or prosecutions, for example where false information has been provided)

These quotes indicate that officials were focused on helping businesses rather than looking after the best interests of the community and future generations.

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