Frydenberg’s ‘clawback’ comments miss the point, as SMEs “caught in the crosshairs” of JobKeeper debate

Treasurer Josh Frydenberg has defended the government’s stance of not claiming back JobKeeper cash from companies that saw significant profits during last year’s COVID-19 lockdowns, saying that a so-called ‘clawback’ provision would have put businesses off from applying in the first place.

But according to COSBOA chief Alexi Boyd, that’s a debate that misses the point, as small and medium businesses risk being “caught in the crosshairs” of the JobKeeper fallout.

In an interview on the ABC’s 7.30, the Treasurer suggested that any suggestion that businesses may have been asked to repay JobKeeper would have led to reluctance to take part in the scheme

“If [businesses] were going to have to pay back that money, they wouldn’t necessarily have taken it in the first place and we would have seen jobs being lost,” Frydenberg said in the interview with Leigh Sales.

He also noted that the government and businesses alike were “staring into the economic abyss” at the time.

“The businesses that received JobKeeper were in the face of one of the biggest economic crises that this country has ever seen.”

The JobKeeper program boosted confidence among consumers and business owners, and Frydenberg went so far as to credit the scheme for the success of some of the businesses that went on to turn a significant profit.

“In many circumstances, the businesses that received JobKeeper desperately needed it, and without it we wouldn’t have seen the strong economic recovery.”

Speaking to SmartCompany, Alexi Boyd, chief executive of the Council of Small Business Organisations Australia, says the issue is less around whether small businesses would have been dissuaded from taking part in Jobkeeper, and more that any clawback provision would have been considered in the process of deciding to apply.

When a business applies for any support measure — or makes any business decision at all for that matter — that they are aware of anything they may have to deal with later down the track.

That relies on the “rules of engagement” being clearly laid out, she says.

“Changing the rules after the fact is what is concerning for small businesses,” she says.

“It sets a precedent in the public domain that this could occur.”

SMEs “in the crosshairs”

Data from the Parliamentary Budget Office, and first reported by the ABC, has revealed that about 20,000 businesses actually saw turnover triple in the June quarter of 2020, compared to the same period of 2019, yet received a combined $368 million in JobKeeper subsidies.

A further 15,000 businesses doubled their turnover, and received a combined $322 million in JobKeeper cash.

While some of these businesses quickly agreed to repay the subsidy, there has been nothing requiring them to. The scheme was based on forecast turnover, not actual turnover, and the government has stuck to its guns on that.

This week, Harvey Norman announced that it has bowed to public pressure and returned $6 million received in JobKeeper funding, after posting record profits for the 2021 financial year.

The admission has led to further calls for more transparency into the JobKeeper scheme, particularly from Labor MP Andrew Leigh, who referred to payments to highly profitable companies as “the sort of flagrant misspending of money that you’d expect to see in some tin pot dictatorship, not in a well-run economy like Australia’s.”

Elsewhere, Independent Senator Rex Patrick has called on the Tax Commissioner to publish details on the amount of JobKeeper payments received by businesses with an annual turnover of more than $10 million — a proposal that has not exactly been met with open arms.

When small businesses engage with the ATO, they have to have a certain level of trust that their information will be secure and confidential, Boyd says.

“We’re all for transparency, and we’re all for a fair and equitable system.”

She also, of course, supports a proper auditing process to hold those that illegally rorted the system to account.

But, listed businesses always knew they would have to report their JobKeeper earnings in their results reporting. For small businesses, that was never part of the deal.

“You can’t go changing the goalposts,” she says.

“It’s going to put small businesses in the crosshairs … for ill-informed blowback.”