Coronavirus: Business owner pockets $150,000 from Government wage subsidy, and he’s not paying it back | Stuff.co.nz

The managing director of a construction firm says he has made $150,000 profit from the Government’s wage subsidy, and he has no intention of paying it back.

Tony Black, of Black Steel, received $239,000 as part of the Government’s $10 billion emergency payout to ensure businesses could pay staff during lockdown.

Black says the shutdown has so far cost him about $80,000, and he’s planning to have his 40 employees back at work on Tuesday, when tens of thousands of workers in the construction, restaurant and manufacturing industries are expected to return to work under alert level 3 conditions.

Black says his business is in good shape and will likely emerge out of lockdown with plenty of work, but may still incur losses over the three month period that the wage subsidy covers.

“At the moment, I’m keeping that as security for my guys’ wages and stuff because I have to keep paying them.

“I don’t believe there’s any legislation in place to enforce anyone to give it back. It was just a stupid idea from the beginning from our Labour Government.

“I’m at a loss as to why the government gave away so much money in a lolly scramble.

Tony Black, is managing director of Black Steel.

“I’m going to use it to pay my staff and keep my cashflow up and ensure that my guys have still got a job in five months time.”

On Friday, Finance Minister Grant Robertson warned the Government was coming after businesses who had wrongly received wage subsidies.

He said $17.5m was being repaid by more than 1200 companies, most of which had been paid in error. 

A specialist investigations team from the Ministry of Social Development is working with the IRD to ensure the scheme was not being abused, and random and targeted audits into 2435 wage subsidy claims and 292 allegations of abuse of the scheme had led to 56 applicants being asked to repay just over $1m.

Robertson said the false claims represented a “fraction” of the 500,000 claims for $10.3 billion that had been paid out so far.

Black said the Government was “stupid” to pay out three months of wages in one go.

“We’ve got people making really big decisions without a lot of forethought, and it frustrates the hell out of me. Our government seems to be giving money away left right and centre.” 

Hagen Hopkins/Getty Images
Finance Minister Grant Robertson says there are a team of investigators keeping an eye on wage subsidy claims.

Black said his business, which does steel fabrication for residential construction in the Auckland area, had outgoings of $190,000 a month for rent, insurance and wages alone.

“The amount of money I need to keep running is massive.”

He said many other businesses in the construction sector didn’t need the millions of dollars in wage subsidies they received to survive.

And he accused the Government of overestimating the threat of the virus, pointing to Australia who have had a similar rate of coronavirus as New Zealand with less stringent lockdown measures.

“Had our Government stuck with level 3, we wouldn’t have needed that grant. It’s a physically transmitted disease, it’s not bubonic plague.

“Most people in this country haven’t got a clue what this is going to cost the country. They’re spending taxpayers’ money like there’s no end to it. 

“I’ve been through many recessions without any help. It cost me everything I had, and I pumped everything I had into it. Sometimes you’ve got to take the swings and the roundabouts.”

Black said operating in level 3 would present challenges, and staff would inevitably have to take more sick days.

“The second they get a sniffle or something, they can’t work. There are going to be a lot more costs running my business.

“I treat my staff like family. I’ve said as soon as we get down to the right level, I’m putting on a huge barbecue to say thanks. I look after my people.” 

A spokesman for the Ministry of Social Development said employers were notified at the time of applying for the subsidy that they may be subject to civil proceedings for the recovery of any amount received that they’re not entitled to.

“They could face prosecution for offences under the Crimes Act 1961 if they have provided false or misleading information; failed to meet any of the obligations about how to use the subsidy; or received any subsidy or part of a subsidy they were not entitled to.”

This content was originally published here.