Number of people on Jobseeker Support increases by 20% in a month; Only 0.17% of wage subsidy payments found to have ended up in the wrong hands

Number of people on Jobseeker Support increases by 20% in a month; Only 0.17% of wage subsidy payments found to have ended up in the wrong hands

The number of people on Jobseeker Support increased by a fifth from mid-March to mid-April.

New Ministry of Social Development (MSD) data shows an additional 6,991 people went on Jobseeker Support in the week to April 17. In the month to April 17, 29,624 people went on Jobseeker Support, bringing the total number of people on this benefit up to 174,630.

All eyes are on what support will follow the 12-week Wage Subsidy, which has paid out $10.4 billion to support 1.6 million workers.

New figures show only 0.17% of the amount distributed has been found by the MSD to have been paid to recipients who don’t meet the criteria.

As at April 21, MSD had asked 56 recipients to refund a total of $1.25 million.

Meanwhile 1,281 recipients voluntarily advised MSD they shouldn’t receive the subsidy. MSD has requested a total of $16.2 million be refunded by these recipients.

Yet of the $17.45 million that has ended up in the wrong hands, only $7.07 million has been returned to the Government.

A team of 104 fraud experts and investigators are auditing the system, with the help of the Inland Revenue and Ministry of Business, Innovation and Employment.

Applicants have been told they would have to repay the subsidy if they provided false or misleading information in their application. They may be subject to civil proceedings for the recovery of any amount received that they aren’t entitled to, and/or prosecuted for offences under the Crimes Act 1961.

The Minister for Social Development, Carmel Sepuloni, said: “For some businesses, circumstances change following receipt of the subsidy, including where insurance may have been received, or new revenue forecasts show the business won’t suffer a 30% drop.

“A number of businesses have come forward when this happens by offering to repay the subsidy, and we encourage any business who may have made a mistake to do the same.”

The 12-week Wage Subsidy is available to employers, contractors, sole traders, self-employed people, registered charities and incorporated societies that can show a 30% decline (or expected decline) in revenue for any month between January and June 2020 compared to the same month in 2019.

They have to pass the full value of the subsidy on their employees.

MSD has completed 2,435 random and targeted audits. 2,252 of these have been resolved and additional reviews of 183 cases are being undertaken.

It has received 292 allegations, 88 of which have been resolved, with the balance still being worked on. As at 20 April, 1,170 complaints and allegations had been received across MSD, MBIE and IRD.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

64 Comments

Speaking of wages....

The Warehouse has asked some staff to take a 10 to 20 per cent pay cut or face redundancy....staff earning above $100,000 were asked to take a 20 per cent pay cut.

"But it's only temporary!" Sure it is....

It's a one-way street alright.

You never see the 20% payrises to the staff on the ground when things are going well.

These aren't putting cuts onto the frontline workers.. They are limitied to staff earning over $60k year, which I imagine is at least department manager if not store manager level. Its not teh checkout operators or shelf stackers that are affected. They are being moved to living wage levels - https://www.stuff.co.nz/business/money/115429143/the-warehouse-to-pay-th...

Noncents, so you never give a raise to you staff?

"Always pay your staff, more then THEY think they are worth, and if you've chosen your staff well, they'll live up to it"
(Perhaps a policy from another era!)

Yes - an era, long since gone. Current one appears to be - hire your staff overseas, pay less than minimum wage, threaten them with deportation if they don't do 100+ hours per week.

Claim that all is good, and that locals are (Choose one or more) [druggies] [lazy] [unqualified] [asking for minimum wage, or heaven forbid a living wage]

I don't have staff at the moment. When I did have staff, I always give them as much as the overlords controlling my budget would allow.

Having worked in Payroll/HR. I can't say I ever saw across the board 10%, 15%, 30% etc... pay increases. Maybe CPI, maybe 20% for an exceptional employee. A lot of companies do bonuses, but again bottom level staff usually get a percentage of a percentage. I can't imagine floor staff getting a 20% bonus.

Ironically the CEO and Exec team are usually on the 50% bonuses when things are good, when things are bad, they usually still wing a bonus by reducing the salaries of those below them.

I can categorically say that in 20 years I have never, ever, heard a company say "Oh look company did well this year everyone gets 20% pay increase"

"All eyes are on what support will follow the 12-week Wage Subsidy, which has paid out $10.4 billion to support 1.6 million workers."

Would more subsidisation be required? My understanding was that once we get to L2 most of the country would be back to work. If that's the case stimulus is probably best applied through consumers since ultimately they dictate the speed and scale of the recovery.

I and my partner for the wage subsidy.over 14 thousand between us...we had it in the bank for three weeks and returned it back to the government through terminal tax then some more....I'm guessing thousands more business owners did the same!!!!the goverment will get most of it back soon enough

They need 104 people to investigate? With the compliance systems in place, surely those that shouldn't be receiving will be self evident in financial reports. Those that have knowingly recieved should be told they will be fined, and penalties will be payable at 14% per day. They will soon sort their books out. Why spend more on 104 investigators! Govt needs to take a serious look at it's own spending/costs.

They need 104, because it is highly likely their are thousands of dodgy claims. This first 17mil is just what they have discovered in the week or two since they made everything public.

If they had 208 investigators I am guessing they would have found $34mil in the same period.

What are they doing paying dodgy claims in the first place. This is no way to run any form of administration, you certainly couldn't get away with running a business in such a manner. What a complete waste of time, effort and money.

Yes, no-one would ever run a business like this...

Time for GR to step aside...get someone in who knows how to create jobs and get the economy moving again. Otherwise this is going to get a whole lot worse. Tell industry now what you have in place, how the funding is going to work, stop waiting for the budget so you can get in the limelight, these are peoples lives you are destroying while we wait for detail and answers.

These types of situations are more complex than just replacing the Finance Minister...but I'm sure you're aware of that. Thoughts on Rob Fyfe and his role? Or is this an anti-Labour rant?

Remember that this situation is only just starting out. Ray Dalio thinks this is going to take about 3-5 years to work through before we come out the other side of it - probably in some completely new form that we don't understand yet. So I wouldn't focus on one invididiual, its much bigger than that (in my opinion).

I realise that but the wage subsidy is not going to be the long term answer and it's not going to stop these companies laying of thousands and thousands of workers. If they have a plan in place to create other jobs (which I hope they have) and they can't roll it out in the 12 weeks, then they need to extend the subsidy, but I doubt they can afford another 10 billion. That is a lot of $ that could be spent employing people to build something or create some real productive benefits. It may be a 3-5 year recovery but they can not afford to wait 6-12 months trying to work out how to fill the gap. I do not care who is in power, but whoever it is needs to act....and give the industries/people a heads up and promise help is on it's way, at the moment it is just kicking the can down the road.

We've been kicking the can down the road since 2008. The can is now so big and heavy that if you try and kick it any further it breaks your leg. Which is where I think we might be at - along the lines of Dalio's thinking. The end of this long debt cycle.

We could have 30% unemployment for years while we organise who gets what and how the new debt system is going to work. I don't think its just the case of government will allocate some money and everything will be back to normal. We could have significant social/political and financial challenges the next few years and who knows what is going to happen.

Isn’t he the guy who has been screaming “cash is trash” for the last year or more? Well, I’d certainly rather have cash right now than a whole pile of debt that I can’t service.
Anyway, as we are going full socialism on steroids, the “evil” employers will need to be sorted out and/or destroyed so that our caring govt can take over as the country’s chief employer. They are so kind and compassionate, so we have nothing to worry about.

So the opposite will fix these problems? I.e. we will put a right-wing pro neoliberal government into power to run things so that we can create economies based on more debt so we can make all of these problems better?

This is much bigger than a political issue - this is probably a change in system as we know it. Something we've never experienced in our lifetimes. Taking shots at Labour right now is insignificant in my opinion.

I guess we'll see - he might be quite right on the cash call when the dust settles. It may be rapidly devalued.

"The can is now so big and heavy that if you try and kick it any further it breaks your leg. "

Hang on, don't you just take a loan/print money and buy a better leg?

Haha yes but the can gets heavier at the same time

Oh you poor poor person :-) you just don't get it. You just take an even bigger loan, and buy an even better leg.

All the economists in all the Treasuries, Governments, and Reserve Banksof the world surely no more than us mere mortals. I hear them everyday..."To inifinity and beyond!"

Wow, looking for miracles much.
Sounds like no matter who's in or what they do you are going to be very disappointed cause there's not going to be any really easy, instant answers to getting people working.

Not only do they not know what they're doing (talking business here) but they don't really care either. We're just the workers, we're not that important to the left of centre thinkers. It's the poor under-privileged types that have been shat upon for a century & a half, that really matter. They're the special ones. And for them right now, nothing's changed.

The Public will only cooperate for so long before all hell breaks loose. All this twaddle about being “kind to each other” may work for a short while, but when your job goes, your home is up for mortgagee sale, your car, TV and washing machine gets repossessed by the HP lender, and you can’t even afford food and clothing, then all this”be kind”crap will be thrown out of the window. In time people will look back and say why couldn’t we keep working and earning and take the risk? Some will die, regrettably, but the vast majority will live and continue enjoying their lives and futures, even if a bit constrained. Within living memory we, or our grandparents lived through Diphtheria, Cholera, Small Pox, Polio, Typhoid, Yellow fever, STDs, Mumps, Measles, Manchuria Influenza, Leprosy, Tuberculosis and many others, but they continued to thrive, do business, party and carry on without bunkering down like frightened rabbits. And we are all here as living proof that they survived through it all. Are we going to pay a huge price that massively exceeds the benefits?

You didn’t mention AIDS. Killed 770,000 in 2018, according to WHO, and around 30 million since the 80s. Or the two world wars. So far, Covid has killed 0.00003% of the world’s population, 200,000 out of 7.8 billion, one in every 35,000 or so. Our death toll is around one in every 270,000.

This an interesting link, to a Nature magazine article on Sweden.

https://t.co/nXYpoUnTJ2

Arsenic deaths are so low. They should just allow the use of arsenic. Look how many more people have died of AIDS and the wars than arsenic.

And they shouldn’t allow the use cars. Would save 350 lives a year. Or allow people to smoke cigarettes. Would save 6000 lives a year.

BigD - if you want to take that stance, would you then agree that those who decide to go back to work outside a government mandate therefore become ineligible for public healthcare? I.e. no hospital admission, no ventilator. You die in your bed at home if you get sick.

Many have already paid a massive price living the way we have for the past 20 years. How has it been for you?

That would be ridiculous.
If they take the chance they accept the odds.
But refusing treatment would be a step to far.

Why? You deny the public effort of a utilitarian response to the disease to chase personal profit while putting others at risk, yet expect special treatment if you fall ill?

If you work you pay tax which pays for that healthcare. It dont come free.

All I'm saying is you either follow the rules set by government or you don't. And those rules are for the benefit of society as a whole, not any given individual.

If you decide that you, as an individual, are more important than society as a whole and decide to not follow the rules and get sick, no help.

Get rid of them then and let the govt take over all businesses and then see what happens. Venezuela, here we come. The people haven’t figured out that the virus is the least of our problems and the govt has caused the majority of our problems. When they figure it out I’m guessing they’ll be angry. Bob Jones might end up being right and this govt will get turfed out at the election. Sadly, no viable contenders for replacement, so it will be a case of the govt giving the election away and not a “win” by the opposition.

Selling our houses to rich foreigners has been a good policy under National? Pushing prices up and creating more private debt that will now make the economic challenges we face even worse?

Have you ever not voted National?

Clarke started it. Key carried on with the immigration policy. Selective memory Independent Observer.

And the current government ended it, while the previous government encouraged it, and the current opposition talk about bringing it back.

You have a point ;-(

Jenee...

A team of 104 fraud experts firm msd? MSD investigate solo mothers.

Do they have 104 staff with understanding of commerce, accounting, payroll, associated entities etc to investigate business?

No they don't...and they still found $17mil. Imagine what competent people could find.

Reported by the public, not found.

How can the IRD or MSD determine what the fall of income is at this point. You are right. Our contracting business hasnt worked for 5 weeks. Yet we are still getting invoices paid. Going forward there will be no income.

Get your head around that for a second. 1.6mm people on wage support out of a working population of 2.65mm.

If our Ue is similar to the recent US numbers then we are looking at 500,000 people losing their jobs, another set having hours cut and more still taking pay cuts.

V shaped recovery ? not a chance.

Depends how soon we get out of lockdown. The longer we are in lockdown the less chance of a sharp recovery, but if May 12th we come out to level 2, and say another 2 weeks later back to level 1 I think recovery will be very rapid (excluding the tourism/hospo dependent parts of the economy, they're toast..)

That is a mighty big exclusion you have there...

Many people will be a bit cautious about spending after we get out of lockdown, which will be a drag on the economy. The velocity of money will decrease.

Restaurants and cafes, well, they will be an endangered species shortly. It will take quite some time for people to return to cafes and restaurants. The ones that didn't go bankrupt prior to returning to level 1 may do well... although they will still struggle for quite some time.

The AirBnB crowd, well, they are SooL. I look forward to my upcoming winter holiday, I should be able to score a nice holiday rental at a rather low price.

The recovery will not be sharp. It will be a very long slog in very sticky mud. Ignore the stock market numbers, they are driven by loose money attempting to find return. That will not end well. As an example, I am amused at the AirNZ share price. It has decreased by about 50% at present. Their estimate of revenues over the next year has a decrease of 90%. Their capital costs will not change by nearly the same amount as their revenue, which bodes rather poorly for their future profit.

yep, were not going back to where we were, but whatever the new lower level is, we will get there a lot quicker than the doom and gloomers here are making out.. if we get out of this lockdown shortly. If it drags on for another 6 months for some reason, then yep, all momentum in the economy will die off and then we are looking at a long recession.

I don't agree Pragmatist. Just one builder in Cromhole has had 6 phone calls, all 6 were people cancelling new houses. That was his work for the next 18 months.
There is no quick recovery happening even if we came out of LD tomorrow

There is a lot more to the economy than just housing.

Yip you are dreaming Pragmatist. As per comments above. I heard an accountant describe part of the problem. A small business's profit may commonly be 10% of income. This 6 week shutdown has just cost them 10% or more of their annual income. So assuming business as usual when restarted (humph) they are underwater all year anyway.

Overseas experience is that even out of lockdown no-one is out spending. This is because the Govt created a mass hysteria amongst the populace in order to control it, aided and abetted by the media. Lockdowns weren't imposed on the basis of science, but in a panic over armageddon style forecasts, made by scientists looking for attention. These models have been significantly revised several times by their authors, but their "oops, I was wrong" mea culpa means little now that the world economy has been already destroyed. However, the terror remains - and perfectly rational people who are young, fit and healthy seem somehow convinced that if they step outside their door they are going to die. Which of course is a load of complete codswallop. The Govt won't want to admit fault, so they will continue to push the terror narrative, and people will continue to be scared, and consumer spending (which is 70% of GDP) will continue to die off, leading to a vicious cycle where businesses still operating will have to lay off more staff and cut more costs, which create more unemployed people and reduces consumer spending even more.

Your tinfoil hat is too tight.

And just seen GR on TV addressing the wage subsidy shambles. $11 billion paid out to just about anybody who put their hand out.
This is the criteria:
“The business must have experienced a minimum 30% decline in actual or predicted revenue over the period of a month when compared with the same month last year, and that decline is related to COVID-19“
Predicted!! Any one month!! It’s particularly mad for part time workers, who don’t even need to have earned the amount of the subsidy.
Why not have made the subsidy a long term interest free loan, possibly offset against payroll KPIs?
And just to hammer the point home: $11 billion dollars, more than $2000 for every man, woman and child in the country. In just over one month. You could be a high earning professional and still get it. And I do know of a few who have. And a cafe owner who claimed $350 for a part timer he paid $80 a week. Madness.

I’m not saying workers don’t need support, just that this is an ill conceived, amateurish scheme that is open to abuse.

The problem it was addressing was that so many folks live pay packet to pay pack that dislocate this process and hundreds of thousands of people are in a credit death spiral.

I agree it's a blunt and bloody expensive action that could have been better but at the end of the day the only thing it's done is kick the can down the road.

If we get 500k+ new Ue any actions by the govt aren't going to relieve the misery of many many people.

Exactly. And my point above. How will solo mother investigators from msd challenge the 30% prediction calculations and other such financial trickery?

yep,,,,you hate this my two kids had PT jobs afters-school/weekend at restaurant...casual contracts..they both getting the 350 a week from there employers...more than they ever made working...Good for them...bad for taxpayer...this is EQC shambles from govt all over again.

But that's the whole point. It was a simple way of helicoptering the money in with very little admin. It was never meant to be a targeted drop other than pretty wide targets.

It should have always been given directly to the employee. Just like the maternity payment.

The up front payment based on a possible forecast was just idiotic.

No it hits two birds with one stone. As well as the employee getting paid it will also have a huge positive effect on company cash flow with twelve weeks paid in to start and dribbling out again over 3 months.

Does it though? What exactly is the company doing with this cash?

From what I have seen most (There are exceptions) companies have;
1. Delayed/stopped payment on all invoices.
2. Stopped paying rent.
3. Forced requested staff to reduce hours, reduce wages, or just made them redudant.
4. They aren't banking it.

So "when you have eliminated the impossible, whatever remains, however improbable, must be the truth?"
My guess is it is being used to prop up the books until the execs/board can figure away to pull it out for themselves.

Yes I am cynical and would like to be proven wrong, but I wont hold my breath.

Oh yeah exactly nailed it for many. I'm not saying it's right just trying to put forward what I see them trying to achieve. Mostly I'm just pissed that I'll be around 70% down for April and still can't apply it being only due to dry. Anything like that would be propping up my cash flow so that's where I see it.

[Please read sarcastically and with humour intended]

Well you farmers aren't real businesses. You don't produce anything valuable other than farts and waste that destroys the world. We don't need food...what we need is debt...oh, and foreign buyers for our houses.

I am sure they will up the carbon tax on cow farts in the next budget to recoup their horrendous overspend.

I'll agree some will be doing that but others no.
Talked to the garage owner down the road he's shut for now, but paid all the bills and is paying his staff full wages. He's looking after them for good reason.
I've paid all my bills in minutes of getting them. We need the money to keep going round and there's only one way that will happen.

And when you run out what then?

Yes I agree that the way the wage subsidy was paid out is increasing compliance costs and open to rorting. I have claimed 26k in wage subsidy for staff and myself but will be paying out 33k on 7 May in tax. They should postponed payment of tax and MSD should have paid employees directly instead of getting business owners to go with begging bowls to MSd

Your access to our unique content is free - always has been. But ad revenues are under pressure so we need your direct support.

Become a supporter

Thanks, I'm already a supporter.