New Zealand considers prosecution against misuse of wage subsidies

New Zealand’s Auditor-General’s office is urging the Ministry of Social Development (MSD) to prosecute companies that have misused the wage subsidy scheme, and step up efforts to get public money back from companies that should not have received them. 

“Reviews of applications after payments were made consisted mainly of verbal confirmation of information from employers and, in some cases, employees,” states the report by the Auditor-General’s office.

“In most cases, these reviews did not involve substantiating the facts using independent, or at least documented information,” it added. 

“The subsidy scheme was put in place very quickly and on a large scale and that support was available to people at a time of crisis … and that was possible due to a high-trust approach that was used and there are some risks with a high-trust approach and we’ve looked the steps that were taken to manage those risks and to mitigate them,” Principal performance auditor David Press told Morning Report.

“We have recommended some additional steps be taken and these steps relate to the checks that have been made after the payment of the subsidy.”

New Zealand first announced its wage subsidy scheme last March to protect jobs, with total payments amounting to just over NZ$14 billion (US$10.12 billion). Employers who were impacted by COVID-19 and lockdown were eligible for NZ$580 (US$419) a week for each full-time employee.

READ: New Zealand’s jobless rate falls to 4.7% in Q12021

By March 5, around NZ$703 million (US$508 million) in wage subsidies had been repaid voluntarily, with a further NZ$23 million (US$16.6 million) “compulsorily recovered”.