Lendlease and Blue Care join throng of large corporations cheating JobKeeper

by | May 31, 2020 | Finance & Tax

Why is Lendlease claiming JobKeeper? What is Queensland’s largest private sector employer, Blue Care, doing claiming JobKeeper when its revenues from government have actually been rising? Michael West investigates the latest mega-rort by the Big End of Town.

In announcing the JobKeeper subsidy, Prime Minister Scott Morrison said, ‘The payment will be open to eligible businesses that receive a significant financial hit caused by the coronavirus. The law and rules around JobKeeper consistently state that its purpose is to appropriately support those businesses and employees affected by the significant economic impact of the coronavirus.

Any local builder or manufacturer or coffee shop or retailer will be able to tell you if their business is down. The customers stop coming.

In a retirement village, the customers are the residents. They haven’t gone anywhere during this coronavirus. They have stayed put, and they have kept paying their accommodation charges to the owner of the village. So the revenue to a retirement village owner won’t have declined much (if at all), from last year to this, even with the coronavirus. And yet Lendlease, the largest owner of retirement villages in Australia, is claiming the JobKeeper subsidy for its retirement living business.

Among other construction giants helping themselves to JobKeeper, Mirvac has even chased up contractors it had already sacked to get them on the scheme. Meriton has not denied it, though stonewalled, Stockland – to its credit – has ruled it out and Brookfield/Multiplex has gone into hiding, refusing to respond to questions.

Marvellous Mirvac: $8 billion property developer rorts JobKeeper scheme

 

A spokesman for Lendlease confirmed the JobKeeper play on Friday: “We’re accessing the JobKeeper scheme in the manner in which it’s intended”. Yet, here is an $8.5 billion company helping itself to millions in corporate welfare, a company which has just raised another $1.5 billion from investors on the share market and is now luxuriating in $5 billion in cash and undrawn bank facilities.

Meanwhile, Queensland aged care behemoth Blue Care is another to swindle the program. Whereas Lendlease has “withdrawn its guidance”, that is, told the ASX it doesn’t know how much it will be hit by the virus shutdown (possibly 15 per cent but certainly not the 50% claim threshold), BlueCare revenues have actually gone up.

Notwithstanding damning evidence of its aged care failures at the Royal Commission, notwithstanding that it has reeled in even more taxpayer funding since, here is Blue Care executive Cathy Thomas urgently advising staff to apply for JobKeeper:

“It is shocking that Blue Care would request all of its employees to register for the JobKeeper programme,” Jason Ward told Michael West Media. Ward is principal analyst, Centre for International Corporate Tax Accountability & Research (CICTAR) and has done work for the nurses union.

“Blue Care, the state’s largest aged care operator, is part of Uniting Care Queensland which is the state’s largest private sector employer. In 2019, Uniting Care Queensland, controlled by the Uniting Church, received over $600 million in government funding and has received additional government funding in the wake of the coronavirus crisis.

“Its business has not faced any significant job losses due to the crisis, funding increases were to increase or maintain staffing. This action seems to represent opportunistic corporate greed rather than the stated mission of compassion, fairness and justice”.

According to charities commission data, in 2019 UCQ had 11,277 staff, of which most were part-time (8,903 employees). Total employee expenditure in 2019 was $971.5 million.UCQ in 2019 (from AIS) had total gross income of $1,551.1 million, including revenue from gov’t of $603.6 million. UCQ reported a loss of $30.5 million (but this is driven by property investments) which they have openly used to demand more government funding for aged care and to justify continuing staffing cuts even in the face of failing accreditation and the horror stories of the Royal Commission.

Federal data shows that in FY2019 Blue Care and ARRCS received a total of $461.3 million in federal aged care funding of which $358 million was for residential aged care. They ran 75 facilities with 4,957 places at an average of $72,218 per place, this is significantly higher funding than other large non-profit aged care operators.

Blue Care, as a charity – albeit a highly corporatised charity which pays its directors handsomely – is not required to pay income tax. LendLease however, has not only failed to pay income tax in Australia for nearly a decade but has actively cheated the tax system as well.

Tender Truncheons: Lendlease concedes Tax Office closes net on retirement village racket

“They haven’t paid tax since 2012, they have earned $92 billion (at the revenue line), and they have undertaken a huge tax rort in their retirement village business,” said one adviser who has worked for the company. “And now they are putting their hand out for more taxpayer money when it is clearly not intended and clearly undeserved”.

“Lendlease and Blue Care are able to claim JobKeeper because they are prepared to exploit any loophole in the rules,” said a tax lawyer over the weekend. “Eligibility for the JobKeeper payments is tested by revenues measured under Australia’s GST rules. Under the JobKeeper rules, certain items called “input-taxed supplies” don’t count. The main input-taxed supplies are on the sales and rentals of houses, loans, food at school tuck-shops and fundraising activities of charities”.

The accommodation charges which are paid by the residents of a village are treated like rent. So they don’t count in measuring whether revenue has declined. So that leaves only minor amounts like bus fares for trips or for using the hair salon as the only measure of whether a retirement village has suffered a decline in turnover.

That means that a 50% decline in minuscule charges like the bus trip fares, will technically justify Lendlease claiming the JobKeeper subsidy when its real revenue may not have declined at all.

Whether the Government designed the system deliberately so large corporations could undermine it is not known but there is no evidence they are doing anything to stop the rorts.

“Under the rules, Lendlease can claim JobKeeper,” said the tax expert. “Lendlease has at least 800 people in its Retirement Living business. At $1500 per fortnight, that’s $15.5 million paid by Australian taxpayers to a company that hasn’t paid tax since 2012, and in its retirement business doesn’t deserve the JobKeeper subsidy. That’s $15 million that our kids will have to pay back.”

We accept Lendlease can properly claim the JobKeeper subsidy for some parts of its property business that have suffered genuine decline. And we accept that as the rules are written, Lendlease can claim the JobKeeper for its retirement living business. But the question is whether Lendlease should have made a claim.

Lendlease claims its core values (‘pillars’) include integrity, openness and trust. Can Lendlease tell the Australian public what was its total actual revenue for the comparative figures for which it is claiming JobKeeper in its retirement Living business? Not the sliver relating to bus fares and haircuts? The real revenue? Like Mirvac and others, although sprouting good corporate governance rhetoric, it is ducking for cover.

Can Lendlease directors confirm they are pleased to have claimed the subsidy when real revenue has declined nowhere near the threshold? Will they withdraw the claim improperly made?

The fabled founder of the company Dick Dusseldorp said in 1973: “Companies must start justifying their worth to society, with greater emphasis placed on environmental and social impact rather than straight economics”. Neither the peak business body Business Council of Australia nor any directors of the corporations mentioned in this story have yet justified their behaviour publicly. It is little wonder public confidence in big business has sunk to new depths. Directors are paid the big bucks to be accountable. Amid apathy in the national media, not one has yet stood up.

ABOUT THE AUTHOR

Michael West

Michael West

Michael West established michaelwest.com.au to focus on journalism of high public interest, particularly the rising power of corporations over democracy. Formerly a journalist and editor at Fairfax newspapers and a columnist at News Corp, West was appointed Adjunct Associate Professor at the University of Sydney’s School of Social and Political Sciences. You can follow Michael on Twitter @MichaelWestBiz.

3 Comments

  1. Avatar

    Job keeper is sooooooo hard for an ordinary person to apply. IF you stupidly followed PM Howard’s advice and bought shares and if you have a property other than your home, the questions are interminable, so much so that after a three plus hours I give up. While my casual job of 20 plus years has died and my share income has plummeted, I just struggle to fill out Morrison’s clever trick of a form. I give up.

  2. Avatar

    Re Blue Care employees : Would they not be union members? What would or did their union advise?

  3. Avatar

    Ahhh, Blue Care is actually a not for profit arm of the Uniting Church. You need to retract and correct.

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