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One of the country’s biggest pathology companies pocketed more than $12 million in JobKeeper payments even though its profits have topped $100 million since the pandemic started.
Australian Clinical Labs is among three pathology laboratories to share in at least $1.6 billion in payments from the Morrison government for COVID-19 testing since March 2020. Its revenue grew 29 per cent last financial year, largely due to its COVID-19 testing.
About 44 million coronavirus tests have been carried out across Australia since March last year.Credit:Joe Armao
The other two big pathologists, Sonic Healthcare and Healius, either did not get JobKeeper or paid it all back. But over the two financial years in which JobKeeper payments were available, Canberra paid Australian Clinical Labs $34.3 million after tax was excluded, and the company repaid $21.9 million – meaning JobKeeper payments made up after-tax profits of $12.5 million.
JobKeeper was designed to keep firms afloat as their revenue plummeted due to the pandemic. The scheme ran from April 2020 until March this year. Federal Treasury said the policy was created “to support business and job survival”. It has estimated that without JobKeeper, the unemployment rate would have remained above 12 per cent for two years. Australia’s unemployment rate is now 4.6 per cent. Treasurer Josh Frydenberg has said it was also designed to stimulate the economy.
Australian Clinical Labs recorded a bumper after-tax profit of $88.7 million for the year ending June 2021. The financial year before, it had after-tax profits of $11.7 million.
Treasury made JobKeeper payments totalling $89 billion to companies across the nation. Research by the federal Parliamentary Budget Office found $20 billion of the money went to companies in which revenues increased.
While many companies kept JobKeeper payments despite eventually turning a profit, Australian Clinical Labs stands out as highly profitable and with a notable jump in revenue – from $523 million in the year ending June 2020 to $674 million last financial year.
Companies that have handed back all their JobKeeper profits include Iluka Resources, which returned $13.7 million, Credit Corp, which paid back $12.7 million, and Domino’s Pizza, which gave back $792,000.
Labor’s assistant spokesman on Treasury, Andrew Leigh, said Australian Clinical Labs was an example of a company that had taken advantage of the public payments.
“Australian Clinical Labs has boosted its revenue and increased its profits. It had a healthy pandemic, and it’s hard to see why it needed millions in corporate welfare,” he said.
“No one doubts that JobKeeper was needed, and no one begrudges it going to firms that were suffering. But Scott Morrison sprayed JobKeeper around like a Formula One winner spraying champagne over the crowd.”
Mr Frydenberg said JobKeeper had done its job, supporting million of Australians during the greatest economic shock since the Great Depression.
“If businesses are in a position to pay back JobKeeper, we will welcome any repayment,” he said. “What we will not do is retrospectively claw back JobKeeper payments from eligible businesses. At a time of huge uncertainty, these businesses kept their employees in work.”
Australian Clinical Labs spokeswoman Sue Cato described JobKeeper as “truly a lifesaver and a job saver. Keeping staff employed and engaged during those turbulent times meant they were available to work when we really needed them, when the company had to respond to the increased demands of COVID-19 testing.”
Australian Clinical Labs was a private company until venture capitalists Crescent Capital floated it in May this year, raising $408 million.
The company’s 2020 annual report notes Australian Clinical Labs had a 44 per cent downturn “in the second half of March 2020 and continuing through April” because of COVID-19. This brief downturn made it eligible for JobKeeper payments. But once a subsidy to pathologists of $85 per test was put in place by the Morrison government, also in March, revenue soared.
The company took JobKeeper payments while warring over job conditions with the professional association covering its lab staff.
Paul Elliott from the Medical Scientists Association of Victoria said the company “opportunistically used the pandemic to introduce cuts to wages and jobs even though recording record profits”.
Melbourne University professor of economics Jeff Borland has conducted research into Australian labour markets and employment policy, and has analysed the JobKeeper scheme.
The Age asked him about Australian Clinical Labs keeping a proportion of its JobKeeper payments. He said the company had given a justification for accepting JobKeeper in its 2020 financial return; this showed the company met the legal eligibility criteria.
“That still leaves the moral issue of accepting JobKeeper. The question is the same one being asked of other businesses which have done well during the pandemic, but given all we know about pathology’s profits during the pandemic, it’s able to be asked with even greater intensity to Australian Clinical Labs: why didn’t they pay it back?”
He said there was no legal barrier to a company making a profit and keeping JobKeeper payments.
“In fact, the whole objective was businesses needed to be able to maintain profits to survive. But when JobKeeper has allowed a company to make even higher profits than before COVID, I think there’s a case that the company should be paying back a significant proportion.”
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