Philanthropist calls for owners of Farmers and Whitcoulls to repay wage subsidy

The company that owns the Farmers and Whitcoulls chains claimed the wage subsidy on behalf of thousands of staff. Photo / Supplied

A leading philanthropist is pressing one of New Zealand's largest private companies to repay most of the $35 million it took in wage subsidies, claiming the payments were not needed and are contributing to growing inequality.

James Pascoe Group, the retail empire of Anne and David Norman, owns a variety of fashion, jewellery and book chains on both sides of the Tasman.

The Ministry of Social Development's website shows that the company behind the Farmers department stores, The Farmers Trading Company, claimed just over $28 million over two rounds of the wage subsidy for more than 3700 staff.

James Pascoe Limited claimed more than $3m for almost 450 staff, while the company through which the retailer owns the Whitcoulls chain, Whitcoulls 2011 Limited, claimed more than $4m for around 600 staff.

But the payments have become a focus for a Christchurch philanthropist who describes the wage subsidy as "the biggest financial scandal in New Zealand history".

Grant Nelson, who set up the charitable Gama Foundation with his wife Marilyn after selling their building materials business in the 1990s, said the nationwide lockdown forced retailers to close for more than a month, when they reopened most retailers saw a surge in business.

"Most businesses were only closed for about five weeks, and then they had a big upsurge after that, so they were being paid for a time that they were doing better work than previously.

"Overall, a lot of businesses did better than they did in the previous year and often they were retailers."

While the trading figures of the Norman's businesses are not publicly available, Nelson said figures from Inland Revenue showed business profitability improved in 2020 compared to 2019. He believes the Normans should repay most of the money.

"My position is they should be paying most of it back. If we did know what their results were, we might be saying they should be paying all of it back, because they've done better than in previous years."

As well as being paid the wage subsidy for a number of weeks when their businesses were open, Nelson said James Pascoe Group had applied for the wage subsidy resurgence, a two-week payment related to when Auckland returned to Covid-19 alert level 3, for stores across New Zealand, most of which were unaffected.

Marilyn and Grant Nelson, pictured at Government House with then Governor General Sir Anand Satyanand in 2011, run the charitable Gama Foundation. Photo / Supplied

"That should never have happened."

The Normans, who rarely give interviews or make public statements, have not responded to a request for comment.

While the scheme has come under criticism, with some companies continuing to pay large dividends despite accepting the subsidy, unemployment has risen less than most economists expected when New Zealand was in lockdown.

Nelson said companies should be paying the money back, with the wage subsidy amounting to a transfer of wealth to the well-off of up to $10b, at a time when the Prime Minister was being warned that the impact of Covid-19 was likely to lead to a rise in child poverty.

"The Government has said it cannot do various things that they promised to do, because they don't have enough money. That includes child poverty.

"We've got future generations that are going to have to repay this money."

Hundreds of millions of dollars has been repaid, including by some of New Zealand's leading retail companies, including Briscoe Group and later The Warehouse, amid signs that high street trading bounced back strongly after the lockdown ended.

As well as Farmers, Whitcoulls and Pascoe chains, James Pascoe Group also owns the Stewart Dawsons and Goldmark brands in New Zealand. In Australia, it owns Prouds and Angus and Coote.