Employers take subsidy but don't uphold their end of the bargain

This issue has concerned me since learning that a Wellington/Taranaki employer subsidised by WINZ to take on young unemployed beneficiaries was paying his employees in a haphazard and suspect way. It isn't advisable to accept just one side of the story though, so I wrote to MSD and asked them under the OIA if the company was under investigation (as described to me by the mother of one of their ex-employees). I also asked if it was Work and Income practice to apply a stand-down period to those youngsters who lost subsidised jobs apparently through no fault of their own.

Their response told me that MSD was in the process of recovering subsidies from the company in question but that it was not under investigation for fraud. And that the stand-down period didn't apply in these instances.

I've since wondered  how widespread this problem is. Labour MP Su'a Wlliam Sio has also asked questions and found that employers owe $800,000 in job subsidies paid out for employees that did not, in his words, "fulfil their end of the bargain".

 “If Job Ops workers are sacked inside six months then employers are supposed to pay back the up to $5000 in wage subsidies they get to take them on in the first place.  It is not good enough that there are currently 477 employers who owe taxpayers a refund, with a total of $814,541 outstanding."

Almost certainly there will be employers who see the job subsidies as an opportunity to advance business interests. And that's OK if ultimately the young person remains in  their ethical employ. Subsidies should be the optimum win-win, despite the purist in me opposing them. The system is what it is and it's better for taxpayer money to be spent on getting someone into a job than keeping them dependent.