Pressure mounts on Skyline over subsidy ‘moral question’

Photo: ODT files
Photo: ODT files
As Queenstown tourism operators once again line up to claim the government wage subsidy, pressure is mounting on one company in particular to pay back what it received from the scheme last year.

As reported in the Otago Daily Times last month, Skyline Enterprises shareholders John Hilhorst and Cath Gilmour have tabled a shareholders motion to its annual meeting next Friday to pay back the $7.9million wage subsidy it took last year.

It has applied for $189,570 for 164 staff in the August 2021 round of the subsidy.

The couple said it was a ‘‘moral question’’ for the company, which recorded a $56.7million net profit after tax in the last financial year.

Longtime Queenstown hospitality operator Doug Champion said he admired Mrs Gilmour and Mr Hilhorst for having the courage to speak out.

Mr Champion, who said he had weathered two major global financial crises without any government support, said if Skyline returned the money, it could be redistributed to the many smaller operators ‘‘who are actually losing their businesses’’.

‘‘The Government’s been really quick to get it out, but unfortunately they haven’t put enough fishhooks in there to say that if you’ve made a profit, you’ve got to pay it back.’’

Mrs Gilmour said the motion boiled down to a ‘‘moral question of is it the right thing to do when you look at New Zealand Inc?’’.

There were many businesses, in tougher positions than Skyline’s, whose owners had had to mortgage their home, she said.

She and Mr Hilhorst had had calls of support from Skyline shareholders throughout the country, as well as locals, but she was not optimistic the motion would be seriously considered.

‘‘But it’s feeding a good community conversation that we needed to have.’’

Skyline chairwoman Jan Hunt could not be reached for comment yesterday, but in a letter to shareholders last month, said the company’s board did not support the motion.

The company had to ‘‘keep adequate cash reserves to cover wider costs associated with maintaining the business’’, Ms Hunt wrote.

‘‘A simple review of our direct tourism segments demonstrates that these were barely profitable in the last financial year.

‘‘We cannot let Covid-19 waylay our capital replacement and growth projects, as we must be ready and able to deliver high-quality products to consumers when they return.’’

Skyline also received $500,000 last August for its Queenstown luge operation from the Government’s strategic tourism assets protection programme.

Writer and economist Max Rashbrooke said the purpose of the wage subsidy scheme was to ‘‘tide over companies that otherwise are not going to survive’’.

‘‘So I think the moral situation is very clear — the firm should repay the wage subsidy before any payments to shareholders.’’

That argument especially applied to large companies, which had access to lending facilities and assets they could borrow against, he said.

The Government needed to add a condition to the scheme that if a company made a full-year profit, the Government was ‘‘at the head of the queue’’ before shareholders.

guy.williams@odt.co.nz


 

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