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How Queensland loaned $1 billion to people who may never pay it back

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Next month, not only will JobKeeper end, but the Palaszczuk Government will learn how many businesses are unable to pay back COVID-19 loans.

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Soon after the pandemic hit, the Government launched the $1 billion COVID-19 Jobs Support Loans Scheme, administered by the Queensland Rural and Industry Development Authority, to help businesses retain staff.

Within the first three months, 6,825 applications were approved – only one in 10 applications weren’t successful – for almost all of the available funding. It was part of a package of measures that also included a grant program that had to be extended due to high demand.

In a report tabled in parliament this week, Auditor-General Brendan Worrall acknowledged QRIDA had put on more staff to make decisions and streamlined processes to provide a rapid turnaround on applications.

But that haste also contributed to hundreds of loans being approved for high-risk applicants who may never make repayments.

The maximum loan amount was $250,000.

“While QRIDA still applied eligibility criteria for the COVID-19 Jobs Support Loan Scheme, it had a greater tolerance than usual for applicants with a high risk of not being able to repay the loan,” Worrall wrote.

“In undertaking its assessment, QRIDA reviewed loan documentation including financial information provided, contacted applicants directly to discuss their business and COVID-19 impact, and also obtained the credit risk rating of applicants from an independent data provider.

“While most loans were approved to businesses with a low to moderate risk rating, five per cent of businesses assessed as high risk or worse received loans.”

No repayments are required during the first year of the loan, meaning any defaults will only become evident from next month, when businesses will also stop receiving the Federal Government’s JobKeeper payments. While QRIDA gave auditors an estimate of the loans able to be repaid, Worrall found it could not be relied upon due to continued economic uncertainty and required a caveat to be placed on its financial statements.

Treasurer Cameron Dick – who also had the government borrow more – has started work on the next state budget. He and Premier Annastacia Palaszczuk will consider further support for sectors, and regions, hit hard by the pandemic-led downturn, particularly those that have been reliant on JobKeeper payments to survive.

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