May 02, 2018

Union Accuses Aged Care Providers of Putting Profits Before Care

When our loved ones go into care, the thought that our chosen aged care provider could be cutting corners in order to maximise profits can be very worrying.

Yet a new report claims that Australia’s six largest aged care providers are finding loopholes to minimise the amount of tax they pay.

In some cases aged care providers are also reducing the amounts they pay to employees and suppliers, despite receiving more money from the government and higher fees from residents, the report says.

The report, which was commissioned by the Australian Nursing and Midwifery Federation, says Australia’s six largest aged care providers by numbers of beds received $2.18 billion worth of government subsidies in the most recent financial year, which equates to 72 per cent of their more than $3 billion in total revenue.

Yet the companies reported profits of only $210 million between 2016 and 2018.

The report, which is titled Tax Avoidance by For-Profit Aged Care companies: Profit Shifting on Public Funds, was prepared by the Tax Justice Network.

In 2017, one aged care provider received higher levels of government funding and increased resident fees, but paid less to employees and suppliers.

THE ANMF says the report shows that aged care providers have the resources to improve staffing levels and provide higher levels of care for residents.

“These for-profit providers can no longer cry poor. The report shows us that these providers are making profits from funding that’s provided courtesy of the Australian taxpayer, while too many residents suffer,” said Annie Butler, the Acting Federal Secretary of the ANMF.

The ANMF and the Tax Justice Network are calling on the federal government to impose tougher financial reporting requirements to deliver greater transparency and accountability for the aged care sector.

“Any company that receives tens of millions of dollars in annual government subsidies must be required to be transparent and held publicly accountable,” the report says.

The ANMF also said it is calling on the federal government to mandate staffing numbers and skill mixes in aged care centres.

HelloCare requested a statement from The Aged Care Guild, which represents eight of Australia’s largest aged care providers.

Lee Hill, Interim CEO of the Guild, said, “All aged care providers, as with any business in Australia, must comply with Australian accounting and financial reporting standards as well as the tax laws of the land. Those same laws and practices apply to larger private providers as they do to all providers.

“The aged care sector already operates in a very regulated and transparent environment under which aged care providers are required to submit detailed, audited financial reports to the Department of Health on an annual basis to demonstrate their compliance with strict prudential standards.

“In taking aim at the corporate structure of some providers the Nurses and Midwives’ Federation has lost sight of the fundamental crisis facing the sector – falling profitability and spiralling costs. As highlighted in the most recent StewartBrown report, costs for providers are growing at nearly 5 per cent per annum while funding per resident remains stagnant.

“Australia’s ability to care for our older citizens depends on private investment in new beds, and diminishing returns for providers are discouraging this critical investment at a time when our aging demographic demands exactly the opposite.”

Click here to read the full report.

This article was amended on 3 May 2018 to include a response from The Aged Care Guild.

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