Nov 29, 2018

Senate inquiry calls for greater transparency, seeks to stamp out possible tax avoidance

A government inquiry into the tax practices of for-profit aged care providers says it could not conclude whether or not companies are engaging in improper tax or financial practices, and called for greater transparency.

In its report released this week, the Senate Economics References Committee’s inquiry said it found no evidence of wrongdoing, but noted that concerns remain.

“The committee cannot with any certainty conclude that for-profit providers are engaging in improper tax or financial practices. The problem, however, is that the committee is also unable to conclude that they are not.”

The Committed recommended that for-profit providers release more information about their tax practices.

The inquiry was launched earlier this year in the wake of a report by the Tax Justice Network Australia which raised “legitimate concerns” about how for-profit aged care providers are using public funds. The report examined the finances of Australia’s six largest aged care operators.

“Australians would be rightly appalled if it transpired that public money that had been provided to fund care for older Australians had been improperly diverted to other corporate purposes,” this week’s inquiry report says.

For-profit a growing sector of aged care market

The report says for-profit care is a growing sector of the market.

In 2016–17, the share of beds held by for-profit providers was more than fourteen per cent higher the share they held in 2010–11.

Aged Care Guild welcomes findings

The Aged Care Guild welcomed the outcome of the inquiry.

Guild CEO Matthew Richter said that the inquiry found no substantive evidence of systemic tax avoidance or aggressive tax minimisation in the aged care providers it scrutinised.

He noted that the Australian Tax Office said “there are no indications that the tax risk appetite of private aged care providers differs from any other industries.”                                                                                                      

Mr Richter said for-profit aged care providers are an essential component of the Australian aged care industry.

“By 2046, an estimated 7.3 million Australians will be aged 65 and over, up from 3.7 million in 2016. Without private providers, Australia simply won’t be able to provide sufficient residential aged care facilities to meet the needs of the country’s ageing population.”

The Aged Care Financing Authority estimates that the sector will need to build around 88,000 new residential places over the next decade, at a cost of over $54 billion.

Mr Richter said that private investment was the only way to meet that challenge.

“If Australia is to meet our coming obligations to our elderly citizens, then private investment needs to play a central role,” Mr Richter said.

ANMF says taxpayer funds not directed to quality care

The Australian Nursing and Midwifery Federation (ANMF) also welcomed the report’s recommendations, especially those aimed at improving transparency.

But the ANMF Federal Secretary, Annie Butler, said the Committee did not go far enough in making the big for-profit operators more accountable for the $2.17 billion in Government subsidies they receive each year and ensuring it is used on safe, best practice care for aged care residents.

“More action is needed for us to have a real chance of fixing the crisis in aged care,” she said.

She said the government needs to listen to residents and their families and hear their stories of neglect.

“The Government and our politicians must realise it’s time to listen to nurses and carers and it’s time to listen to elderly residents and their families – who are concerned that taxpayer funds aren’t being used to provide quality care. And that as a result, far too many nursing home residents are being neglected,” she said.

Ms Butler said for-profit providers are cutting costs by employing too few staff and staff with lower levels of qualifications.

“What is clear, highlighted in evidence given by the Tax Justice Network Australia, is that for-profit providers certainly have the capacity to employ more qualified nurses and care staff, but are focused on their bottom-line, with some paying little or no tax through their use of complex corporate structures. As the Committee stated, ‘each dollar that is taken for corporate purposes is a dollar that is not spent on the provision of care.’”

“Every day we wait for the Royal Commission, more qualified nurses and care staff positions are cut and nursing and care hours slashed. That means that vulnerable residents are suffering without enough staff to care for them, as for-profit providers continue to use their Government subsidies to bolster their bottom line. Residents and their families can’t wait for up to two years for a Royal Commission, they need the Government to act now – to stop their suffering.”

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