Non-profit age care providers fail to account for billions of federal government funding, report shows

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Some of the largest non-profit residential aged care operators in Australia have failed to account for billions of dollars in federal government funding, according to a new report from the Centre for International Corporate Tax Accountability & Research (CICTAR), released yesterday.

The report, Caring for Growth, Australia’s largest non-profit aged care providers, demonstrated that the facilities provided a lack of public accountability and transparency and that investment was prioritised over care.

The analysis undertaken in the report looked at the available public financial statements and government funding data on nine large non-profit operators, which revealed a pattern of extracting revenue from government subsidised residential aged care to fund property investments.

The report followed previous analyses of Australia’s largest for-profit operators which shed new light on the underlying structural problems in aged care as the COVID-19 pandemic devastates Victoria’s nursing homes.

The non-profit aged care operators analysed, included BlueCare, Uniting NSW, Mercy Aged Care, Bolton Clarke, Catholic Healthcare, Anglicare, Juniper and Southern Cross Care in SA and NT and Southern Cross Care Tasmania.

According to the report, the facilities received $2.4 billion in government funding and controlled 11% of total nursing home beds at 317 facilities.

While four of the top six operators reported losses in 2019, those losses were driven by property investment. Each of the six operators generated between $26 million and $62 million in net cash from operations.

There was limited detail on how the non-profit operators spent hundreds of millions in government funding, the report said.

The analysis also revealed nine non-profit providers paid executives and board members collectively over $30 million in total compensation in 2019.

Lack of reporting requirements meant in most cases, it was not possible to identify how much each individual executive or board member was paid.

“It is no wonder that the underlying problems in aged care have been further exposed by the coronavirus crisis,” said Jason Ward, the report’s author.

“Hundreds of millions in public subsidies are provided with no strings attached and no requirements for transparency and accountability. Large for-profit and not-for-profit aged care operators appear to be driven by a privatised market-based approach that – despite large government subsidies – is failing to provide care and dignity to Australia’s most vulnerable residents.”

Included in the report were critical recommendations for reform which were:

• Targeted funding and support for small community-based providers with a track
record of high-quality care should be prioritised;

• Aged care operators with over $10 million in annual federal funding must be
required to file full and complete Tier 1 financial reports, with complete business
segment breakdowns and clear standards for reporting government funding;

• All aged care operators with less than $10 million in annual federal funding must be
required to file Tier 2 financial reports, if not doing so already; and

• Aged care operators must be required to publicly disclose government funding and
total expense by type at a facility level.

The report has been submitted to the ongoing Royal Commission and in support of a Senate bill that would increase financial transparency in aged care.

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