Inquiry backs aged care tax transparency

The Senate Economics Reference Committee investigating the financial and tax practices of Australia’s for-profit aged care providers has called for a range of measures it believes can improve transparency and accountability across the sector.

The Inquiry launched in May following an explosive report by the Tax Justice Network Australia, commissioned by the Australian Nursing and Midwifery Federation (ANMF), which revealed the nation’s top six for-profit aged care providers were using a range of available loopholes to avoid paying tax.

In its final report tabled last night, the committee outlines five key recommendations that would subject aged care providers to more rigorous scrutiny over their financial and tax practices and give the public greater access to the quality of care across the sector.

Recommendations include:

  • The Royal Commission into Aged Care Quality and Safety consider the tax and financial structures of aged care providers
  • The Australian Government explore opportunities to share information about quality of care across the sector, aiming to increase transparency and comparability, and support informed decision-making by consumers
  • The Australian Accounting Standards Board implement changes to apply the International Accounting Standards Board’s revised Conceptual Framework
  • The Australian Government investigate strategies to increase public transparency of aged care providers’ financial information held by the Department of Health
  • The Australian Government convert the existing voluntary Tax Transparency Code to a mandatory code for all large and medium corporations or adopt similar strong transparency measures such as the publication of data from country-by-country reporting

ANMF Federal Secretary Annie Butler labelled the committee’s recommendations a positive step towards ensuring the big for-profit operators use taxpayer funds they receive on quality care but said the measures did not go far enough.

The ANMF had called on Senators to adopt two of the union’s core recommendations:

  • That any operator receiving over $10 million in Government funding be required by law to file full audited financial statements with the Australian Securities and Investments Commission (ASIC)
  • That companies disclose all transactions between trusts or similar parties that form part of their corporate structures.

“We believe that many of the recommendations lay the foundations for bringing greater transparency into the financial practices of for-profit providers but more action is needed for us to have a real chance of fixing the crisis in aged care,” Ms Butler said.

“The Government and our politicians must realise it’s time to listen to nurses and carers and time to listen to elderly residents and their families – who are concerned that taxpayer funds aren’t being used to provide quality care.”

The TJN report, Tax Avoidance by For-Profit Aged Care Companies: Profit Shifting on Public Funds, found the country’s largest for-profit aged care providers – Bupa, Opal, Regis, Japara, Allity, and Estia –  received more than $2.17 billion in taxpayer funded government subsidies, 70% of their total revenue, and made profits of $210 million during 2016 and 2018.

Evidence heard by the committee during the Inquiry included operators such as Opal (part owned by AMP Capital) paying its owners more than $15 million in dividends in a year in which it paid no tax.

Another leading provider, Allity, failed to pay income tax and used a 15% interest loan to dodge its tax liabilities.

Bupa and Regis failed to show up to the Inquiry.

In its report, the committee acknowledged residential aged care was a deeply personal subject for many Australians and that it was more important than ever to ensure public funds meant for care are used effectively and efficiently.

It noted the rise of for-profit aged care providers, stating that in 2016-17 for-profit aged care providers held a share of operational residential aged care places more than 14% higher than in 2010-11.

It said TJN’s report raised legitimate questions about how for-profit aged care providers use public money but ultimately concluded it could not determine the truth.

“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 committee suggested aged care providers would find it difficult convincing the community that their financial practices should be kept confidential.

It also said it remained concerned about access to quality aged care facilities for many Australians, especially in rural and regional areas, with current barriers leading it to propose residents and families have as much information as possible so they can more easily exercise choice upon entering aged care.

Addressing the link between the financial and tax practices of aged care providers and the quality of care received by older Australians, the committee claimed it did not hear evidence about failings in care, either individually or systemically, and therefore could not make comment.

Instead, it suggested the Royal Commission into aged care, sparked by an ABC Four Corners investigation that exposed abuse of elderly nursing home residents, was better placed to find out whether corporate financial practices were a factor in any of the cases it investigates.

Ms Butler said the TJN report demonstrated for-profit providers had the capacity to employ more qualified nurses and care staff.

She said politicians should not avoid making tough decisions about the practices of for-profit aged care providers by deferring them to the Royal Commission.

“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 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.”

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