Care providers ‘siphoning off’ government funds: report

Aged care providers are “lining their pockets” with public money, according to a damning report from a financial and taxation research group.

A report by the Centre for International Corporate Tax Accountability and Research (CICTAR) slams the lack of accountability of federal residential aged care funding.

The report, Careless on Accountability: Is Federal Aged Care Funding Siphoned Away?, says there is an “urgent need” for transparency and public accountability on how the funding is spent.

“Providing additional funding without improving transparency and accountability will not improve care,” the report states.

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“Those already profiting from the publicly funded sector may line their pockets further while understaffing and neglect continue.

“Residents of aged care facilities deserve to be treated with dignity and respect, not as a steady and stable source of public funding.”

CICTAR says that despite the Royal Commission into Aged Care Quality and Safety finding “a system characterised by neglect” and its subsequent recommendations, little has been done to reform the sector.

“While many non-profit aged entities seek to provide the best care with available resources, many of the largest non-profit operators were also found to be using public aged care funding to buy property and grow the business at the expense of quality care for residents and decent wages and conditions for workers.”

In its report CICTAR says:

  • Tricare, one of Queensland’s largest operators, is owned through complex corporate structures ending in Norfolk Island, which is exempt from capital gains tax.
  • Blue Care, part of Uniting Care, accepted $160 million in JobKeeper in the past two years, but gave $28 million to the Uniting Church Queensland.
  • Calvary paid $380 million to take over aged care operator Japara. CICTAR questioned where a non-profit came up with $380 million.

“Greater transparency and accountability should benefit the entire sector by ensuring that public money is spent as intended,” the report says.

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CICTAR claims the worst performers in the sector are the large for-profit providers while the strongest performers are small facilities run by state governments.

“This is not a case of a few bad actors, but a systemic problem requiring structural solutions to increase transparency and accountability,” the report states.

CICTAR recommends:

  • federal funding be quarantined for direct care costs
  • transparency on how any government money is spent
  • standardised reporting and a regulator to enforce reporting standards and issue sanctions on misuse of funds
  • targeted federal funding for small providers with a consistent track record of high-quality care.

CICTAR published a report in 2018 detailing tax avoidance practices by some of the largest for-profit aged care companies. Subsequently, Bupa reached a $157 million settlement with the Australian Taxation Office.

An ABC RMIT fact check report found that although residential aged care providers receive      about $13 billion a year in taxpayer funds, they only have to provide high-level financial reports that focus on financial outcomes and viability.

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“In practice, providers can report vastly different levels of detail, and they are not required to show spending on individual facilities, let alone spending on individual residents,” the report states.

Providers with multiple sites also do not have to submit individual reports for each facility and can instead submit one report covering all their aged care services.

“Notably, the Australian Accounting Standards allow not-for-profits and non-publicly listed companies to avail themselves of substantially reduced disclosure requirements when preparing their general-purpose statements,” the report says.

La Trobe University emeritus professor Hal Swerissen told the ABC that while home care providers had to spend the money on the specific person to whom it was allocated, this was not the case for residential care providers, which could “move the money around” once they received it.

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Written by Jan Fisher