Nurses shine a light on aged care providers rorting the tax man

For-profit aged care providers taking advantage of $2.17b in taxpayer funded subsidies.

Australia’s top for-profit aged care providers have posted large profits while taking advantage of $2.17 billion in Australian taxpayer funded subsidies, according to a new report commissioned by the Australian Nursing and Midwifery Federation (ANMF).

On Tuesday, the report’s author Jason Ward gave evidence to the Senate Economics Reference Committee, which is currently investigating the financial and tax practices of Australia’s for-profit aged care providers.

The report, Tax Avoidance by For-Profit Aged Care Companies, revealed how the top six providers, some with foreign ownership, used various loopholes, corporate structures and discretionary trusts to avoid paying their fair share of tax.

“Most people would have a hard time believing the claims by the largest for-profit aged care companies that they are fully transparent and solely dedicated to providing high quality care,” Mr Ward said.

“The aged care sector will need additional public funding, but there needs to be greater accountability to ensure better staffing levels and care rather than lining the pockets of executives and investors.

“While the aged care companies have attacked the report, they have not acknowledged clear examples of questionable tax practices. These include Allity’s loan from shareholders at a 15 per cent interest rate and the ATO’s audit of Bupa for offshore debt payments. Bupa shifted over half a billion in profit to its UK parent company in 2016.

“Bupa continues to insist, despite additional investigations into the company’s tax affairs by the European Commission and the Spanish government, that it does not use any tax avoidance or aggressive tax minimisation strategies.”

ANMF Federal Secretary Annie Butler welcomed Mr Ward’s appearance at the Senate Inquiry, saying his evidence will demonstrate the need for legislation that enforces greater transparency, accountability and financial reporting by Australia’s largest for-profit aged care providers.

“Elderly nursing home residents continue to suffer, even though the top six for-profit providers are reaping in over $2 billion in taxpayer-funded subsidies,” Ms Butler said.

“The report shows that providers clearly have the financial capacity to improve staffing levels, but instead are focused on maximising their profits.

“We’re confident that the evidence provided to the inquiry will justify the need for the introduction of legislation whereby aged care providers receiving billions in government subsidies must show the funding is directly being used on care for their elderly residents.

“That must be a pre-requisite for any taxpayer subsidy, otherwise providers will continue to put profits before people.”

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    COMMENTS

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    thommo
    18th Jul 2018
    9:59am
    you do not mention the greatest rip off of them all AVEO.
    johnp
    18th Jul 2018
    10:57am
    agree with thommo, media has gone quiet on the great AVEO rip-off, wonder why ??

    18th Jul 2018
    11:51am
    So, it's now not OK for a company dealing with the elderly to make a profit and, by using tax laws, avoid paying tax. It may come as a surprise to some that people go into business to make a profit. This report seems to be attacking the named companies for daring to make a profit and insinuating that residents are not being cared for. If any residents are at risk or not being given satisfactory care then there are laws that protect them.
    johnp
    18th Jul 2018
    11:55am
    Huh ?? not relevant have you missed the publicity surrounding AVEO ??
    Anonymous
    18th Jul 2018
    12:19pm
    No, johnp, but this article does not mention them and I'm only responding to this article. I have noticed that replies to articles on this site invariably drift off topic and I have not done that.
    Rae
    18th Jul 2018
    1:34pm
    It's fine to make a profit. Then you pay appropriate taxes and don't need taxpayer subsidies. Private business should not need subsidising by taxpayers. This is a very big issue.

    Borrowing from yourself at very high interest rates to sort negative gearing laws is something that needs sorting out.
    Eddy
    18th Jul 2018
    1:47pm
    Okay Old Man, what laws 'protect' elderly residents. We have laws against all sorts of reprehensible behaviour like murder, rape, robbery, insider trading, fraud etc, but it does not stop these crimes occurring. Similarly we have laws against abuse of elderly and vulnerable persons, but they do not stop any alleged abuse occurring. It is too easy to get away with crime, especially if you have a smart legal team behind you.
    Ted Wards
    18th Jul 2018
    11:56am
    Another thing this article doesn't look at until 30 June 2015 under the old aged care system only Australian not for profits could offer any aged services. It was in fact Julia Gillard who proposed what was originally called living longer living better, then it was the idiot after her who introduced the UK model and although they knew back in what 2014/15 it didn't work it was introduced as they only way forward and commenced 1 July 2015, when the government opened the door to the user pays private aged care system. Not a sigh or a what the was raised by anyone except aged care service providers and we were basically told by the Australian public to shut up that private providers could deliver a better system. Welcome to the system you wanted..... only as a legal case in the UK just showed where the public sued the government over this system, the government got it wrong. Private aged care just does not work..... so complain all you want, you had your chance in 2010 - 12 to stop this and only providers kicked up a fuss because we could see what was going to happen. Wasn't it only a few days ago you published an article where everyone went providers should be held more to account? This is the system you did nothing about to stop....
    Rae
    18th Jul 2018
    1:38pm
    Yes Ted a lot of legislation has been faulty in the past 40 years. Fortunately that can all be changed as legislation is a moving feast. Nothing is locked in now the no disadvantage rule has been broken.

    Of course those trade deals may cost us a lot of money in fines but you get that when they are signed as win/lose deals from the start.

    It can all be sorted out which is a good thing surely.
    Ted Wards
    18th Jul 2018
    12:18pm
    The real story also is any aged care provider that provides a service to someone on a package is entitled to cost recovery. Om a package you get an individual budget. The higher the package the higher the budget. It no longer matters whether you a NFP or a for Profit, both are paid the same way, both are highly under paid because the government dictates to the provider how much to change!
    Dabbydoos
    18th Jul 2018
    12:33pm
    I have a very close relationship with someone who has worked in the aged care industry for over 10 years. Tax evasion is only one of these " for profit " nursing homes rorts. Staff are underpaid, under staffed and issued with gag orders. I wish this person would leave the industry so everything can be brought into the open. Sadly it is not an option financially. Tax evasion is just a small part of the whole system.
    TREBOR
    19th Jul 2018
    10:17am
    Royal Commission??

    18th Jul 2018
    1:01pm
    So, the question is, who should be trusted to provide aged care? I worked on and off over many years in this industry, in a church based sector of the industry, and a community based, not for profit entity. I think I can reasonably safely commend both sectors to YLC readership. The question remains however, that there is a far greater need for aged care places than can be provided for, by non-profits. It is a bit like the old state school v private school, and government subsidies for the privates. That argument was won and lost in the 1960's. Close down all the for profit nursing homes, and where do the residents go? Curiously the nursing union is at the forefront of this expose. Has it occurred to anyone that the cost of nursing is one of the reasons that governments of both persuasions have seen fit to exit this field? No, I thought not.
    Rae
    18th Jul 2018
    1:44pm
    Truly Big Al. The cost of the CEOs and Executive and Shareholders is even higher though.

    Maybe everyone needs to take a haircut in income to even things out a bit.

    Especially politicians. I can remember when a Government backbencher earned the same as a Senior Nurse. Luckily nurses incomes haven't kept up with those.

    Yes let's cut all wages and salaries for everyone. That's sure to fix things.
    KSS
    18th Jul 2018
    2:10pm
    Big Al the numbers of nurses employed in aged care pale in comparison to the numbers of aged care workers who number in the hundred thousands plus! And those aged care workers are some of the poorest paid workers we have; much like their compatriots at the other end of the life cycle - the child care workers!
    Anonymous
    18th Jul 2018
    4:45pm
    Nursing homes are obliged to employ only one Registered Nurse. So their wage-costs are not the problem.
    KSS
    18th Jul 2018
    1:14pm
    The fact is wherever there is a Government subsidy to be had, there are going to be unscrupulous operators out to grab what they can.

    It happened in education where private providers were scamming both students and the Government over enrolments that didn't exist or where the student had no chance of ever completing the course. It happened in child care where operators claimed for kids that didn't exist. It happened with after hours home visiting doctors who charged Medicare for emergencies that weren't and in some cases patients that didn't exist. Not to mention pink batt providers, school hall builders, solar panels installers.....Now it's the turn of aged care providers.

    But the actions of the few should not be deemed to be indicative of the entire sector. It's the way the subsidies are given that seems to be the real issue. Perhaps this is where change needs to happen.
    Rae
    18th Jul 2018
    1:47pm
    Private businesses shouldn't need subsidies if they are efficient and competitive like the true believers in free market keep saying. They should run on their own and either succeed or fail.

    It shouldn't be up to taxpayers to make up profits for business owners and shareholders.
    Triss
    18th Jul 2018
    8:26pm
    Yes, you’re right, Rae, government is a bit too reckless with taxpayers’ money.
    sunnyOz
    18th Jul 2018
    2:47pm
    I can see this from 2 sides...my aunt currently lives in her own home, receiving a home care package. And until recently, I worked in payroll paying for aged care workers. Someone is making a hell of allot of money, and it is not the care workers. And for the meager assistance my aunt receives, where is the money going?

    18th Jul 2018
    4:40pm
    Put all these bastards out of business.
    TREBOR
    19th Jul 2018
    10:15am
    Yes, well - how much is a fair profit? When a foreign business operator can breeze into buying his daughter a Point Piper mansion..... just a small bauble... you seriously have to wonder at the level of sellout this nation has endured under its 'political leadership'. And where all this money comes from and how, and how much tax is actually recovered on profit.