The Senate Economics References Committee had begun investigating the financial and tax practices for-profit providers in May after a highly publicised Tax Justice Network-Australia (TJN-Aus) report suggested they were hiding profits to minimise their tax.
Now their final report has been released – and the Commission says it hasn’t found with any certainty that for-profit providers are using improper tax or financial practices.
In fact, the TJN-Aus report itself stated that the largest for-profits paid corporate tax at a rate of 29.02% in 2014-15 and 29.78% in 2015-16 – much higher than our average corporate tax rate of 17%.
Check out the graph above. In 2017, for-profit providers actually had a lower revenue than not-for-profits – $7,143 million compared to $9,737 million – while there was only a $35 million difference in their profits.
For-profit aged care providers’ return on assets is also much lower than other industries – 3.8 per cent in 2017 compared to 17.41 per cent for consumer services and 14.87 per cent for health care.
Greater transparency needed
The Committee says it is concerned that some for-profits could potentially take advantage of current accounting standards to hide their financial activities – and certainly we agree that there is an opportunity here for the sector to be more transparent.
The Committee has made a number of recommendations, including that the Government look at ways to increase the transparency of aged care providers’ financial information held by the Department of Health and better share this information with consumers and their families.
Providers’ tax practices will also fall into the terms of reference to be examined by the Royal Commission into Aged Care Quality and Safety – another recommendation by the committee – and one we support as the Commission will have many more resources available to investigate this issue.
But the fact is both for-profits and not-for-profits receive the same funding from the Federal Government – and we know that this is falling seriously short of what is needed.
Funding falling behind
As we covered here, 45 per cent of facilities were in the red this year. The average profit per bed was $816 a year or $15.69 a week – and these are not just not-for-profits. Private operators make up 44 per cent of our aged care sector.
If we want to guarantee quality aged care services for older Australians, the Government needs to ensure both private and not-for-profit operators have sustainable funding – and we the consumer need to contribute more to this care.
We hope that the Royal Commission realises the same.
