Broader stakeholder views
4.1
In addition to the views on alleged tax avoidance summarised in the
previous chapter, some stakeholders outlined their objections to the Tax
Justice Network-Australia's (TJN-Aus) analysis in other areas. In particular, stakeholders
commented on the method used by TJN-Aus to calculate 'tax payable' by aged
care, as well as claims made with regard to the profitability of large
for-profit providers.
Concerns about the sector from the Australian Taxation Office
4.2
The Australian Taxation Office (ATO) raised the following areas of
concern in relation to income tax regarding for-profit aged care providers:
financing arrangements; use of tax consolidated groups; and use of trusts.
4.3
The ATO advised that it has concerns over the financing arrangements
used by certain multinational entities in the aged care industry, particularly
the conditions of their related party financing arrangements. The ATO noted
that it is reviewing the application of the transfer pricing rules[1] to financing
arrangements of entities in the aged care industry. In addition, the ATO noted
that the OECD hybrid mismatch measure[2]—which
received royal assent in August 2018 and will begin to come into effect from
January 2019—will address concerns regarding hybrid mismatch arrangements.[3]
4.4
The ATO also raised concerns about the number of entities in the aged
care industry operating through a multiple entry-point consolidated (MEC) group
structure. The ATO submitted that such structures have 'the potential to
obscure intra-group transactions for financial or public tax reporting'.[4]
4.5
The ATO further submitted that due to the nature of financial reporting
obligations, MEC group structures 'can make it difficult for the public to
understand the full operations of the foreign group in Australia'.[5] Accordingly,
the ATO noted that:
We encourage greater transparency by these groups through
adoption of the Board of Taxation's Voluntary Tax Transparency Code and/or best
practice adoption of the general purpose financial statements (GPFS) measure
applicable to significant global entities (which recommends filing of an
aggregated set of GPFS for the entire Australian operations of the foreign
group).[6]
4.6
The ATO noted that the use of unit and discretionary trusts as vehicles
to operate aged care facilities is a common feature of privately owned groups
in the aged care industry, often explained by the desire to isolate the
commercial risks of operating a particular facility from the broader group.[7]
4.7
Mr Jeremy Hirschhorn, Deputy Commissioner, Public Groups and
International, ATO, reiterated this point:
At the small end, we often see private groups, often around
families, develop a business. That will often be through trust structures for
the property side or for the entire business, and that is often aimed at
pushing—in a sense, it doesn't change the tax necessarily, but it shifts the
tax up a level and moves it away from the operating entity up a level. That may
not be tax driven; trusts are subject to very different disclosure rules and
corporate rules to companies. At some stage, there's aggregation.[8]
4.8
However, the ATO acknowledged that 'the use of trust structures means it
is not possible to identify the tax payable based on publicly available
information alone', and that private trusts are often not required to prepare
financial statements.[9]
4.9
The ATO outlined its concerns with the use of such trust structures,
stating that:
In rare cases, trusts are used in conjunction with other tax
planning or avoidance strategies to artificially reduce the tax payable on
underlying business operations. There are a number of general and specific
anti-avoidance rules we can apply to ensure the appropriate amount of tax is
paid, in relevant circumstances.[10]
4.10
The committee notes that the Treasury Laws Amendment (Making Sure
Foreign Investors Pay Their Fair Share of Tax in Australia and Other Measures)
Bill 2018, which was introduced into the House of Representatives in September
2018, includes measures to improve the integrity of income tax law for
arrangements involving stapled structures that deliver low tax rates to foreign
investors.[11]
Maximising profit over care
4.11
A large number of stakeholders supported the conclusions of TJN-Aus and
expressed concerns about the implications of the financial practices of for-profit
aged care providers on the quality of care provided to residents.
4.12
The Australian Nursing and Midwifery Federation (ANMF) asserted that:
Recent research commissioned by the ANMF demonstrated that
aged care residents receive one and a half hours less care than they should,
every day. Yet there are no rules to ensure that government subsidies given to
aged care companies is spent directly on their care.[12]
4.13
Indeed, the ANMF considered that the TJN-Aus Report shows that
for-profit aged care providers are maximising profits over the provision of
better quality care:
This research...revealed that these [for-profit] companies have
the financial capacity to bridge the gap in care hours by employing more nurses
and carers but are placing their profits and shareholders before safe,
effective care for their residents.[13]
4.14
Similarly, the Combined Pensioners and Superannuants Association (CPSA)
argued that the findings of the TJN-Aus Report 'demonstrates a trend that
for-profit aged care companies are compromising on providing quality care
services and are instead choosing to direct their attention towards maximising
profit'.[14]
4.15
CPSA further argued that:
The financial practices of for-profit aged care providers not
only manifests in the avoidance of tax, but also in other cost cutting measures
such as employing too few staff and staff with lower levels of qualifications.[15]
4.16
CPSA contended that this view is supported by the decrease in staff with
higher levels of qualifications in residential aged care facilities:
Attempts to cut staffing costs is evidenced in the decrease
of RNs and ENs [Registered Nurses and Enrolled Nurses] employed in aged
facilities, who receive higher wages, and the increase in personal care
workers, who receive lower wages. In 2016, the gross median weekly wage
reported by RNs was $1352 and by ENs it was between $1000 and $1050, compared
to a median weekly wage of $689 for PCAs [Personal Care Assistants].[16]
4.17
The NSW Nurses and Midwives' Association (NSWNMA) highlighted similar
concerns in relation to staff quantity and quality in residential aged care
facilities operated by for-profit providers:
We represent workers employed in many for-profit healthcare
settings. Our members have highlighted common concerns in relation to funding
shortfalls in aged care facilities operated by large for-profit aged care
providers. In recent years they have experienced shorter shifts, reduced
staffing and been given additional duties, making workloads problematic and
often unachievable. In turn, this creates higher absenteeism such as sick
leave, which is not replaced. This compounds the issue. These combined factors
create an environment where overworked staff cannot provide the quality of care
that residents expect and deserve.[17]
4.18
The NSWNMA further submitted that:
It is our opinion this can only be feasibly explained as a
cost-saving exercise by for-profit providers.[18]
4.19
Submissions from other state and territory nursing unions made similar
claims about the quality of service provision, including staffing levels, by
for-profit aged care providers.[19]
The inquiry also received and reviewed a significant volume of correspondence
from aged care staff and relatives of residents who expressed concerns over the
level of staffing and quality of care.
4.20
Mr Ward from TJN-Aus acknowledged that the financial conditions for some
providers in the industry, both not-for-profit and for-profit, are challenging.
However, Mr Ward argued that the motivation of large, for-profit aged care
providers is different to those of their not-for-profit counterparts:
Several submissions generalise about conditions across the
entire aged-care sector, without focusing on the large for-profit companies.
Again, of course many of the smaller non-profits and some for-profit providers
are struggling financially as they genuinely attempt to provide the best
quality of care possible. These providers face challenging conditions, but the
experience and motivation of the large for-profit companies is entirely
different.[20]
4.21
Similarly, Adjunct Associate Professor Michael West expressed the view
that a culture of maximising profits within a corporation can result in a
conflict of interest. Specifically, in the for-profit aged care sector, a
conflict can arise between a company's duty to its shareholders and the
provision of care:
Every institution has a culture, and corporations all have
their cultures too, and there's a huge diversity in these cultures. Generally,
the culture comes from the top, is led from the top. Generally, over the years
I've found if there's an aggressive culture in maximising profit at all costs
then there's a fundamental conflict of interest. The government and most people
and stakeholders want the elderly to be looked after. Of course there are the
workers; you need to pay workers a reasonable amount to do that. It's a market.
I agree that it is a market. It's not distorted in that sense, but there is a
conflict of interest. If your duty is to your shareholders primarily, and your
personal bonus rides on getting costs down and getting profits up, then all it
needs is a bit of aggressive behaviour on the part of the executives, which we
see all the time, and care is going to be sacrificed.[21]
4.22
Mr Ian Yates, Chief Executive at COTA Australia (COTA), disagreed with
views that a profit motive necessarily places quality of care at risk:
...it depends how the governance structure—the owners—and the
senior management in that company set their culture. I say that because there
are for-profit providers in this country who want to be around for a long time
who believe that the way to stay around for a long time is to deliver a quality
product, and there are not-for-profit providers in this country who turn in
very substantial profits. They're just not distributing them as dividends.[22]
4.23
Mr David Armstrong, Chief Executive Officer at Allity, assured the
committee that for-profit providers can obtain value for shareholders at the
same time as providing high quality care:
Absolutely. We get funded the same [as other providers] and
we're accountable on the same basis for resident outcomes through the
accreditation process and providing specified care and services. So we're
absolutely accountable, and we compete on that basis to meet residents'
expectations.[23]
4.24
Mr Grant Corderoy, Senior Partner at StewartBrown, reasoned that:
...if they [for-profits] weren't providing the standard of care
we would expect to see two things: we would expect to see their occupancy
levels decline and we would expect to see major staff movements. We deal very
strongly with the sector and we don't see a massive difference in occupancy
levels—that's resident occupancy levels—and we're not seeing a major staff
movement change where staff are visibly moving from for-profit to
not-for-profit providers, because they've got access to providing the same
quality care.[24]
4.25
The Aged Care Industry Association (ACIA) argued that a provider's
ownership type does not predict quality of care outcomes:
...a focus on ownership type is misleading and unhelpful. The
key outcome from the Australian aged care system should be [the] provision of
high-quality care to older Australians. There is no evidence that ownership
structure is a predictor of care quality or of care outcomes for residents—focusing
on ownership structure is a diversion from the key area of care quality.[25]
Stronger links between government subsidies and quality of care
4.26
Some inquiry participants advocated for stronger links between
government subsidies and quality of care, as measured through legislated skills
mixes and staffing ratios.[26]
4.27
The ANMF, for example, argued that 'taxpayers contributions to funding
for-profit aged companies must be directed to ensuring the provision [of] safe
and effective care for every resident'.[27]
Accordingly, the ANMF recommended that:
-
Residential aged care companies must publicly and transparently
report the staffing of all aged care facilities.
-
Residential aged care companies should provide proof that
government funding is being spent directly on the care of residents. This
should be mandated as a pre-requisite to receiving a subsidy. The best way of
demonstrating this would be to implement mandated and legislated skills mixes
and staffing.[28]
4.28
Likewise, CPSA contended that:
For-profit aged care providers financial and tax practices
that channel Australian Government subsidies into profits clearly do not
provide value for money for the Government. Government aged care subsidies
should be used for the purpose they are assigned for, that is caring for
residents. Ring fenced funding and stricter monitoring needs to be put in place
to ensure all Government funds are being used for this intended purpose. The [TJN-Aus]
report highlights that there are currently inadequate safeguards in place to
ensure that the $2.17 billion in Government subsidies given to for-profit
providers is spent directly on care for residents.[29]
4.29
The Queensland Nurses and Midwives' Union (QNMU) submitted that there is
considerable evidence linking the quality of care with the staff levels and
skill mix of the aged care workforce. Referencing the TJN-Aus Report, the QNMU
reasoned that, in light of the profits and attempts to minimise tax liabilities
made by
for-profit aged care providers, 'there seems significant capacity for
improvements in staffing and skill mix to achieve evidence based minimum
levels'.[30]
4.30
The NSWNMA took the stance that value for money in aged care is
'inextricably linked to personal safety'. Further, the NSWNMA argued that
public expectations of sufficient protections must be guaranteed not only
through accountability of providers' tax practices, but also through ensuring
the appropriate allocation of government subsidies to the provision of quality
care.[31]
4.31
The NSWNMA went on to emphasise that the aged care industry provides
care to the most vulnerable, contending that:
Therefore the same protections that are afforded to children,
must also be afforded to the elderly. Mandated ratios of staffing and skills
mix, determined by an evidence-based model of care, and regulated
appropriately, must be applied to the sector.[32]
4.32
That view was supported by Ms Bronagh Power, Policy Officer at the CPSA:
All older Australians should have access to safe, dignified
care and taxpayers' contributions to funding aged-care companies must be
directed to ensuring the provision of that care. CPSA believes that the
accountability of aged-care providers and the quality of care for residents can
be ensured by tying the provision of subsidies to adequate staffing ratios and
the delivery of quality care. Profits must not come before the dignity, safety
and wellbeing of older Australians.[33]
4.33
However, a number of submitters and witnesses cautioned that, without
concurrent changes to the funding model for aged care, any mandated
staff-to-resident changes would significantly impact the viability of all aged
care providers, both
for-profit and not-for-profit. Some stakeholders also advised that such changes
would inevitably result in an increased financial burden on government.[34]
Gap between revenue and profits
4.34
TJN-Aus observed that there is a significant gap between the reported
revenue and profits of the for-profit aged care providers examined in its
report.
4.35
Some stakeholders, including TJN-Aus, drew a number of conclusions from
this gap. For example, Mr Ward argued that looking at revenue can be an
important indication of the use of tax avoidance strategies to reduce taxable
profit:
Of course tax is based on profit. Of course the expense of
running an
aged-care business is significant. However, the primary trick in most corporate
tax avoidance strategies is to reduce taxable profit through artificial means.
This appears to be exactly what Allity, Bupa and others have done.[35]
4.36
Mr Hirschhorn from the ATO sympathised with TJN-Aus' reasoning,
commenting that 'in this market, it's often said the tax planning is in the
expenses and not so much in the income'. Mr Hirschhorn elaborated that:
...it is very hard to distinguish between tax planning through
inflated expenses and just having high expenses and not being very profitable.
And I would say the failing of that [percentage taxable] metric is that it does
not distinguish between tax minimisation techniques and companies which are
struggling to make a significant profit. It also does not necessarily
distinguish amounts which are reported as income in accounts—for example,
revaluation gains—which are not taxable whilst they're unrealised. I understand
why they look at that ratio, but it does fail to distinguish between economic
performance and tax minimisation strategies.[36]
4.37
Conversely, industry groups tried to explain the gap on a number of
fronts. For instance, StewartBrown submitted that it 'is generally understood
that company tax is payable on taxable income not on revenue', and therefore:
...assuming the quoted figures in Table 2 [see Table 3.1] are
accurate, the combined tax payable ($154 million) as a percentage of taxable
income ($517.2 million) represents an average income tax rate of 29.8%. We
suggest that such an average taxation rate is above the majority of listed or
for‐profit
entities in all other industry sectors in Australia.[37]
4.38
The Aged Care Guild noted that not all businesses have the same ratio of
profit to revenue, and argued that it is therefore 'inappropriate to compare
the profitability of the aged care providers to revenue or, for that matter, to
other unrelated industries'.[38]
The Aged Care Guild went on to argue:
The amount of tax payable by [for-profit] providers is based
on the taxable income of the entity and not its revenue, so the reference to
the low ratio between tax payable and revenue is irrelevant and is not grounds
for claiming that there is endemic tax avoidance or use of accounting
structuring to avoid tax.[39]
4.39
ACIA drew the committee's attention to total revenue and expense figures
for the aged care industry, noting that incurred expenses, especially wages for
the sector's workforce, make up a substantial portion of revenue. ACIA
contended that:
Conflating revenue with profit as a basis to allege
under-payment of taxation is deeply misleading. Tax is payable on profit; to
claim revenue provides any indication at all of taxable income is simply
flawed. Taking figures from the Aged Care Financing Authority, the aged care
sector in 2015–16 attracted revenues of $17.4 billion. However, the sector
incurred expenses of $16.3 billion; any claim to determine taxable income based
only on revenue can be no better than guesswork.[40]
4.40
Mr Ben Feek, Chief Financial Officer at Opal Aged Care, also told the
committee:
Opal had total income of $527.2 million as quoted on page 5
of the
[TJN-Aus] report, and the report infers that, by only paying $2.4 million in
tax in that year, it was by inference doing something wrong. Opal had in that
year $511.5 million of expenses. Those expenses are incurred providing the
services to our residents. Profit before tax was $15.6 million. So the level of
profitability that is in fact taxable is far less than the revenue that has
been realised by Opal.[41]
Profitability of large for-profit providers
4.41
Another key assertion made by TJN-Aus was in relation to the six largest
for-profit aged care providers making large profits earned principally from
government subsidies.
4.42
Mr Ward from TJN-Aus argued that to obtain a true picture of the
profitability of large for-profit aged care providers, the focus should be on
individual providers rather than averaging across the sector:
I think in some ways you have to look at the individual
companies, because that's where the detailed information is. But I do think
it's very important to take a look at the larger for-profit sectors as a
separate trend entity and understand what patterns are going on with them
versus other parts of the industry whether they be non-profit or for-profit.[42]
4.43
However, industry stakeholders rejected the TJN-Aus analysis. For
example, StewartBrown commented that:
An underlying theme of the Report appears to be in relation
to FP
[for-profit] entities making large profits gained substantially from recurrent
government subsidy funding. The Report was silent regarding analysing the
profitability or even making comparison to other industry sectors.[43]
4.44
Other industry stakeholders such as Bupa also claimed that it 'is a
misconception that residential aged care providers are highly profitable'.[44]
4.45
StewartBrown noted results from its Aged Care Financial Performance
Survey (ACFPS) which found that, for the six months to December 2017,
41.3 per cent of residential aged care facilities reported an operating loss.[45]
4.46
LASA pointed to the findings of Aged Care Financing Authority's (ACFA) Fifth
report on the Funding and Financing of the Aged Care Sector, observing
that:
[ACFA's report] states that total profit for the sector was
$1.1 billion, including $1.3 billion of 'other' income which suggests that
operating profit is dependent upon 'other' income, as in previous years.
The ACFA report makes specific mention of the inclusion of
other
(non-operating) income in the financial results with the observation that the
overall profitability is dependent upon the other income.[46]
4.47
StewartBrown suggested that a more appropriate measure of financial
performance of aged care providers is the Return on Assets (ROA) ratio, which
relates to a provider's operating surplus as a measure of the total assets
employed. The ROA ratio is used to assess what levels of real return providers
are achieving in relation to the assets employed, irrespective of debt or equity.[47]
4.48
StewartBrown advised that:
Using this relevant ratio, the ROA for year‐end 2016 was
approximately 1.7%, and this declined to approximately 1.2% for FY17 and we
expect it to be around 0.5% for FY18. This is hardly a viable return for aged
care provider organisations.[48]
4.49
The Aged Care Guild noted StewartBrown's ROA analysis, and also
calculated the ROA for its own members—which comprise the eight largest private
residential aged care providers (including five of those providers examined in
the TJN-Aus Report). The Guild submitted that:
Already, the financial condition of aged care has
deteriorated to a level overall that will deter investment that is essential to
meet the future needs of elderly Australians. Stewart Brown estimated that in
the period to December 2017 aged care overall showed a return on assets of only
0.5%—whereas six months earlier it was at 1.3%. For Guild members, return on
assets fell from 3.8% to 2.6% in the same period.[49]
4.50
The Aged Care Guild also proposed that it is 'informative to compare the
returns of Guild members and the sector generally to those being achieved by
other sectors of the economy' (Table 4.1).[50]
The Guild elaborated that:
By any measure, to say that Guild members are reaping large
profits through taxpayer subsidies is incorrect. In fact, taxpayer subsidies
are used to fund residents' care—not profits—and the returns in the aged care
sector are far less than many other sectors...[51]
Table 4.1: Return on Asset comparisons to other industry
groups[52]
| ASX GICS
industry group |
2017 % |
2018 (est)
% |
| Commercial and
professional services |
12.01 |
11.56 |
| Consumer
services |
17.41 |
15.37 |
| Food and
staples retailing |
10.28 |
10.57 |
| Health care
equipment and services |
14.87 |
16.95 |
| Media |
19.43 |
16.85 |
| Retailing |
13.10 |
13.67 |
| Software and services |
29.77 |
31.70 |
| Telecommunication
services |
11.01 |
11.44 |
| Transportation |
4.65 |
5.11 |
| Guild members
(average) |
3.80 |
2.60 |
4.51
Mr Andrew Sudholz, Chief Executive Officer of Japara Healthcare, indicated
that aged care is not a highly profitable sector, irrespective of provider
ownership type:
It's important to understand that everyone in this industry
is trying to make a profit that sustainable, but the industry now has quite a
few places not making a profit, and that is both the church and charity and the
privately owned people.
The question about what is inadequate profit has to do with
the return on invested capital, and we're currently running in the very low
single-digit range. The evidence is there; it's one or two per cent.[53]
4.52
The Aged Care Guild acknowledged that its members do compare well with
other aged care providers in relation to the level of returns, particularly
when compared against the not-for-profit sector. However, the Guild observed
that there are a number of reasons for this, including: the provision of
'additional services' in its members' facilities (fees for which have
previously been reported as 'other income' by providers)[54];
and the concentration of Guild member providers in major cities or large
regional centres, therefore attracting higher accommodation payments.[55]
4.53
This reasoning was supported by Mr Corderoy from StewartBrown in
explaining the difference between the ROA calculations provided by the Aged
Care Guild and StewartBrown:
In the for-profit sector, the vast majority of their
facilities are in the metropolitan areas and a smaller amount are in the inner
regional areas. Of course the not-for-profit sector and the government have a
much greater spread, including taking the burden, as it were, for the outer
regional and remote areas. If you look at say the metropolitan sector, the
return on assets would be greater, but remember that our figures are looking at
the whole geographic sector...So when you're looking at an overall average, the
not-for-profits clearly will have a lower result. But if we just do a return on
assets on metropolitan Sydney and metropolitan Melbourne, yes, they would be
higher than our figures, but our figures are looking at the sector as a whole.[56]
Consumer choice in the sector
4.54
Regulatory constraints on the provision of aged care services mean that
consumers are limited when it comes to choosing a service. While for-profit
providers contend that they compete based on the quality of the services
provided, a lack of transparency and accountability means that consumers are
limited in their ability to make informed decisions about their care. Further,
the reluctance of many residents and their families to change residential
settings means that appropriate information to make an informed decision
regarding residential care entry is essential.
4.55
On this point, Aged Care Crisis Inc., a not-for-profit consumer-based
advocacy group, submitted that:
[For consumers to] exert choice in the marketplace requires
information, the knowledge to assess and use it, as well as the confidence and
power to use it. Without this citizens are at high risk of being exploited.
During the 20 years of this system Australia has been the
most opaque of all countries in collecting and supplying data to those who need
it. Providers won't even tell us how many staff they have let alone supply any
data about the care they provide.[57]
4.57 These concerns were also raised by Public Services
International (PSI), who suggested the current nature of funding for aged care
is harming the community and leading to worse consumer outcomes.[58]
PSI stated that:
The current funding model for aged care services, as with
other government funded services that utilise for-profit provision of the
service, is open to rent seeking behaviour, as:
...
There is limited ability for the user of the service to gain
experience and knowledge of the sector, or the provider, prior to the need for
the service arsing, and, changing provider once engaged is difficult. This
creates a significant power imbalance and makes 'choice' an abstract construct
for the consumer. This is made worse by the current lack of public information
on service providers.[59]
4.56
In regional Australia, consumer choice is more limited than in
metropolitan centres:
ACTING CHAIR: I suppose that, when we look at
competitiveness in markets, there's always that question about what we are
competing for. I think there are some real questions about the extent to which
aged care is a genuinely competitive market, not least because, once a patient
enters a home, moving them is, as I know from personal experience, so immensely
traumatic that the idea that you will decide you don't like that choice and
make another choice is really limited by the practical realities of moving a
frail aged person with dementia.
Another analysis of this market might be that, at least for
those people who are reliant on private capital, the battle really is
competition for private capital rather than competition for clients. Do you
think that's a fair characterisation of how this market operates?
Norah Barlow: I definitely believe that it's a
competitive sector at the point of getting a resident into your home and
providing the type of services and environment that you would want. That does
require capital, because you are actually building. So I definitely see that
point. I understand your point that, once they're in a home, for lots of
reasons they generally don't move.
ACTING CHAIR: My personal experience, to be honest
with you, is mostly in regional Australia, so it's not very competitive at the
point of entry either.
Norah Barlow: No, being location specific would
suggest that that's pretty difficult. In metros, it's a very big difference.[60]
4.57
Chapter 5 provides a broader discussion of financial transparency and
related regulation of aged care providers, as well as suggested measures to
enhance the integrity and public visibility of providers' financial and tax
practices. By extension, the measures proposed also go some way to enhancing
consumers' ability to make informed decisions about their care.
Committee view
4.58
The committee acknowledges that aged care is a sector where expenses are
characteristically high and profit margins are low.
4.59
However, the committee considers that the insights provided by TJN-Aus,
and in turn through this inquiry, demonstrate that current frameworks—in
particular, the ability to use stapled and other complex corporate structures—provide
scope for providers to potentially avoid, or at the very least minimise, their
tax obligations.
4.60
The committee is concerned by the apparent difficulty in obtaining a
complete picture of these practices by for-profit aged care providers. The
committee contends that—in an industry that is tasked with caring for those who
are highly vulnerable, and indeed, is heavily reliant on government subsidies
to do so—such limited visibility is unacceptable to the public.
4.61
Further, the committee notes evidence from the ATO that it has some
concerns over the financing arrangements used by certain entities in the aged
care industry, particularly the conditions of their related party financing
arrangements.
4.62
In light of this, the committee considers that greater investigation of
the tax and financial structures of aged care providers is warranted.
Recommendation 1
4.63
The committee recommends that, as part of its deliberations, the Royal
Commission into Aged Care Quality and Safety consider the tax and financial
structures of aged care providers.
4.64
While not the focus of this inquiry, the committee acknowledges
stakeholder concerns regarding quality of care by for-profit aged care
providers, as well as calls to implement safeguards to ensure government
subsidies are spent directly on care provision. The public justifiably expects
assurance that government funding is appropriately allocated to the provision
of quality care and, as such, concerns about getting value for money from
government subsidies are inseparable from the personal safety of aged care
consumers. The committee contends that more can be done to increase the
transparency and comparability of information relating to quality of care
across the aged care sector to support aged care consumers and their families.
Recommendation 2
4.65
The committee recommends that the Australian Government explore opportunities
to better share information about quality of care across the aged care sector,
with the aim of increasing transparency and comparability, and supporting
informed decision-making for aged care consumers and their families.
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