Any
regular reader of online news would have seen mentions of elder abuse, neglect
and sub-standard health care over the years.
hellocaremail.com.au, 2017:
Elder abuse is a
critical issue in aged care homes, with thousands of cases reported to the
Health Department every year…. In 2016-2017, there were 2853 reports of
“reportable assaults’’ and 2463 allegations of “unreasonable use of force”.
Australian
Law Reform Commission, Elder Abuse (DP 83), Abuse
and neglect in aged care, 12 December 2016:
1.34 Stakeholders
reported many instances of abuse of people receiving aged care. These included
reports of abuse by paid care workers[55] and
other residents of care homes[56] as
well as by family members and/or appointed decision makers of care recipients.[57] For
example, Alzheimer’s Australia provided the following examples of physical and
emotional abuse:
When working as a PCA
[personal care assistant] in 2 high care units, I witnessed multiple, daily
examples of residents who were unable to communicate being abused including:
PCA telling resident to ‘die you f---ing old bitch!’ because she resisted being
bed bathed. Hoist lifting was always done by one PCA on their own not 2 as per
guidelines and time pressures meant PCAs often using considerable physical
force to get resistive people into hoists; resident not secured in hoist
dropped through and broke arm—died soon after; residents being slapped,
forcibly restrained and force-fed or not fed at all; resident with no relatives
never moved out of bed, frequently left alone for hours without attention;
residents belongings being stolen and food brought in by relatives eaten by
PCAs.[58]
1.35 The
ALRC also received reports of other forms of abuse, including sexual[59] and
financial abuse.[60] Restrictions
on movement[61] and
visitation[62] were
also reported. Many submissions also identified neglect of care recipients.[63]
The
Sydney Morning Herald,
15 October 2017:
Across NSW, 58 per cent
of aged care workers surveyed said they have not been able to provide the level
of care residents deserved because of budget cuts. Of those, 80 per cent said
staff shortages were the main barrier to providing proper care.
The
Courier-Mail,
19 April 2018:
PROFIT-HUNGRY aged care
companies are charging fat “administration fees” to skim up to 40 per cent of
government payments for in-home nursing care.
More than 100,000
elderly Australians are on a waiting list to receive as much as $50,000 a year
in a “homecare package” to pay for nursing, housekeeping or companionship
at home. But an investigation by The Courier-Mail has revealed
that some home-care companies are pocketing as much as $19,000 of the
taxpayer cash through hefty “administration” or “case management” fees.
The fees are billed on
top of hourly charges for home help – leaving clients with less cash
to spend on in-home care such as nursing. And if clients want to
switch to a cheaper provider, they are being slugged up to $1000 in “exit
fees”.
The Age, 3 May 2018:
Scandals, including a
recent national audit showing 600 aged-care homes failed in the past
five years to provide minimum standards, prompted a government review. The
Coalition, accepting a key recommendation, has ended the ridiculous practice of
alerting operators to spot checks. The review also urged the streamlining and
strengthening of the regulator.
If one does a
simple online search many of the big ‘for profit’ aged care providers are named
in relation to such abuse, neglect and sub-standard health care allegations.
Now in May
2018 the Tax Justice Network[1] is looking at aged care
provision from another angle. One which shows that the budgetary meanness which sees these big companies expect elderly residents to remain in sodden incontinence pads or live-off meagre meal rations occurs in spite of the millions in profit made on the back of billions in taxpayer funding of the age care sector.
It has
released A Tax Justice Network – Australia Report, TAX
AVOIDANCE BY
FOR-PROFIT AGED CARE COMPANIES: PROFIT SHIFTING ON PUBLIC FUNDS.
Sadly, this
report only confirms the fact that corporate greed runs rampant through all major
aspects of Australian life, including aged care.
Executive Summary, Background, p.5:
Older
people are a growing proportion of Australia’s population; in 2016, 15% (one in
seven) Australians were aged 65 years or older. By 2056 this percentage is
expected to grow to 22% (8.7 million).1 The need for aged care services is
increasing. Between 2015– 2016 almost 214,000 people entered aged care in Australia.
On average, older people in Australia spend three years in permanent
residential care, just over two years in home care, and one and a half months
in respite care.2 The Australian tax payer, via the Commonwealth Government
contributes around 75% of the expenditure in aged care in Australia, which is
around 96% of the total funding on aged care from Commonwealth and State
Governments. Government recurrent spending on aged care services in Australia
was $17.4 billion Australian dollars (AUD) in 2016- 2017, with residential aged
care services accounting for 69.3% ($12.1 billion AUD).3 Some of this funding
is provided as subsidies to aged care provider companies including those that
operate for profit. In 2018 the Australian Nursing and Midwifery Federation
(ANMF), Australia’s largest national professional and industrial nursing and
midwifery organisation with over 268,500 members, commissioned the Tax Justice
Network - Australia to analyse possible tax avoidance by for-profit aged care
companies and to provide recommendations for improving transparency on
Government spending on for-profit aged care.
Key points from the
report
*
By number of beds, not-for-profit providers are the largest aged care provider
group in Australia (52% in 2013-2014), however there has been a rapid growth in
the size and spread of for-profit companies; Bupa, Opal, Regis and Estia are
the largest aged care providers nationally. If Japara and Allity are included,
these 6 for-profit companies operate over 20% of residential aged care beds in
Australia.
*
In the most recent year (mostly the 2017 financial year) the six largest
for-profit companies were given over $2.17 billion AUD via government
subsidies. This was 72% of their total revenue of over $3 billion. These
companies also reported profits of $210 million AUD (2016-2018).
*
Companies can use various accounting methods to avoid paying tax. One method is
when a company links (staples) two or more businesses (securities) they own
together, each security is treated separately for tax purposes to reduce the
amount of tax the company has to pay. Aged care companies are known to use this
method as well as other tax avoiding practices. Another practice is by
“renting” their aged care homes from themselves (one security rents to another)
or by providing loans between securities and shareholders.
*
The six largest for-profit aged care providers have enormous incomes and
profits:
* The largest company, BUPA, had
almost $7.5 billion in total income in Australia (2015-16) but paid only $105
million in tax on a taxable income of only $352 million.
* BUPA’s Australian aged care business
made over $663 million in 2017 and over 70% ($468 million) of this was from
government funding.
* Funding from government and resident
fees increased in 2017, but BUPA paid almost $3 million less to their employees
and suppliers.
* The second largest, Opal, had total
income of $527.2 million in 2015-16 but paid only $2.4 million in tax on a
taxable income of only $7.9 million.
* 76% ($441 million) was from government
funding in 2016.
*
Allity had total income of $315.6 million in 2015-16 and paid no tax.
* 67% ($224 million) of Allity’s
revenue was from government funding in 2016-17.
*
Regis, Estia, and Japara are listed on the Australian Securities Exchange (ASX)
but appear to be using methods to reduce the amount of tax they pay while
earning large profits from over $1 billion of government subsidies.
*
Family owned aged care companies (Arcare, TriCare, and Signature) receive
between $42-$160 million each in annual government subsidies but provide very
little public information on their operations and financial performance and may
use accounting methods to avoid paying tax.
* (All figures quoted above are in AUD)
*
The Australian Government and the Federal Opposition (the Australian Labor
Party) have proposed several ways to fix the problems with companies avoiding
tax by using trust structures and other methods but there are still loopholes.
*
It is difficult to get a detailed and complete picture of the full extent to
which these heavily subsidised aged care companies are avoiding paying as much
tax as they should, because Australian law is not currently strong enough to
ensure that their financial records and accounting practices are publicly
available and fully transparent.
Conclusion
The
six largest for-profit aged care providers in Australia received over $2.17
billion AUD in annual tax payer funded subsidies which provided after tax
profits of $210 million AUD. The actual operating profits were much larger.
These providers only paid around $154 million AUD in tax in 2015-16. Companies
that receive millions of tax payer dollars via Australian government subsidies
must be required by law to meet higher standards of transparency in financial
reports and be publicly accountable. The report calls upon the Government,
Opposition, and cross-bench Senators to work together to make laws to stop aged
care providers from avoiding the taxes they should pay and provide clear
records of their business dealings.
The
Tax Justice Network – Australia strongly supports recent government legislation
that has been introduced to close loopholes in the Multinational Anti-Avoidance
Law and government reforms to stapled structures. However, there is still a
need for additional transparency measures. The Tax Justice Network – Australia
also strongly supports a policy proposed by the Australian Labor Party to
introduce minimum taxation of discretionary trusts. These reform measures are
examined in more detail by this report in the section: Current Reform Measures.
This
analysis of tax payments and corporate structures of the largest for-profit
aged care companies provides clear evidence that simple common-sense reforms
are needed immediately to restore integrity to the tax system and to ensure
public accountability on billions of dollars in government spending.
RECOMMENDATIONS
FROM THE REPORT
Any
company that receives Commonwealth funds over $10 million in any year must file
complete audited annual financial statements with Australian Securities and
Investments Commission (ASIC) in full compliance with all Australian Accounting
Standards and not be eligible for Reduced Disclosure Requirements. Public and
private companies must fully disclose all transactions between trusts or similar
parties that are part of stapled structures or similar corporate structures
where most or all income is earned from a related party and where operating
income is substantially reduced by lease and/or finance payments to related
parties with beneficial tax treatment.
Australia’s
Largest For-Profit Aged Care Companies
In
Australia, non-profit providers collectively operate a majority of residential
aged care beds. However, the market share of large for-profit providers
continues to grow rapidly. Likewise, the influence of for profit providers on
shaping government policy and influencing broader trends in the aged care
sector has never been greater. Ranked by the number of government allocated
residential aged care places (beds) in 2017, the six largest for-profit aged
care companies in Australia are; Bupa, Opal, Regis, Estia, Japara, and Allity.
Combined, they operate over 20% of all residential aged care beds in the
country. These companies continue to expand market share through new
developments and acquisitions. These companies are also expanding to provide
more retirement living and home care services, which allow access to additional
government funding. In the most recent financial year (2016-2017), these six
for-profit aged care companies combined received over $2.17 billion in
government subsidies.4 This made up 72% of their combined total revenue of over
$3 billion.5……
COMPANY
SNAPSHOT
Bupa:
A United Kingdom-based mutual insurance company with global operations
including aged care services. Australia is Bupa’s largest and most profitable
market.
Regis,
Estia, and Japara: Public aged care companies listed on the ASX.
Opal:
A private aged care company owned by subsidiaries of two listed companies, AMP
Capital and Singapore-based G.K. Goh.
Allity:
controlled by Archer Capital, an Australian private equity firm with large
foreign pension fund investors.
Arcare,
TriCare and Signature (formerly Innovative Care): three family-owned,
for-profit aged care companies.
NOTE:
1. The Tax Justice Network -
Australia is the Australian branch of the Tax Justice Network (TJN) and the
Global Alliance for Tax Justice. TJN is an independent organisation launched in
the British Houses of Parliament in March 2003. It is dedicated to high-level
research, analysis and advocacy in the field of tax and regulation. TJN works
to map, analyse and explain the role of taxation and the harmful impacts of tax
evasion, tax avoidance, tax competition and tax havens. TJN’s objective is to encourage
reform at the global and national levels.
Membership of the Network can be found here.
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