Report shows funding for non-profit aged care operators disappears
A new report, Caring for Growth, Australia’s largest non-profit aged care providers, by the Centre for International Corporate Tax Accountability & Research (CICTAR), shows the largest non-profit residential aged care operators fail to account
for billions of dollars in Federal Government funding and prioritise investment over care.
An analysis of available public financial reports and Government funding data on nine large non-profit operators reveals a pattern of extracting revenue from Government subsidised residential aged care to fund property investments.
The report follows previous analyses of Australia’s largest for-profit operators and sheds new light on the underlying structural problems in aged care as the COVID-19 pandemic devastates Victoria’s nursing homes.
The report analyses the available public financial reports and Government funding data of nine of Australia’s largest non-profit aged care operators, including BlueCare, Uniting NSW, Mercy Aged Care, Bolton Clarke, Catholic Healthcare, Anglicare, Juniper and Southern Cross Care in SA and NT, and Southern Cross Care Tasmania who received $2.4 billion in
Government funding and controlled 11% of total nursing home beds at 317 facilities.
While four of the top six operators reported losses in 2019, those losses were driven by property investment. Each of the six operators generated between $26 million and $62 million in net cash from operations.
These non-profit operators provide limited detail on how hundreds of millions in Government funding was spent, so like the for profits and family owned companies, it is impossible to see how much is spent directly on providing care.
The report also reveals that the nine non-profit providers paid executives and board members collectively over $30 million in total compensation in 2019. Lack of reporting requirements means that it in most cases it is not possible to identify how much each individual executive or board member was paid.
“It is no wonder that the underlying problems in aged care have been further exposed by the Coronavirus crisis,” said Jason Ward, the report’s author.
“Hundreds of millions in public subsidies are provided with no strings attached and no requirements for transparency and accountability. Large for-profit and not-for-profit aged care operators appear to be driven by a privatised market-based approach that – despite large government subsidies – is failing to provide care and dignity to Australia’s most vulnerable residents.”
The new report covers the largest non-profit aged care providers in each state. These entities sit on large cash reserves and even larger property holdings. Current financial reporting is limited and opaque and it is not clear how federal funds are spent. The report has been submitted to the ongoing Royal Commission and in support of a Senate bill that would increase financial transparency in aged care.
All aged care operators must be required to prioritise the needs of Australia’s elderly above all else. The report demonstrates the lack of public accountability and transparency and provides a set of simple and common-sense recommendations for reform.
Key recommendations from the Report are:
• Targeted funding and support for small community-based providers with a track record of high-quality care should be prioritised;
• Aged care operators with over $10 million in annual federal funding must be required to file full and complete Tier 1 financial reports, with complete business segment breakdowns and clear standards for reporting government funding;
• All aged care operators with less than $10 million in annual federal funding must be required to file Tier 2 financial reports, if not doing so already; and
• Aged care operators must be required to publicly disclose government funding and total expense by type at a facility level.
All operators in this report are non-profit and exempt from income tax payments, except on profits generated by for-profit subsidiaries or joint ventures. While laws vary between states and territories, non-profit status can also allow for exemption from payroll taxes, exemption from local council rates and other benefits.
The report can be found here. (Password: NonprofitAustralia)
For more information on the Centre for International Corporate Tax Accountability & Research (CICTAR) and previous CICTAR/Tax Justice Network – Australia reports on aged care, visit www.cictar.org