I work at a nursing home run by Opal. As a part-timer, do I get first go at any extra shifts going?
Clause 11.3(f) of the Opal Aged Care (NSW) Enterprise Agreement 2016 sets out that offers of “… additional hours or shifts will be made to part-time employees in the first instance”.
Opal
Aged care giants under fire
A Senate inquiry has shone a light on the murky financial and tax practices of Australia’s biggest for-profit aged care providers.
It raises questions about what they have to hide,” said the inquiry’s acting chair, NSW Labor Senator Jenny McAllister.
“Labor Senators are keen to hear from two of Australia’s largest for-profit aged care providers. We’ll be looking at what procedural options we have to make sure that happens.”
The Tax Justice Network (TJN) said Bupa, which operates in several countries, appeared to be engaged in “a global pattern of aggressive tax avoidance”.
TJN researcher Jason Ward said Bupa’s businesses in Australia, particularly aged care, had benefited heavily from government funding.
Also, it appeared that Bupa had structured its business in ways to minimise corporate tax obligations.
“Bupa’s sale of interests in its Australian partnership generated profits in the UK of over $568 million in 2016 and left an Australian entity with billions in debt,” Ward’s submission said.
“The Bupa case provides a clear example of the need for government reforms to mandate greater transparency and public accountability for government funding given to for-profit companies.”
Senator McAllister said tax officials told the inquiry they had concerns about tax arrangements used by some companies in the aged care sector.
“Senators heard that one of the sector’s largest operators – Opal – paid their owners more than $15 million in dividends in a year that their operating company paid no tax,” she said.
“Another large operator – Allity – were paying close to 15 per cent interest on a loan to a related party, an arrangement tax officials said could rarely if ever be described as arm’s length.
“For-profit aged care providers depend on government subsidies. Australians rightly expect that this money will be used to provide care for vulnerable and older members of our community, not hidden using tricky accounting practices.”
Allity told the inquiry the claim that the company engaged in aggressive tax planning and tax avoidance was “false and unsubstantiated”.
However, Jason Ward described the loan with its very high 15 per cent interest rate as a way for Allity’s investors “to extract a profit that is not subject to taxation in Australia”.
“It is hard to imagine that this shareholder loan at 15 per cent was cheaper than other funding options or predominately for commercial purposes and not tax minimisation,” Ward said.
“There is no doubt that these interest charges significantly reduced taxable income.”
Leading finance journalist Michael West said the 15 per cent interest rate on the Allity loan was seven times the prevailing cash rate.
“One of the main tricks of the trade in avoiding tax is getting loans from a related party offshore and paying high interest rates on it to get the money out of the country in lieu of paying tax,” he wrote.
Ward said Regis appeared to pay a higher share of taxes than other for-profit companies.
However, this may have been motivated by the $33 million in fully-franked dividends (dividends on which the company has already paid tax) received by the company’s two founders and largest shareholders, he added.
In addition, Regis’s top six executives and five non-executive directors received $5.4 million in total salaries and fees in 2017.
This was equivalent to 7.4 per cent of Regis’s total net profit after tax.
Letters to the Editor
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Education Allowance at Opal
I recently obtained a job as a registered nurse in a nursing home operated by Opal Aged Care. I hold an additional qualification that is related to my duties at the facility. Are these recognised in some way?
Clause 18.5 (Continuing Education Allowance) in the Opal Aged Care (NSW) Enterprise Agreement 2016 sets out that a registered nurse or enrolled nurse who holds a qualification in a clinical field, in addition to the qualification leading to registration or enrolment, shall be paid an allowance subject to certain conditions. The most important is that the qualification must be accepted by the employer to be directly relevant to the competency and skills used by the employee in the duties of the position. The allowances payable are set out in Schedule D of the agreement and vary depending on whether they are a postgraduate certificate, diploma or degree.
MPs to turn spotlight on aged care
ANMF welcomes Senate inquiry into for-profit providers.
A Senate committee will examine the financial and tax practices of Australia’s for-profit aged care providers.
This follows revelations that the top six for-profit providers received $2.17 billion in government subsidies but paid little or no tax.
A report by the Tax Justice Network showed many for-profit providers, some with foreign ownership, use a variety of corporate loopholes in order to avoid or aggressively minimise tax.
The report was commissioned by the Australian Nursing and Midwifery Federation (ANMF), which represents nursing unions in every state and territory.
Following the report’s release, the Senate Economics Reference Committee announced it would investigate the for-profit sector’s tax strategies and their effect on the quality of service delivery.
The inquiry will also look at whether the government is getting value for money and whether the sector is sufficiently accountable for spending taxpayer money.
The top six operators – Bupa, Opal, Regis, Estia, Japara and Allity – control about 20 per cent of the aged care market and get about 70 per cent of their revenue from government.
The ANMF’s Acting Federal Secretary, Annie Butler, welcomed the inquiry on behalf of aged care nurses and the nursing home residents they care for.
“Aged care residents receive one and a half hours less care than they should, every day. Yet there are no rules to ensure the $2.17 billion in government subsidies given to these for-profit providers is spent directly on their care,” she said.
“The Tax Justice Network report revealed these providers have the financial capacity to employ more nurses and carers but are placing their profits and shareholders before safe care for their residents.
“Many providers do not employ enough staff to adequately feed, wash, toilet, change or give medication to their residents.
“Companies that receive millions of dollars via government subsidies should be required by law to meet higher standards of transparency in financial reporting.
“They should not be given subsidies unless they can show that government money is being directly spent on the care of elderly residents.
“If the government is serious about ensuring quality service provision, it needs to shift its
focus from company tax cuts to company tax collection by closing the loopholes.”
Find out more
Read the ANMF and Tax Justice Network’s report on tax avoidance by for-profit aged care companies: http://anmf.org.au/documents/reports/ANMF_Tax_Avoidance_Full_Report.pdf
Big profits, low tax and poor care
Owners of for-profit aged care companies are doing nicely and can afford to increase the number of nursing staff to deliver the care their residents deserve.
Recent media coverage has exposed widespread sub-standard care in nursing homes along with revelations of elderly Australians getting ripped off by retirement village operators.
However, not much has been said about the high profitability of aged care companies and the dubious ways they minimise tax despite relying on government funding.
Research by the Australian Nursing and Midwifery Federation (ANMF) shows the six biggest for-profit providers Bupa, Opal, Regis, Estia, Japara and Allity – control about 20 per cent of the aged care market.
Their profits, government subsidies, market share, resident fees and political influence are all growing.
They received nearly $2.2 billion in government subsidies, which made up 72 per cent of their revenue, according to the latest figures.
In total they reported an annual profit of $210 million.
As residents’ acuity increases, the level of funding per bed has increased as well.
Government funding of the industry is expected to continue growing at an average 6.7 per cent per year.
Massive profits subsidised by government
ANMF acting federal secretary Annie Butler says some of the for-profit operators are making significant profits from a largely government-funded industry while failing to employ enough staff and provide decent standards
of care.
“Our research shows the industry can well afford to raise standards of care including adequate staffing levels and better food,” she says.
For-profit providers are also increasing the revenue they generate from residents’ fees.
Labour costs have gone up but not as fast as the increase in funding received for higher-need patients.
“Providers are exploiting workers with higher workloads, and consequently lower levels of care for patients, so they can maintain their profit margins.”
While relying on public money the for-profit providers are also using schemes to avoid paying a fair share of tax.
“While profits go up, tax revenue goes down and the quality of care is comprised in pursuit of even higher profits.”
Aged care increasingly dominated by big players
Annie says the big for-profit providers are expanding rapidly through both acquisitions and
new development.
“These companies are driving consolidation in the industry and have a major influence on how non-profit companies operate,” she says.
“It will become increasingly harder for small for-profit companies to compete with their larger rivals.”
Most of the companies are looking at providing a range of aged care services beyond traditional nursing home beds.
Many are involved in providing home care services and are looking to both home care packages and NDIS funding for additional revenue and opportunities.
Retirement village operators are expanding aged care beds and aged care operators are expanding independent living options.
Tax liability vanishes
Despite operating in an industry that relies heavily on government funding, the for-profit aged care and retirement village companies seem adept at minimising corporate income tax.
One of the main ways they do so is by using trusts and stapled securities or related corporate structures.
Companies are split into a trust or trusts (which own the real estate and/or provide finance and are not subject to corporate income tax), and operating companies.
The operating companies are subject to the full corporate tax rate and the trusts are required to distribute profits.
This structure allows the trust to charge the operating company excessive rents or lending costs.
This generates tax-free profits for the trust and its shareholders while reducing the tax liability in the operating companies.
In January 2017, the tax office (ATO) issued an alert drawing attention to the problematic use of stapled structures to avoid tax.
The federal Treasury has also released a consultation paper on stapled structures, identifying the same issues.
Some of the larger family-owned for-profit aged care providers are owned through family trusts.
These families include some of the wealthiest families in Australia who are profiting heavily from government funding for aged care.
What is a “home base”?
Question: I have commenced work at a nursing home operated by Estia Health. When starting I was told that the home I work from will be my ‘home base’. What does that mean?
Answer: Under Clause 13 of the Estia Health NSW Enterprise Agreement 2016 Opal Aged Care (NSW) Enterprise Agreement 2016, employees mainly work at a particular Estia Home, which is called their “home base”. This appointment will be in writing. This, however, does not necessarily prevent you from working at other Estia homes as part of your regular duties. A temporary or permanent change in your home base must be mutually agreed.