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Inquiry told sustainability of aged care sector vulnerable under current funding system


There needs to be greater financial transparency of all aged care providers receiving taxpayer funds plus a stronger focus on the financial sustainability of the sector, a Senate inquiry has heard this week.

The Senate Economics Reference Committee inquiry into the financial and tax practices of for-profit aged care providers held its first and only public hearing in Sydney on Tuesday.

The inquiry is also addressing the impacts of the quality of service delivery and sustainability of the sector, adequacy of accountability for the expenditure of taxpayer money and whether current practices meet public expectations.

There were 32 submissions made to the inquiry, which was called in May in response to the Tax Justice Network – Australia report suggesting for-profit providers were using arrangements to minimise or avoid tax obligations.

Ian Yates

The report called for increased transparency and public accountability of the funds companies receive from the Commonwealth to provide services (read our backgrounder here).

Seniors advocacy group COTA Australia said any organisation that received taxpayer money should have a publicly accountable and transparent financial reporting system.

“We support calls for greater financial transparency but across all providers and also for the funding of residential care to be placed in the hands of consumers,” COTA Australia CEO Ian Yates told Australian Ageing Agenda on Tuesday ahead of his address at the hearing.

Under the current funding and regulatory climate, the overall sustainability of the aged care sector is vulnerable, industry benchmarking and accountancy firm StewartBrown said in its inquiry submission.

“The financial sustainability of the aged care sector as a whole, and not just the residential segment, needs to be fully understood by all stakeholders,” StewartBrown senior partner Grant Corderoy told Tuesday’s public hearing.

Mr Corderoy said having “a robust funding and policy model supported by appropriate legislation and regulatory control is now critical.”

The Senate inquiry should focus on the financial sustainability of the sector and extend to all stakeholders, Mr Corderoy said.

Aged care peak body Leading Age Services Australia reiterated calls for immediate funding relief and a long-term sustainable funding strategy for the sector.

“A large number of residential aged care facilities are experiencing significant and sustained financial stress due to funding cuts by successive governments, combined with rising operating costs and growing acuity and complexity of residents’ needs,” LASA CEO Sean Rooney told the public hearing.

Sean Rooney

The government controls the subsidies paid and dictates the standards of care provided, which has resulted in sustained financial pressure for many aged care providers, Mr Rooney said on Tuesday.

The Tax Justice Network, Combined Pensioners and Superannuants Association, the Aged Care Guild and aged care provider Allity are among other organisations that addressed the Senate at Tuesday’s public hearing.

The Senate is required to report back by 14 August 2018.

Related coverage

Senate inquiry launched into tax practices of for-profit providers

For-profit aged care providers defend their financial practices

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