Aged care providers are canvassing the Federal Government about the impacts of the removal of the payroll tax supplement, announced in the Federal Budget, warning the move will have a negative effect on workforce.
Large aged care providers are also now facing the prospect of having to undertake negotiations with multiple state governments as a result of the move.
And on Wednesday, the change in the payroll tax prompted Japara, the first ASX-listed aged care provider, to request a halt on trading pending its analysis of the impacts of the Federal Budget.
In Tuesday night’s Budget the Federal Government announced it would suspend the aged care payroll tax supplement to achieve a saving of $652 million over four years.
The payroll tax, a levy charged on for-profit aged care providers by state governments, is refunded by the Commonwealth in the interests of ‘competitive neutrality’. Not-for-profits are largely exempt, except for those who subcontract services such as laundry or catering.
As Australian Ageing Agenda reported, the Commission of Audit earlier this month recommended the government stop paying the payroll tax supplement as it was “effectively shifting the payment of state tax to the Commonwealth.”
However, aged care providers and peak bodies have criticised the government for implementing the recommendation without consultation with the sector.
On Wednesday, Leading Age Services Australia (LASA) raised the issue with Minister for Social Services Kevin Andrews and Assistant Minister Mitch Fifield, as well as Shadow Minister for Ageing Shayne Neumann and Greens Senator Rachel Siewert. The peak body said it would further lobby officials from the offices of the Prime Minister and Treasurer when it meets with them on Monday.
Lobbying at the regional level has also begun, with the chief executives of the state branches of LASA seeking urgent discussions with state and territory finance and health ministers.
LASA described the development as “a political football on GST revenue between the government and states” which was “unwittingly an attack on the very workforce that must be supported to grow considerably if we are to meet the needs of older Australians.”
“The removal will have a direct effect on organisational cash flow, staffing, skills retention and will artificially constrain wages at a time when the industry needs to be employing more people.
“Our industry is committed to fiscal responsibility and importantly high quality care and services for vulnerable older Australians. The government needs to understand that age services is not a highly profitable industry and a funding cut like this will seriously threaten some providers,” LASA said.
Discussions with state governments
Large aged care providers, particularly those operating across numerous jurisdictions, will now likely face negotiations with several state governments.
Managing director of Bupa Care Services, Louis Dudley, told AAA on Wednesday that while he understood why the Commission of Audit had proposed the change, the subsequent lack of discussion with the sector was unfortunate given the other positives in the Budget, such as the redirection of the $1.5 billion Workforce Compact money back to the general pool of funding.
“I have to go to each of the state governments now and discuss with each one, one at a time, which really is increasing red tape, and that’s the opposite of what the government was trying to achieve nationally,” Mr Dudley said.
He said that scrapping the measure, which had been set up to ensure a level playing field, was a polarising move and would cause friction within the sector. “I think it’s unfair that some are levied this charge and others are not,” he added.
Bringing about an industry response to various state governments was not an easy thing to achieve, he said. “All of us aged care provides have a limited infrastructure in that sense, so to now have to debate these things with state governments is not an optimal outcome.”
Minister responds
However the Federal Government looks set to resist calls for the measure to be reversed, with Assistant Minister Fifield telling AAA yesterday that “the Commonwealth is no longer in a position to indirectly transfer money to the states and territories via aged care providers.”
Senator Fifield said the repurposing of the workforce supplement money would result in a 2.4 per cent increase in funding across the board for aged care providers, and that the Budget also provided $54 million extra through increases to the viability supplement. “These extra funds will assist providers to target their areas of need,” he said.
HAVE YOUR SAY: Do you agree with the government’s decision to stop the payroll tax supplement? Comment below
No the payroll should not go.
The payroll tax supplement should not go. I am obviously looking at it from a provider’s perspective but this subsidy has helped us maintain our facility. Without it we would be considering closure. Along with all the other indignities heaped upon us by governments this is the final straw. The not for profits don’t’ provide a better service than the for profits and they get so much more in benefits. Let the government take away their staff salary sacrifice benefit which would save much more money. We are just an easier target. And by the way payroll tax should be banned. Taxing you for paying people and employing them? it is outrageous enough on tis own.