Nursing home giants shifting millions in profits offshore

Companies including Bupa and Opal are shifting profits offshore and paying minimal tax, all while receiving hundreds of millions of dollars in government subsidies, a new report finds.

The report analyses the complex and opaque corporate structures used by the biggest for-profit operators of nursing homes in Australia.

According to The Guardian it exposes the tax dodging practices of Australia’s largest for-profit aged care providers. Several of the companies have international connections, but the biggest global company is Bupa. They are UK based global mutual health insurance and health services company, but Australia and New Zealand is the largest market. 

PSI: The introduction of a fair new global tax system is long overdue

 For several years, Public Services International (PSI) has been working to establish a fair new global tax system. PSI Director Policy & Governance Daniel Bertossa is not surprised on how these companies get away from their obligations and says that authorities must respond and make a settlement with this injustice.

The ease with which these corporations can rip off the taxpayer and shift millions into tax havens shows just how unhealthy the current international tax system really is.

Bertossa asserts that companies not contributing to the community by paying their fare share of taxes and should not get governmental contracts. 

The nurses working in these rest homes sure pay their taxes. The residents in the rest homes sure paid their taxes. Companies who do not pay their taxes should not be obliged to receive governmental contracts or subsidies.

He continues.

Employees in the public sector are expected to work under a high level of accountability - companies receiving governmental money should also provide a high level of public transparency. 

Staffing crisis in Australia’s aged care system

The chronic staffing crisis in Australia’s aged care system has led to dangerous workloads for nurses and carers resulting, too often, in missed care for vulnerable nursing home residents. The Australian Nursing & Midwifery Federation acting Federal Secretary Annie Butler said:

Aged care is in crisis, yet Australia’s biggest aged care providers are clearly putting profits ahead of their responsibility to ensure safe and dignified care for the elderly.

Butler continues. 

When contrasted with what we know about the aged care crisis in Australia, and increasing evidence of chronic understaffing, this report shows us that for-profit providers do have the financial capacity to improve staffing to deliver safer and more effective care for residents but they are choosing to focus on maximizing profit rather than providing safe staffing levels.

The report shows:

• Australian taxpayers, via Government funding, contribute around 70% of the expenditure in aged care in Australia, which is around 96% of the total funding on aged care from Commonwealth and State Governments;
• The six largest providers (BUPA, Opal, Regis, Estia, Japara, and Allity) received over AUD $2.17 billion in government subsidies – which was 72% of their total revenue of over AUD $3 billion;
• Bupa, Australia’s largest aged care provider, made over $663 million in 2017 with 70% ($468 million) coming from government funding. Even though taxpayer funding and residents’ fees increased in 2017, it paid almost $3 million less to employees and suppliers;
• Although Bupa is headquartered in the UK it makes more profit in Australia and New Zealand than in the UK or any other region;
• Opal, the second biggest provider, had a 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. Opal is owned by AMP Capital and a Singapore-listed company;
• Allity, did not pay any tax in 2015-16 or 2014-2015;
• Opal paid no tax in 2014-2015

Allegedly they used tactics often associated with profit-shifting, including related party loans and the use of trusts in so-called stapled security arrangements. Profit shifting refers to tax planning strategies used by multinational companies that exploit gaps and mismatches in tax rules to artificially shirt profits to low or now-tax locations where there is little or no economic activity. 

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Bupa under investigation by Australian tax authorities

The UK- based company, Bupa operating in Australia is now under investigation by the Australian tax authrorities over their approach to structuring its debt, fueling calls from campaigners for greater transparency around how companies receive large government subsidies structure their businesses, according to the Financial Times. 

 Bupa, which is Australia’s largest aged care provider, registeret A$7.5 bn in total income in the country in 2015/2016, of which A$352 millions was taxable income, leading to A$105m tax payment.