Last week we commented on the Australian Nursing & Midwifery Foundation (ANMF) targeted campaign against the Big Six private aged care operators, who they accuse of making big profits from government funds and then aggressively avoiding paying tax.
Pointing out the cynical messaging of the ANMF about profit gouging we referred to the StewartBrown benchmarking that shows many Not For Profits in its Top Quartile results equalled the private operators profit or ‘surplus’ per bed – and they don’t pay tax.
After our publication Senior Partner Grant Corderoy wrote to us in part as follows:
“…it may be misleading to suggest that the First 25% do not pay tax (being not-for-profit) as we need to look at the whole organisation result (which will include a significant number of facilities making losses) when considering the tax position. The First 25% are facilities (within organisations) and not providers (operators)”.
He points out these ‘surpluses’ support their work in loss making areas like rural and remote aged care facilities.
“A very relevant financial ratio is the return on total assets (ROA) which is negative, and even the ACFA 2016 ROA was 1.6% (for 100% of provider organisations) and this has decreased to less than 1% overall in the period to December 2017. This explains the large capital drain that is currently evident in residential aged care”.
“In summary, the tax focus on NFP’s has to be based on the overall organisation result and not just the First 25% facility result”.
There is no argument with Grant, and we as a community have to be appreciative of the NFPs delivering care in the loss making markets.
But this is the decision of the NFP shareholders, to redistribute excess funds.
Private operators have a commitment to their shareholders to deliver a profit in cash or capital growth.
The point is the ANMF cynical strategy on the privates: both NFPs and privates make the same level of surpluses where they can from the same government funding.
Cut out the privates’ profits and watch the capital for new developments disappear. Then what happens to ageing, frail Australians?