Concerns over major FBT changes

Victoria’s body representing the aged care industry, along with three other leading health sector associations, have written to the federal government and Coalition expressing their staunch opposition to the government’s announced changes to Fringe Benefits Tax (FBT) arrangements for vehicle leasing.

John Begg, Leading Age Services Australia – Victoria chief executive, said the changes were of serious concern and would result in quantifiable real reductions to the effective wages of the employees of aged care organisations, as well as many other community services providers. 

“The changes will result in either a reduction of at least $2,000 – $3,000 per year in benefits or an increase of $2,000 – $3,000 in expenses per employee. Either way – this is a significant impact,” Mr Begg said.

Letters sent to Treasurer Chris Bowen and Opposition Leader Tony Abbott, co-signed by Ambulance Victoria, Victorian Healthcare Association and the Australian Dental Association, stated the change was a major adjustment for community service providers – with an estimated impact of more than $20 million per year in Victoria.

Mr Begg said the collaborative response demonstrated the strength of the concern the organisations have regarding the issue, and the urgency with which action is being sought from both sides of politics.

“This is a huge issue for all concerned. Our industries cover public sector workers such as nurses and paramedics, and span public hospitals, aged care, community health, and allied health professionals.

“About 70% of the employees of our member organisations who access leasing arrangements earn less than $100,000 per year and the average cost of their leased vehicles is $35,000.”

Mr Begg also noted that benefits of this type are of particular importance for positions in rural areas, where recruitment and retention can be challenging.

“The ability to claim FBT is widely and legitimately used in our industries to recruit and retain our highly trained and skilled workforces key staff who in many cases are able to gain a higher take home income in the private sector.

“This change by the Commonwealth directly threatens the workforce stability and security of our industries as it creates a perverse incentive for our workforce to seek higher paid jobs elsewhere.”

Mr Begg also expressed concern on behalf of the groups at the manner in which the announcement was made, with no notice or consultation, and without consideration of the unintended consequences, particularly for public sector and notforprofit employers and employees.

“This issue is a grave concern and we call on the federal government to reverse its decision made without consultation or understanding of the adverse impacts.”