Payroll tax limiting provision of aged care

Trevor Carr, LASA Victoria chief executive, claims the removal of the payroll tax supplement, effective from 1 January 2015, is creating inequity in Australia’s aged care industry where, nationally, 63% of the sector are exempt.

“This is leaving a payroll tax burden of $652 million (over 3.5 years) on private aged care providers who are caring for about 71,000 senior Australians,” Mr Carr says.

The need to expand Australia’s aged care sector to meet the growing demand of an older population is well documented. Last week’s, 2015 Intergenerational Report points to a tripling of the people aged over 70 years, reaching around seven million people by 2055.

Mr Carr says the aged care sector needs accelerated growth to meet service demands and not disincentives.

“In the short term, the aged care sector requires an investment of about $30 billion to provide an additional 105,000 aged care places by 2027,” Mr Carr says.

From 2003-2014, there has been a national decrease of 16% in state and territory funded places and a decrease of 43% in Local Government places. Over the same period, private providers of aged care services invested and delivered 25,447 places, an increase of 56%.

Mr Carr says it is the private sector that is “wearing” the tax burden but is still investing and providing residential aged care places that are meeting the needs of an ageing Australia.

“Aged care is the fastest growing health sector and it is essential that governments nurture the private aged care sector with favourable policy settings so it can adequately provide access, choice and sustainability for the future.”

In the 2013-14 financial year, it is estimated that Victoria’s private aged care providers received a $64.5 million payroll tax supplement from the federal government.

Greg Gunn, director of Gold Aged Care’s Camberwell Gardens, says the removal of the payroll tax supplement is having a “real impact”.

“As a private provider of aged care services we now need to allocate the money for payroll tax from our operating budget,” Mr Gunn says.

“This means there is less funding to employ staff and to meet the complex needs of our ageing community.”

Mr Carr says the federal government’s decision to discontinue the payroll tax subsidy was based on 59 words in the National Commission of Audit Report.

“This was done without consultation with the sector, without consideration for the providers, the workers and the residents that were to be impacted,” Mr Carr said.