Shayne Neumann (Blair, Australian Labor Party, Shadow Minister for Indigenous Affairs) Share this | Hansard source

One of the biggest surprises for the aged care sector coming out of the budget was the cessation of the aged care payroll tax supplement from 1 January 2015 as found on budget paper No. 2, page 189. It effectively ended the doctrine of competitive neutrality in the sector between the for-profit providers and the not-for-profit providers. It ripped away $652.7 million over four years from the sector. It was a bit of a shock because there was no consultation or sector support for it. The CEO of Benetas, Sandra Hills, expressed in a letter to me on 4 June the following:

The greater issue is the impact that the removal of the payroll tax supplement will have on investment in the sector. Aged care in Australia must have a mix of providers to ensure we remain a competitive, innovative industry that offers the highest quality of services available. Removal of this payroll tax supplement will seriously threaten some providers resulting in less competition across the industry.

She goes on to outline her concerns about the impact on organisational cash flow, future investment, staffing, skills retention and artificial wage constraint.

I have a few significant questions for the minister. What modelling was undertaken into the impact on the aged care sector of this budget measure on viability of providers, their profitability, jobs, workforce and investment? In particular, what has the modelling revealed about the impact on independent providers, small providers and those in rural and regional areas? If no modelling was undertaken, why not?

I understand also there has been some redirection of the workforce supplement into some sweeteners for the viability supplement. Within a few weeks of the budget, leading aged-care services provided some details of the impact on specific providers including in regional Queensland, which saw that particular provider receive an additional $2,900 in the viability supplement but lose $100,000 to $120,000 in the payroll tax supplement. I am sure they can provide you with the details.

I would be interested to know how you intend to deal with the significant impost on the sector. The inaugural report of the Aged Care Financing Authority from 30 June 2013 reports the average net profit before tax across the sector is just 5.6 per cent. How does the government expect the sector to remain viable with this further impost? Has the minister undertaken any specific modelling into the impact on residential pricing? If not, why not? If he has done modelling, what does that show?

I would like the minister to explain why the payroll tax supplement is being ceased on 31 December 2014. Why is it that the minister has actually ended the principle of competitive neutrality which has been accepted by both sides of parliament since 1988? I refer also to the comments of Louise Dudley, the managing director of Bupa care services, he said recently:

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.

How does the end of competitive neutrality sit with the policy of your government in the reduction of red tape as well?

You would appreciate, of course, that, according to ACFA, we will need to build an additional 80,000 aged-care places over the next decade. This involves an extra $25 billion, according to ACFA. You would be aware, Minister, that the surprise budget announcement actually forced one provider, Japara Healthcare, to halt trading. I wonder how you expect the sector to cope with the increased investment they need to build residential aged-care placements and capital infrastructure in the decades ahead.

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