Eldercare profits are at record levels, numbers of trained nurses are down by a third, and the number of residents who need special care are up 50 per cent. The Senate Inquiry into the Financial and Tax Practices of For-Profit Aged-Care Providers kicks off tomorrow. Is the system broken? Are taxpayers getting value for money? In this opinion piece, Michael Wynne of Aged Care Crisis, an independent volunteer organisation which advocates for aged care residents, writes that cost-cutting and the pursuit of profits often come at the expense of care. As ageing demographics are exploding, the system needs an overhaul.

“The interest of [businessmen] is always in some respects different from, and even opposite to, that of the public … The proposal of any new law or regulation of commerce which comes from this order … ought never to be adopted, till after having been long and carefully examined … with the most suspicious attention. It comes from an order of men … who have generally an interest to deceive and even oppress the public.”

Adam Smith: The Wealth of Nations, 1776.

There have recently been revelations that aged care companies who receive their money from the taxpayer have not been paying tax on this money. The issue is being investigated by a Senate Committee. Companies, including those providing aged care, are accused of forming webs of companies and of using them to move money that might have gone to care or taxes into offshore tax havens.

This inquiry is important because it exposes the links between aged care and the practices of the companies and banks that have been making headlines over the last few years. It opens broad issues in society and in policy for examination.

Managing the tension between our self-interest on the one hand and our responsibilities as citizens, has been at the heart of our development as a civilisation. We have balanced these competing pressures in order to harness personal ambition on the one hand and to be socially responsible, maintain integrity, and protect the vulnerable and our society on the other.

Aged Care Crisis (ACC) is a community organisation that has been studying how and why this has changed so dramatically over the last 20 years. It has made many submissions, including to this most recent Senate Inquiry into financial and tax practices of for-profit aged care providers.

A social revolution with consequences

In the late 1900s an economic cult developed around markets. This turned the wisdom of hundreds of years on its head. The cult claimed unrestrained markets driven entirely by self-interest created good outcomes. There was a “hidden hand” with mythical properties. If unchecked by regulation or the need to be responsible the self-interested would bring benefits wherever they pursued their interests.

Ronald Reagan and Margaret Thatcher, perhaps in the early stages of dementia, and then John Howard in Australia, embraced the cult. They ignored the lessons of history and many warnings when they aligned themselves with the big businesses whose “hidden hands” they believed would solve their problems. They became admired leaders by spreading the cult of self-interest that business now espoused into every sector of our society.

The pressures of strong competition, efficiency, a multitude of professional marketplace advisors and an army of new managers trained in the new patterns of thinking left no room for reflecting on society, responsible conduct, compassion or empathy — the attributes of a civilised society.

Those who struggled to maintain a caring community have been belittled and pushed aside.

It should not surprise us that the market has now turned on the vulnerable citizens that society once cared for and is exploiting them ruthlessly. The funding system, the tax system, customers and employees including tourists, students and other visa holders have all been ruthlessly exploited by predatory businesses.

These include those we trust like the banks, franchising companies, educators, job support organisations, food preparation, farmers and even charities.

The most vulnerable

The most vulnerable of all are the frail elderly. Not far behind are the underpaid nurses who care for them in our nursing homes. This was the sector where most trouble with policy could be anticipated. To counter potential problems, information has been sanitised or else kept from the public. The role of industry led regulators was compromised by their need to protect government and industry from embarrassing publicity.

It is only through whistle-blowers or when an outside regulator becomes involved as happened at Oakden in South Australia that the full extent of what is happening in aged care has been revealed. Nurses and families who have the knowledge to understand have been describing this as a human tragedy for years. They see unnecessary suffering and needless early deaths.

Their assessments are confirmed by data showing that Australians get half the amount of care from trained nurses and a third less total nursing care than for example the US. International studies show that safe and effective care cannot be provided with this level of staffing.

The senate inquiry into tax evasion

ACC’s submission seeks to persuade this inquiry that what is happening in aged care is linked to what is happening in society. Both are logical consequences of policy.

ACC has tracked the patterns of thinking responsible to their origins and then through the US by multiple channels to aged care in Australia. The submissions expose the links between the banks, many of whom have been major investors in aged care, the pool of common directors that they all share, the aggressively commercial private equity companies and the franchising companies targeting home care.

There are a multitude of dubious accounting, financial, legal and other groups schooled in the patterns of thought. They act as consultants and policy advisors to government, as well as companies seeking advice on tax, corporate structure or other matters. Some have tarnished global histories that rival the banks. Their self-interest is closely tied to the system they advised us to adopt.

The submission describes the close links and conflicts of interests as the leaders in the industry wrote the new regulations in 1997, sit on government committees, advise and influence government. They replace the independent bureaucrats who should be giving that advice.

It describes the threat that staffing requirements and the power of the unions posed to the profits of the providers. Government gave way to industry pressure, removing all staffing constraints and limited the power of the unions. The report shows how over the years the numbers of trained nurses has fallen by a third as the proportion of residents who need skilled care has risen by 50 per cent.

Resolving the issues

It is clear that in aged care we need accurate information about staffing skills and levels, about how our money is being spent, about the number and nature of complaints and about the number of failures in care. But to make this market work we also need an effective customer and informed community that can use that information to bring strong pressure to bear on the providers of care in our communities.

The government has shown itself to be incapable of this.

Aged care offers a unique opportunity to reflect on what is happening in our society and on the plight of the vulnerable who are being exploited. We can bring back compassion and empathy. These are our spouses, parents and the members of our community who work in care. This is happening in our communities under our noses every day.

We visit those places to see our families and some of that care is provided in our homes. These sectors most readily engage our sense of social responsibility and our compassion for others, the qualities lacking in our market controlled society today. We have a unique opportunity to initiate the long process back to a responsible and caring society.

Aged Care Crisis is suggesting to the Senate Committee that they seize this opportunity by requiring the regulators to have empowered representatives in the community acting as the front line for their activities. There needs to be someone on site regularly to tell them what is happening.

This would ensure that the community, which is on site regularly, would have direct local access and local knowledge. It would be in a strong position to put pressure on government and market to meet its requirement for social responsibility and compassion.

J. Michael Wynne

J Michael Wynne MB.ChB.,FRCS.,FRACS.,Grad Cert Ed
Aged Care Crisis


Michael Wynne is a retired academic surgeon from Queensland.  He has had a long interest in dysfunctional social systems and has written two web sites examining corporate behaviour.  During the 1990s he was a whistle blower and actively researched US health and aged care companies that were being welcomed into Australia.  He collected data for state probity regulators.  This contributed to these companies leaving or abandoning plans to operate in Australia.

Since the turn of the century he has tracked aged care in Australia and has been writing submissions to inquiries and reviews.

The ACC submission can be read here.

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