Private Healthcare company Healthscope under fire over proposal to farm millions in employees' tax benefits

ABC report on Healthscope

Australian National Broadcaster reports on how in-receivership hospital group Healthscope (bought by global asset owning giant, Brookfield in 2019) is taking radical steps to stay alive, converting to a charity and proposing to take up to 90 per cent of a benefit intended to reduce workers' taxable income.

Experts, including CICTAR Principal Analyst, Jason Ward, oppose the move, which could see taxpayers miss out on tens of millions in revenue and ship most of the benefits to the company.

In late 2019, just months before the COVID-19 pandemic swept the globe, Canadian-based asset manager Brookfield snapped up the healthcare group, Healthscope for $4.4 billion. Brookfield then lumbered the hospitals with $1.6 billion in debt as it repatriated cash back to its head office. Now, in receivership and facing deep financial difficulties, a plan to restructure the company as a charity is underway.

Part of this plan involves the use of ‘salary packaging’, which is is a benefit that gives workers in not-for-profit organisations the ability to reduce their pre-tax income, meaning the amount of tax they pay is lower because their taxable income is assessed without the amount packaged out of it.

The longstanding scheme has been used by not-for-profit public hospitals to attract and retain staff but what Healthscope wants is for its employees to access the benefit and then keep as little as 10 per cent of it, giving the broke company the bulk of the cash.

Jason Ward is blunt in his assessment of the idea, saying:

"This is a phoney use of a non-profit status in order to create private wealth. It absolutely makes no sense. This [Brookfield] is a company that has over a trillion US dollars in assets and has mastered the art of profit-shifting and not paying its fair share on hugely lucrative investments in Australia."

Health Services Union (HSU) leader Kate Marshall said staff were shocked by the scheme, which could end up with taxpayers losing tens of millions in revenue. "What Healthscope are proposing is literally taking money out of workers' pockets to pay their billions of dollars' worth of debt," she said.

"It's highly objectionable. We've never seen anything like this. It is astounding to us."