Largest, riskiest health reform likely to be hidden in Treasury report

An independent report has found Catholic not-for-profit hospitals could be forced to pay $192 million per annum if Treasury's tax reform recommendations include the scrapping of tax concessions to charities.

The change would cause some hospitals to cut or close essential services, and may increase the burden on public hospitals and raise the cost of private health insurance, Catholic Health Australia (CHA) CEO Martin Laverty warned today.

CHA, which represents public and private hospitals operating one in ten of the nation's hospital beds, commissioned accounting firm KPMG to assess the impact on its 75 not-for-profit hospitals of removing payroll and fringe benefits tax exemptions from charities.

The KPMG report found removing fringe benefit tax concessions would cost Catholic hospitals $72 million annually, and the removal of payroll tax concessions would cost $120 million per annum -- a total cost of $192 million a year.

"Taking away fringe benefits tax and payroll tax concessions from not-for-profit bodies would destabilise hospital services in Australia. There is no way we could meet a new cost of $192 million in year one and simply continue business as usual," Mr Laverty said.

"Some Catholic not-for-profit private hospitals would be forced to cut or close services. This may in time increase in public hospital workloads. It may increase the cost of private health insurance. It would cause some not-for-profit hospitals to shut their doors.

"The CHA network is the main provider of rural private hospital services. Removing tax concessions may render some country not-for-profit hospitals unsustainable. Many country hospitals already run at a loss and survive only by being linked to urban hospitals," Mr Laverty said.

The Henry Review of Australia's Tax System is expected to propose the removal of tax concessions to not-for-profit private hospitals and other charitable organisations.

"We expect the Henry Review of the Tax System report to recommend a cut in charitable tax concessions to save Government dollars. In contrast, a similar review in New Zealand found tax concessions for charities should in fact be increased," Mr Laverty said.

"Scrapping charitable tax concessions would force Government to pick up the tab for extra costs in health care, aged care, and many other community services.

"We urge the Government to reject any recommendation of the Henry Tax Review to scrap charitable tax concessions, and instead look to the lesson of New Zealand, where the benefits of charities have been recognised through their tax system."

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