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FBT cap: we are not entertained

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Patients could face a blow-out in waiting times for elective surgery if the Federal Government pushes ahead with controversial plans to cap tax concessions on entertainment benefits for hospital employees, the AMA has warned.

The nation’s peak medical group had told Treasury its proposal to impose a $5000 cap on salary sacrificed meal and entertainment expenses that are eligible for fringe benefit tax exemptions would harm the ability of public hospitals and other not-for-profit health groups to attract and retain skilled medical staff, undermining the services they are able to provide.

In its May Budget, the Federal Government claimed the tax concession – currently worth around $17,000 a year – was being exploited and abused, and estimated its crackdown on the perk would raise $295 million over four years.

But AMA Vice President Dr Stephen Parnis said the Government had not provided any substantive evidence to back its claim FBT concessions were being used unfairly, and urged it to proceed with great caution in making any changes.

“The AMA is deeply concerned that the reforms canvassed in the exposure draft could significantly affect the ability of institutions, including public hospitals, to recruit and retain staff,” Dr Parnis said, warning this could cause treatment waiting times to blow out.

“If the current supply of medical specialists decreases, we believe it is reasonable to predict a lengthening of waiting lists for elective surgery and outpatient clinics.”

Public hospitals and not-for-profits have relied on the FBT concession to help them compete with the private sector for the services of doctors and other health workers.

Dr Parnis said that many practitioners chose to forego higher wages on offer in the private sector to work in public hospitals because of the chance to practice advanced acute care, undertake research and provide teaching and training.

But he said they still deserved to be fairly remunerated for their skills and experience, and the FBT tax concession helped to make the salaries hospitals could offer competitive.

The AMA has warned that putting a cap on the concession would have a number of serious unintended consequences for the health care system, particularly the supply of medical specialists.

In the short-term, any drift of medical specialists away from the public system will likely cause waiting lists for surgery to blow out.

In the longer term, because the health system relies on senior and experienced hospital medical staff to help train the next generation of practitioners, Dr Parnis said the loss of even some of these workers to the private sector because of reduced tax breaks would undermine teaching capacity.

He said this was particularly worrying because it was coming at a time when the pressure on hospital teaching capacity had never been greater as a result of rapid growth in the number of medical graduates.

Several organisations have written to Treasury urging that the $5000 cap on entertainment expenses that are eligible for FBT exemptions be raised.

St John’s Ambulance said it relied on the FBT exemption to help attract and retain skilled staff, and suggest the cap be increased to $20,000, while the Fred Hollows Foundation recommended it be set at $30,000.

The Salvation Army, meanwhile, warned a $5000 cap would hit the salaries of half its staff.

The Tax Institute recommended the bcap be set at $15,000.

The tax change is due to come into effect from 1 April 2016.

Adrian Rollins