Open letter to PM Kevin Rudd from the Victorian health care sector

August 14, 2013 | News | No Comments

The Hon Kevin Rudd Prime Minister
PO Box 6022
House of Representatives Parliament House
CANBERRA ACT 2600

Dear Prime Minister,

We wish to raise the concerns of our member organisations regarding your recent announcement of changes to fringe benefits tax treatment of vehicle leasing arrangements and company used cars.

We are particularly concerned at the manner in which the announcement was made, with no notice or consultation, and without consideration of the unintended consequences, particularly for public sector and not-for-profit employers and employees.

As you will know, salary packaging of vehicle expenses is common in the public health system and the not-for-profit sector for nurses, paramedics, aged care workers, doctors, allied health workers and many other professionals including police and teachers. As with other salary sacrifice arrangements, access to vehicle fringe benefits provide a necessary means to increase the competitiveness of remuneration in these roles. Benefits of this type are of particular importance for positions in rural areas, where recruitment and retention can be challenging.

Figures released by the Australian Salary Packaging Industry Association (ASPIA) suggest that the average employee with a vehicle lease arrangement earns around $70,000, and their vehicle is worth $34,500. 70% earn less than $100,000. Of the 100,000 individuals reviewed, 28% are in the charity or public health sectors, 21% are police or teachers and 33% are state or federal public servants.

Only 18% work in the private sector. Initial feedback from our member organisations suggests that the impact of the changes on individual staff will be as high as $2,500 per year. This equates to an annual total of $20 million across the Victorian public health sector alone.

We are keen to point out that the already announced changes to individual education expense deductions, limiting allowable deductions to $2,000, although deferred, will have a significant impact on the same cohort of employees. Taken together, these changes will serve to further erode the service capacity of these essential sectors in a number of ways.

Firstly, they will devalue the benefits available to employees, which are so vital in ensuring that a career in the essential services, health, community and aged care sectors remains an attractive choice.

Secondly, we will potentially see organisations forced to spend more to maintain these benefits, reducing their capacity to provide services.

Finally, there is likely to be an increase in the administrative burden on both employers and employees.
Given the heavy use of vehicle leasing and company owned vehicle use arrangements by public and not-for-profit health organisations, we encourage you to consider the potential impacts this change will have for service capacity, and what can be done to mitigate those impacts.

Yours faithfully,

MR JOHN BEGG
CEO
LASA VICTORIA

MR TREVOR CARR
CEO
VICTORIAN HEALTHCARE ASSOCIATION

MR GREG SASSELLA
CEO
AMBULANCE VICTORIA

DR JO-ANNE CHERRY
PRESIDENT
AUSTRALIAN DENTAL ASSOCIATION