A doctor’s group has warned that capping tax entitlements for public hospital staff would amount to a pay cut and would make staff think twice about taking jobs in the sector.
Assistant treasurer Josh Frydenberg announced on Thursday that in next week’s budget the government would cap the amount that public hospital staff and workers in the not-for-profit sector could claim in meals and entertainment entitlements.
Currently, those employees can use salary packaging to claim an unlimited amount for meals, alcohol, entertainment and even venue hire under fringe benefits tax (FBT) arrangements. That will be capped at $5,000 in next week’s budget, saving the government about $300m.
The FBT entitlements are already capped for other benefits, such as school fees and private health insurance, at $17,000 for public hospital workers and $30,000 for those in the not-for-profit sector.
Frydenberg said the government had “an imperative to act” because the uncapped amount on meals and entertainment had been “exploited in some parts”.
“What we have done is not remove it altogether, but to put a reasonable $5,000 cap on meal and entertainment allowances which again I think gets the balance right,” Frydenberg told ABC TV.
But the vice president of the Australian Medical Association (AMA), Stephen Parnis, said the measures would “undermine remuneration arrangements” that had been in place for decades.
“What is proposed is effectively a pay cut,” he said.
“There is no doubt that if you work for a private practice, you earn significantly more. This is a strong disincentive [to work in the public hospital system].”
Parnis criticised the government for failing to consult doctors on the tightening of entitlements and said it was “not helpful” in repairing a relationship badly damaged by the proposal, now abandoned, to charge patients to see a GP.
“This is a product of no consultation,” he said.
Frydenberg acknowledged that the entitlements were used to compensate for the relatively low pay of charity workers.
“We understand the motivation for the fringe benefits tax concessions for the not-for-profit sector because they’re not able to match the salaries that can be offered by the private sector,” he said.
The not-for-profit sector employs 8.6% of Australia’s workforce.
