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This document was added or updated on 28/08/2020.
Classifying Commonwealth Government COVID-19 support to the aged care industry
Other subsidies on production
For a payment to be considered a subsidy, it must have an influence on production - defined as “an activity, carried out under the responsibility, control and management of an institutional unit, that uses inputs of labour, capital, and goods and services to produce outputs of goods and services” (2008 SNA, para 6.2).
Subsidies are also more specifically defined as “current unrequited payments that government units, including non-resident government units, make to enterprises on the basis of the levels of their production activities or the quantities or values of the goods or services that they produce, sell or import” (2008 SNA, para 7.98). While subsidies may influence the level and/or price of goods and services, they may also influence “the remuneration of the institutional units engaged in production” (2008 SNA, para 7.98).
Subsidies on products are defined as “a subsidy payable per unit of a good or service” (2008 SNA, para 7.100). They may be a specific amount of money per unit of quantity of a good or service, or calculated ad valorem as a specified percentage of the price per unit.
Other subsidies on production are defined as “subsidies except subsidies on products that resident enterprises may receive as a consequence of engaging in production” (2008 SNA, para 7.106). Other subsidies on production influence the process of production and cover a diverse set of possible payments. The 2008 SNA provides two examples of other subsidies on production – subsidies on payroll or workforce, and subsidies to reduce pollution.
To ensure there is a continuity of the aged care workforce to deliver aged care services safely during the COVID-19 pandemic, the government is supporting aged care providers and workers by providing a staff retention bonus to the aged care workers as well as extra funding to enable aged care providers to hire extra workers and upskill existing workers on COVID-19 infection control (footnote 2 & 4).
These payments to support the aged care workforce are not classified as subsidies on products because employment forms part of primary income (as inputs of labour) and the payments fail the “payable per unit of a good or service” criterion from the 2008 SNA. The payments are instead conceptually classified as other subsidies on production as continuity of production by supporting the workforce is the primary objective. This is comparable to the conceptual treatment of other Commonwealth COVID-19 policies that have supported employment including JobKeeper and wage subsidies for apprentices.
1. https://www.health.gov.au/initiatives-and-programs/residential-aged-care/funding-for-residential-aged-care/the-aged-care-funding-instrument-acfi <back
2. https://www.health.gov.au/news/announcements/covid-19-supporting-senior-australians-and-those-who-care-for-them <back
3. https://www.pm.gov.au/media/new-covid-19-payment-keep-senior-australians-residential-aged-care-safe <back
4. https://www.pm.gov.au/media/24-billion-health-plan-fight-covid-19 <back
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5261.0 - Economic measurement during COVID-19: Selected issues in the Economic Accounts, May 2020
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 18/05/2020 First Issue