Government must raise the bar for companies drawing on the public purse, experts have warned in the aftermath of a damning report on the state of the aged care system.
Thursday's aged care royal commission interim report described the system as a "shocking tale of neglect", and a complete failure of the market.
"The structure of the current system has been framed around the idea of a 'market' for aged care services where older people are described as 'clients' or 'customers' who are able to choose between competitively marketed services. But many older people are not in a position to meaningfully negotiate prices, services or care standards with aged care providers," the report said.
"The notion that most care is 'consumer-directed' is just not true. Despite appearances, despite rhetoric, there is little choice with aged care. It is a myth that aged care is an effective consumer-driven market."
Jason Ward from the Centre for International Corporate Tax Accountability and Research told a Senate inquiry into government outsourcing on Friday he saw the rapid growth of for-profit corporations providing disability and home care services "with little or no accountability" as a major concern.
"There is a really shocking and disturbing lack of public transparency and public accountability for those government fundings," Mr Ward said.
"There are some mechanisms that have been established in order to not provide government funding to companies that are getting contracts to do government work or getting government funding for public services. But those are so far quite ineffective.
"I mean, one case example of recently, the largest federal contract given in 2019 was with BUPA, this is a company that has ... received over half a billion dollars in providing age care services but had to reach a settlement with the ATO for $157 million. And then earlier this year rewarded a $3.4 billion contract to provide medical services to the Australian Defence Forces. Companies like this shouldn't be rewarded with public dollars after demonstrating clearly aggressive tax behavior in Australia and globally."
Mr Ward said the bar had to be raised for companies receiving public money to provide core services.
"The level of government procurement is substantial, and it has the ability to sort of set a broader standard across the market and to sort of raise the standards, not lower them. And so people getting money from federal spending should be held to a higher level of public accountability and public standards," he said.
"Just to use the age care example, I mean, if you're getting money to care for Australia is elder that money should be going to that purpose and should be going directly to that not enriching investors as a prerequisite, you know, before it's actually providing the care that's needed."
Centre for Policy Development chief executive Travis McLeod said poor service delivery "undermined trust in government and diminished our democracy".
But Prime Minister Scott Morrison sought to downplay the role of privatisation in aged care issues.
Asked whether the profit motive was part of the problem, Mr Morrison said: "I mean, let's go back to where this all started with the aged care facility in South Australia. It was a publicly run one. I mean, it doesn't matter whether it's public, private or not for profit. We have seen abuses and we're seeing substandard care across all fields. So, I mean, you've got to address the issues in each of those sectors."