Aged care leaders worry Morrison government’s budget boost will not be enough

Aged care leaders are unimpressed by the Morrison government’s reported plans to spend $10bn over four years on reforms to the sector, saying it’s about a quarter of what’s needed to address the findings of the aged care royal commission.

The Grattan Institute, in its response to the aged care royal commission’s report, urged the commonwealth to boost spending on the aged care sector by $10bn a year – considerably more than the $10bn over four years the government is reportedly planning for the sector in the 11 May federal budget to fund recommendations including more home care packages.

Stephen Duckett, the health program director at the Grattan Institute and former secretary of what is now the Department of Health, said the “government’s response to the royal commission report has not been promising so far”.

While the royal commissioners did not cost their recommendations, Duckett said an additional $9.8bn a year was needed on top of the current annual spend on the system – which was $27bn in 2018-19, when $20bn came from the government and the rest from state and territory governments and recipient contributions.

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Duckett noted recent government announcements for aged care, including an initial $452m unveiled when the report was released at the beginning of March, have been “superficial” in addressing the key structural problems in the sector, around improved staffing levels and quality and eliminating the 90,000-strong waiting list for home care packages.

“The government must lift its ambition, and seize this opportunity to introduce landmark social policy reform fit to stand next to Medicare and the National Disability Insurance Scheme,” Duckett said.

The thinktank has proposed a new Medicare-style levy on taxable income, changes to the pension assets test or to the residential aged care means test, and reductions in “excessively generous” tax breaks on superannuation to raise the additional funds to aid the failing system.

While the royal commissioners diverged on their funding recommendations, both agreed on some form of levy to raise cash – a move the government has been hesitant to commit to.

“Their distinguishing argument so far has been that we are not going to increase taxes and we’re not going to reduce tax expenditure, but the government should see this budget as an opportunity,” Duckett said.

“Healthcare is a growing sector, and it is skewed towards employing women. I think there’s a good argument for the government to pay for the changes needed even if it means taking a hit to their bottom line.”

The Grattan Institute report proposed four areas of critical reform. Firstly, it argued Australia needed a new Aged Care Act.

“This would enshrine a universal entitlement to care, and enable a new streamlined and integrated single aged care program. Secondly, aged care needs new governance systems to provide stronger accountability and transparency. An independent temporary aged care transition body should be established, while the department of health implements urgent fixes to the current system.”

Australia must also set and enforce minimum care hours per resident in residential care, and all aged care workers should have minimum training requirements.

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The health and aged care minister, Greg Hunt, refused to be drawn on the $10bn figure over four years.

“We do not comment on budget speculation,” a spokeswoman for Hunt said.

Patricia Sparrow, the chief executive of Aged and Community Services Australia – the peak body representing church, charitable and community-based providers of aged care – labelled the Grattan Institute report as “speculative”, but said $10bn was “certainly a lesser figure than what has been suggested as being needed”.

“There’s a nervousness. We’ve been here before,” Sparrow said, noting previous inquiries into the sector had failed to trigger substantial reform.

Sparrow’s ACSA forms part of the Australian Aged Care Collaboration, an alliance of providers responsible for about 70% of services in Australia. The collaboration called for uncapped home care packages and a registration scheme for care workers in its response to the royal commission report last week.

Ian Yates, the chief executive of the Council on the Ageing, said the reported $10bn in additional funding “isn’t on the right scale” and is hopeful “we’ll still see significantly more than that” promised by the government as part of its budget response.

“I am reasonably confident that the final figure for aged care will be larger than that. But we’ll have to wait and see whether it will be sufficient ... We know it’s a contest in cabinet,” he said.

But the head of Monash University’s health law and ageing research unit, Prof Joseph Ibrahim, a geriatric physician who gave evidence to the aged care royal commission, said Australians deserve to know how the funding already going to aged care providers was being spent before measures to raise further funding were implemented.

“While I don’t think there’s any doubt that more money is needed in the system, the question of how much I think remains open-ended,” Ibrahim said.

“First we should be demanding a design for a better system, and to be shown by aged care providers they are not going to waste any extra money given to them. If they’re going to just stick any money into the stock market, and the shareholders are going to get the benefit, then I am not interested in giving them more funding.”

Ibrahim said there were different philosophies about how much people should pay towards their own care, including whether assets accumulated should go to an individual’s family or towards their own aged care, and whether taxpayers should fund aged care knowing they might not ever have to use it themselves but that it will benefit others.

“And I think what we need to do is be able to say, is aged care a public good like healthcare, or is it a private luxury? The minute the government makes that statement and is transparent about that, then people can better decide what they are willing to pay and how.

“I think that level of transparency is needed and needs to be articulated. We can’t just assume that there will be universal access to the same standard of care for everyone.”

As a starting point to better fund aged care, Ibrahim said providers should be forced to find where money is currently being wasted and misappropriated.

“We know that you can save money by doing things properly,” he said. “Before proposing a new funding model, the consequences of doing things badly have led to issues that should firstly be addressed.”