Last week, the Aged Care Task Force released 23 recommendations including a move towards aged care funding based on personal wealth, while aged care workers’ hourly wage will increase by up to 28.5 percent.
Following 2021’s explosive Royal Commission into Aged Care Quality and Safety, the federal government established the taskforce to review funding arrangements for Australian aged care.
The new recommendations reject the royal commission’s support for a Medicare-style tax or one percent levy on personal income.
“While the taskforce supports government maintaining its central role in funding aged care, it does not support a specific increase to tax rates to fund future rises to aged care funding,” the report said.
The Minister for Aged Care and taskforce chair Anika Wells, who has been criticised for her position due to effectively reporting to herself, added that the government will not “change the means testing treatment of the family home for aged care.”
Instead, the taskforce suggests that older Australians who can afford it should pay more for their care based on their level of personal wealth, with fears that increasing taxes could lead to intergenerational equity problems due to the country’s shrinking working-age population.
“Given the increasing wealth of many older people and the declining working age (that is tax paying) population, there is a strong case to increase participant co‑contributions for those with the means to contribute, noting that there will always be a group of participants who need more government support,” the report said.
The Australian reports that self-funded retirees – who make up more than half of nursing home residents and in-home care recipients – could end up paying around $2 billion more out of their own pockets for their aged care if the Albanese government accepts the recommendations from the taskforce.
It says that the analysis, conducted by aged-care accountants StewartBrown, shows the taskforce proposal for nursing home residents who don’t draw a pension to pay their everyday living costs such as meals, cleaning and laundry would see them pay about $570m a year more.
The taskforce noted that the government’s proposed objective for superannuation is “to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way”.
It says “income from superannuation should be drawn down in retirement to cover health, lifestyle, other living expenses and aged-care costs”.
While it puts a case forward for user funding, saying that aged care fees should be “fairer, simpler and more transparent so people can understand the costs they will incur if they access aged care”, the taskforce failed to provide information on how this approach would be measured or when it would be introduced.
Ms Wells said the government will now continue to analyse the taskforce’s recommendations before it releases a comprehensive response.
“As we consider the taskforce report and continue to implement the reforms of the royal commission, our focus will always be ensuring dignity and respect for older Australians,” she said.
At present, the government is responsible for funding 75 percent of residential aged care and 95 percent of home care, which the taskforce called out as not optimal or fair, as the total spend on aged care continues to increase year-on-year.
According to the ABC, the last financial year (2022-23) saw a total of $27.1 billion spent on aged care which is up from $23.6 billion in 2020-21 and $24.8 billion in 2021-22, with the projected spend expected to reach $42 billion by 2026-27.
The taskforce found that demographic changes will see the demand for aged care services continue to grow as the number of people over 80 is expected to triple over the next 40 years.
There’s also increasing pressure on the sector due to the high expectations from current and future generations on what quality aged care should look like.
It discovered that today’s ageing population has greater wealth than previous generations, with superannuation balances expected to grow considerably over the coming decades.
The quality of aged care appeared to be an ongoing concern for the taskforce as the current system struggles with staffing, skill and retention issues.
In a boost to aged care workers, it was announced on Friday that thousands of employees will benefit from wage increases following a “historic” decision from the Fair Work Commission (FWC) in a long-running work value case.
The amount will vary depending on the type of employment according to the FWC.
Health Services Union president Gerard Hayes said, “Effectively, for personal carers, there’s an increase between 18 percent and 28 percent. Home care, between 15 percent and 26 percent.”
This equates to more than $9 per hour for a personal carer who will see their wages jump from $23.10 to $32.52, according to Hayes.
He added the pay decision was “one of the best outcomes this union has ever achieved”, suggesting the pay rise would make “aged care competitive with the public health system.”
“For the last decade, aged care has been held together by the goodwill and commitment of a severely underpaid, insecurely employed workforce. Today, those workers have won wage justice,” he concluded.
The increase includes the FWC’s interim 15 percent pay rise which was announced in November 2022 following admissions that the sector’s employees were underpaid and undervalued, likely due to gender assumptions.
Supporting workers, including laundry personnel, cleaners and food service assistants, will see a 6.8 percent increase, while indirect workers will see a 3 percent raise which Hayes said suggests there is “more to do” for support workers.
Despite the taskforce’s recommendations, the pressure on cost reduction and cost realignment is not going to go away, which means procurement has to play a proactive role in reducing costs while raising standards.
Procurement needs to realign how the commercial model works in the future to bring greater long-term aged care standards whilst making them affordable for whoever is paying.
To learn more about how the Aged Care Task Force’s recommendations will affect procurement, register today for the 9th Annual PASA Health & Aged Care Procurement Conference which will take place on 5th & 6th June in Sydney.
