Introduction by Croakey: Australians will live longer and healthier in the coming decades, according to Treasurer Jim Chalmers at a press conference this week in the lead up to Thursday’s release of the Intergenerational Report.
This will lead to an increase in the cohort of people requiring care and “a bigger role for the care economy”, Chalmers said.
While this is not specific to aged care – acknowledging the roles also of healthcare, disability and early childhood care – it is important the aged care sector is prepared for the ageing population, including by implementing the recommendations of the Royal Commission into Aged Care Quality and Safety.
Charles Maskell-Knight PSM has written much about aged care reform at Croakey (including here and here); below, he questions the value of the Aged Care Taskforce to review aged care funding arrangements, writing:
If the issues around aged care funding had never been considered before, there might be a need for some sort of advisory committee to assist the Government. But the reality is that the issues are well-known, and have been raised in numerous previous reviews of aged care, including the Royal Commission.”
Readers with an interest in aged care wishing to engage in the Aged Care Taskforce consultation can find more information here. The deadline for submissions is 31 August.
Charles Maskell-Knight writes:
During a National Press Club speech in June, Minister for Aged Care and Sport Anika Wells observed that “the Baby Boomers are coming” and that “we are going to need a fair and equitable system to meet the needs of Baby Boomers who, with their numbers and determination to solve problems, have shaken every single system they’ve come across”.
She also announced the establishment of an Aged Care Taskforce that will have 15 members, chaired by the Minister, and is to “review funding arrangements for aged care, develop options for a system that is fair and equitable for everyone in Australia, and build on Royal Commission into Aged Care Quality and Safety recommendations”.
It is to report by the end of the year on options to make aged care “equitable and sustainable into the future”.
The Taskforce membership is largely made up of the CEOs of various lobby groups representing care providers and older people, leavened with a few superannuated public servants and politicians and a trade unionist. Given the diverse interests represented, agreement on the meeting schedule and some high-level sentiments is about all that can be expected.
The communiqué from the second meeting on 25 July shows that the Taskforce members agreed on six high-level principles, including that:
- aged care funding arrangements and their outcomes should be fair, simple, transparent and sustainable
- funding should be sufficient to provide quality and appropriate care delivered by a skilled workforce
- there should be accountability for funding received from government and participants, how it is spent, and the quality of the services provided.
The only mildly contentious point the group agreed was that “government funding should be focused on care costs [and] personal contributions should be focused on accommodation and everyday living costs”.
It is one thing to agree that funding should be “fair” and “sustainable”, but these are slippery concepts.
The Taskforce clearly decided it needed some help with these ideas, so it embarked on a public consultation process, which closes 5pm on 31 August. The public are asked to respond to a series of questions, including:
- what does “fairness” in aged care funding and care services look like?
- is funding for Australia’s aged care system sustainable? If not, what is needed to make it sustainable?
The existence of this consultation process has received very little publicity, and even people who do learn out about it may find it hard to track down how to participate. Responses to the questions received through the consultation process will not be representative of the public generally, just as the Taskforce membership is not representative of the public generally.
We have been here before
If the issues around aged care funding had never been considered before, there might be a need for some sort of advisory committee to assist the Government. But the reality is that the issues are well-known, and have been raised in numerous previous reviews of aged care, including the Royal Commission.
Most recently the Aged and Community Care Providers Association (ACCPA) has released a Financial Sustainability Issues Paper, reporting on the outcomes of a meeting in June attended by 43 organisations “representing consumers, aged care providers, unions, experts and government bodies”.
The paper essentially sets out all the issues around increasing funding for aged care, and it is not clear what the Taskforce will be able to add to it.
In considering the issues it is important to remember that aged care is only one of many spending pressures contributing to future structural budget deficits.
As a nation we have deluded ourselves that we can have Scandinavian levels of government services while paying South American levels of taxation. We can’t, and at some stage the Federal Government will have to address this.
Reversing the regressive stage three tax cuts would be a good first step. Beyond this, the Treasury Tax Expenditures and Insights publication provides a handy shopping list of options to increase revenue without imposing new taxes or increasing rates. A government concerned with raising additional revenue without penalising working-age taxpayers could even consider joining the two-thirds of OECD countries that levy inheritance taxes.
The fact that the Aged Care Taskforce even exists suggests a belief in government that aged care is somehow different to all the other spending pressures faced by the budget. As I have written before, Defence Minister Richard Marles is not convening an AUKUS Funding Taskforce to work out how to raise $370 billion over the next few decades. He and his department simply assume that funding will be forthcoming from the budget.
Is it “fair” that aged care is treated differently?
Aged care spending benefits a particular demographic cohort, many of whom have the financial resources to pay for the services they receive. It can be argued that it is only “fair” that those who have the means to pay for the aged care they need should be required to do so, especially if their financial position has been enhanced by generous tax concessions supporting superannuation and property investment.
However, the cohort that will require aged care over the next 25 or 30 years have already contributed to the cost of their parents’ aged care. Is it “fair” that they should now also be required to pay for their own aged care?
Residential aged care providers offer a combination of services, made up of personal care including clinical care, ordinary living expenses (such as food, laundry, entertainment, and utilities), and accommodation.
Given that the care element is akin to the care provided largely free under Medicare or the NDIS, is it “fair” that aged care recipients should be required to pay for it? Both the Royal Commission and the ACCPA paper concluded that people should not have to pay for care, as distinct from the other elements of aged care.
If it is considered “fair” that people with substantial financial resources should pay for the personal and clinical care elements of aged care, shouldn’t they also pay for the same sorts of care delivered through the health system?
Requiring recipients to pay for care would also raise issues of fairness within ageing cohorts. Is it “fair” that the heirs of people who die without entering the aged care system should be better off than the heirs of those who die having received expensive aged care?
There seems to me to be a stronger “fairness” argument that aged care recipients should be expected to pay for the ordinary living expenses and accommodation costs they would incur if they were living in their own home. It probably isn’t “fair” for people receiving residential aged care to have these costs met by the government, while people living in the community continue to be responsible for them.
If this principle is accepted, the contribution should be set based on the Independent Hospital and Aged Care Pricing Authority’s determination of the costs; and it should not be subject to the same sort of lifetime limit that currently applies to means-tested aged care contributions.
Governments usually use “financial sustainability” as code for ‘what government thinks it can afford within existing budget constraints’. For example, after the 2013 election the new Abbott Government argued that the cost of the healthcare system was unsustainable, and that the problem could only be addressed by transferring costs to patients through co-payments.
This is a very narrow perspective on sustainability. From an economy-wide perspective whether services are paid for through taxation or co-payments doesn’t matter – what matters is the absolute cost of the services relative to the economy.
OECD data show that in 2019 Australia spent about 1.3 percent of GDP on long-term care – a little less than the OECD average of 1.5 percent. However, the average across western Europe is well over 2 percent, while the average across Scandinavia is over 3 percent.
This suggests that as a relatively wealthy country an increase in total aged care spending of between 50 and 100 percent would be sustainable. But how that additional funding is raised is a matter of fairness, as it will involve spending less of GDP on something else.
The need for political leadership
“Fairness” and “sustainability” are not technical questions. Even if they were, the Minister should be seeking advice from technical experts, not a committee of lobby group CEOs.
“Fairness” and “sustainability” are all about values and trade-offs between different groups in society – and in this case, potentially different generations. They are political questions for consideration by elected representatives.
It is time for Minister Anika Wells to show some leadership, rather than hide behind a committee.
Charles Maskell-Knight PSM was a senior public servant in the Commonwealth Department of Health for over 25 years before retiring in 2021. He worked as a senior adviser to the Aged Care Royal Commission in 2019-20.
Further reading – Aged care policy meets Utopia on steroids
See Croakey’s extensive archive of articles on aged care reform.