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The Aged Care Taskforce report has been released, finally. But still we wait…

Introduction by Croakey: The Aged Care Taskforce’s report, which was delivered to Government in December last year, has finally been released.

The Department of Health and Aged Care has invited “aged care providers, older people, their friends and family” to attend a 45-minute webinar tomorrow (12 March) from 2pm AEDT, where Taskforce members will present the report and recommendations, and address questions from the audience.

Will the questions raised below by policy analyst Charles Maskell-Knight be answered?


Charles Maskell-Knight writes:

Almost three months after the Aged Care Taskforce (chaired by Aged Care Minister Anika Wells) delivered its report, Aged Care Minister Anika Wells has released it publicly.

However, its release was not accompanied by a Government response, so uncertainty continues about the Government’s intentions regarding changes to aged care financing.

The Minister’s media release accompanying the report contained the usual platitudes:

“Australia’s aged care system is under stress. There is universal acceptance that something must change in order to ensure all Australians can age with the dignity, safety and high-quality care they deserve.

“After spending their lives building up our country, we have a solemn responsibility as a nation to respectfully care for older Australians as they age.

“All of us have a stake in a sustainable, high-quality and dignified aged care sector – whether it’s for our parents, ageing loved ones, or even eventually for ourselves.

“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.”

Remarkable

It is remarkable that the Minister acknowledges the need to ensure high-quality care, given the exposure draft of the new Aged Care Act does not include high-quality care as an object of the Act, but that is another story.

And it is also remarkable that the Government has been unable to land on a response to the report after three months. As it waited until after the Dunkley by-election to release the report, perhaps it will now wait until after the Cook by-election on 13 April to release its response?

The Taskforce Report contains 23 recommendations. Some of them are statements of principle rather than recommendations: “it is appropriate older people make a fair co-contribution to the cost of their aged care based on their means”.

Others are trivial: “ensure a strong safety net for low means participants to meet aged care costs, and “make aged care fees fairer, simpler and more transparent so people can understand the costs they will incur if they access aged care”.

Some kick the can down the road to somebody else: “consider the appropriateness of the current remoteness classification system” and “continue block funding in thin markets where appropriate and necessary. Consider any other supports necessary to ensure access to care in under serviced markets”.

However, there are a few substantive recommendations.

Contributions for Support at Home

In relation to the Support at Home program (to replace Home Care Packages from July 2025 and subsume CHSP from July 2027), the Taskforce recommends developing clear inclusion and exclusion principles to determine which goods and services will and won’t be funded.

It also recommends a three-tier structure for co-contributions: lowest (if any) for clinical supports; a medium tier for items that may support independence and re-ablement; and the highest tier for services that someone not in the Support at Home Program would typically pay for in full.

Accommodation payments

The most significant recommendations relate to accommodation payments for residential aged care.

The Taskforce recommends deferring a decision on abolishing RADs (refundable accommodation deposits) as proposed by the Aged Care Royal Commission until at least 2030, following yet another review.

However, based on the Department’s Financial Report on the Aged Care Sector 2021-22, which found providers lost $14.86 per resident per day on accommodation, the Taskforce concluded there is a need for an immediate injection of additional funding into aged care accommodation.

Given the Department’s financial report does not adjust the figures reported by providers to remove the effect of related-party transactions (for example, rents paid to parent companies at inflated rates, interest-free loans of RADs to parent companies, or loans from parent companies at inflated rates), I would take the $14.86 loss with several handfuls of salt.

However, the Taskforce was convinced, and it thus recommends turning the RAD into a partially refundable accommodation deposit, by requiring providers to retain three percent of the sum per year, up to a maximum of five years.

Under current arrangements, people with the means to pay a RAD but who do not wish to do so can elect to make a daily payment set by reference to an interest rate determined by the Government at the time.

The Taskforce recommends that the amount of DAP (Daily Accommodation Payment) paid by residents should be indexed in line with increases in the aged pension.

These are major departures from the current framework of accommodation payments. A RAD is effectively an interest-free loan from a resident to a provider, and the DAP mechanism is intended to offer providers an income stream equivalent to what they would have received in interest on a RAD.

Based on current fixed term deposit rates, a person paying a $550,000 RAD is losing about $27,000 in interest annually. A further three percent retention payment would add $16,500 to the impost.

And while there is a case for DAPs to vary over time as interest rates move – noting that this would lead to uncertainty for residents in planning their affairs – indexation of DAPs for people who began to pay them during periods of high interest rates would leave them significantly worse off compared with people who began payments during periods of low interest rates.

These are brave proposals to put before a Government that so far has been unwilling to tackle any but the most egregious inequities in the taxation system.

Will it really want to increase what are effectively government-sanctioned private taxes on baby-boomers?

Perhaps we will find out in mid-April.

Further reading

The Conversation: Government’s aged care report proposes older Australians pay more but eschews a levy, by Michelle Grattan


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. He is a member of Croakey Health Media. Follow on X/Twitter at @CharlesAndrewMK.


See Croakey’s archive of articles on aged care