Aged care changes an important first step to secure a system in crisis

CEDA Chief Executive Melinda Cilento says:

“These changes are an important first step to secure the financial sustainability of the aged-care system and it is pleasing to see they have much-needed bipartisan support.

“The challenges in aged-care funding and delivery have been apparent for decades, and we can no longer delay. 

“Neither side of politics will be able to escape the looming budget pressures of our ageing population.

“Older Australians will need to contribute more to the costs of their care or providers will not be able to meet the growing needs and expectations of our ageing population.

“The increased funding for and focus on in-home care in this package will help to address the growing need for care services and allow the many Australians who want to age in their homes to do so. 

“This is also a question of intergenerational fairness. As the Government’s taskforce highlights, older Australians are generally wealthier than in previous generations, while the taxpayer base – which relies too heavily on working-age Australians – is shrinking.

“Lifting the lifetime contributions cap for means-tested residential care fees from around $76,000 to $130,000 is an important move. 

“We should continue to review the cap over time to ensure it is adequate. The system will need to be more flexible and adaptive to ensure we can continue to meet demand.

“While it has ruled out increasing the means-test threshold for the family home, the Government should consider lifting the threshold to around $500,000, reflecting the significant rise in home values over the last decade. 

“Australians are increasingly entering into care at an older age and with higher, more complex care requirements.

“But the changes announced today acknowledge that those who can afford it should pay for daily living costs. 

“This allows providers to offer more flexibility, and reflects the reality that people pay for these services in their everyday life before entering care.

“Some Australians have accumulated a substantial amount of wealth, including increasing superannuation balances, supported by tax concessions. 

“The principle of means testing for aged care should not be controversial as long as the system is underpinned by a robust safety net to support those who can’t afford care, such as those on a full aged pension.

“We also agree there should not be penalties such as jail terms for directors of aged care homes except in egregious cases of wilful neglect. 

“This would have been counterproductive when we need to encourage more investment into the sector, as well as workers, both of which would likely be deterred by the uncertain application of regulations that bring criminal liability and penalties.

“The aged-care sector desperately needs more funding. 

“The combination of complex new regulations, workforce shortages and financial challenges means many homes can no longer operate effectively. 

“Many providers are struggling to get enough workers – some are operating at just 50 per cent capacity and some have closed altogether. People are also being held in hospital due to the lack of beds. 

“And there are very few homes in the pipeline to be built even as demand for beds is rising.

“Meanwhile, although some much-needed pay rises have been announced, pay alone will not solve workforce shortages. We must continue to look at ways to encourage workers to join and stay in the sector. 

“Migration will also be required, and CEDA continues to advocate for an essential skills visa to bring qualified and motivated workers into the sector.”