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The Federal government should boost funding by about $10 billion a year to help fix Australia’s ‘broken’ aged care system, according to a new report from the Grattan Institute.

The extra funding could be funded by a combination of a new Medicare-style levy or taxable income, changes to the pension assets test and/or residential aged care means test, and/or reductions in excessively generous tax breaks on superannuation, the independent think tank suggests.

If properly directed, it claims the extra funding could “transform” the aged care system, clearing the long waiting list for adequate home care, employing at least 70,000 more aged care workers, and ensuring a qualified nurse is on-site 24/7 in all residential aged care homes.

“The aged care system is a stain on Australians’ conscience,” said lead author and Grattan Health and Aged Care Program Director Stephen Duckett.

“None of us want to end up in the present shameful system. Many of us feel guilty if we decide to pack our elderly mum or dad off to care.

“The Prime Minister and the Treasurer must get serious about fixing aged care. This is more than a political problem, it is a moral imperative.”

The Grattan report, The next steps for aged care: forging a clear path after the Royal Commission, calls for a streamlined and integrated aged care system underpinned by a new rights-based Aged Care Act that guarantees care and support to everyone who needs it.

It recommends universal funding of care costs, similar to funding through Medicare of patients’ costs in public hospitals, saying that it would provide universal insurance for people with high care needs, and would mean people would not need to worry about funding their possible care needs in older age.

Grattan says the cost of a reformed, universal aged care system will only grow as Australia’s population continues to age and there are fewer working-age people paying taxes to fund the care of retirees.

The government could consider a 1% aged care levy on taxable income, and should find more money for aged care by reducing generous tax breaks for wealthy Australians, it argues.

Further, more of the family home’s value should be included in the Age Pension assets test, and superannuation earnings in retirement, currently untaxed for people with balances less than $1.6 million, should be taxed at 15%, the same as superannuation earnings before retirement.

“Surveys consistently show that Australians are willing to pay more tax to fix aged care,” Dr Duckett says.

“The time to act is now. The Aged Care Royal Commission report leaves the government with nowhere to hide. This report shows how a better-funded and designed aged care system would protect the rights, uphold the dignity, and celebrate the contribution of older Australians.”

Read the full Grattan report here