Government rules out new tax or levy to fund aged care

The taskforce, chaired by Aged Care Minister Anika Wells, was established to examine how to sustainably fund the sector now and into the future.

It identified numerous challenges impacting aged care, including more demand for services in line with demographic changes, shifting community expectations of what quality aged care looks like, the need for additional funding, older Australians being wealthier than previous generations, and the taxpayer base declining as a proportion of the population.

The much-anticipated final report makes 23 recommendations for reform, including that wealthier Australians should pay more for aged care. Recommendations include:

  • Continuing the significant role for government funding of aged care services. A specific tax or levy to fund aged care is not recommended.
  • It is appropriate older people make a fair co-contribution to the cost of their aged care based on their means.
  • Establishing a fee-for-service model for Support at Home so participants only pay a co-contribution for services received.
  • Transition the sector by 2035 to no longer accepting refundable accommodation deposits (RADs) as a form of payment for aged care accommodation, replaced by a rental only model.
  • Considering ways to encourage providers to develop and scale innovative care models, invest in technology, and conduct research into best practices.
  • Continue to focus government funding in residential aged care on care costs with a significant role for resident co-contributions in non-care components (accommodation/daily living expenses).
  • Review and streamline financial reporting to government to ensure reporting is genuinely enhancing transparency.

According to the report, while the Aged Care Royal Commission recommended implementing a levy, similar to the Medicare Levy, to fund aged care, the taskforce concluded that increasing aged care funding through additional tax would exacerbate intergenerational inequity.

Speaking at a press conference in Canberra this morning, Minister Wells said the independent report marked the government’s next step in its mission to deliver dignity to older Australians.

“The Albanese government has put nurses back into nursing homes, given carers more time to care. We have lifted wages, and we have improved transparency and accountability in the aged care sector,” she declared.

“We are determined to set the aged care sector up for long-term success to make sure that older Australians receive the high-quality care that they deserve, both in the years and decades to come.”

Ms Wells said the government, which has been considering the report since December, would announce its full response to the recommendations in “due course”. For now, it will focus on continuing aged care reforms, which Ms Wells suggests are beginning to flow through the system.

“There are now an additional 2.16 million minutes of care being provided to older Australians in aged care every single day,” she said.

“There was a record pay rise – it was $11.3 billion for aged care workers. We’ve got 250,000 aged care workers in Australia. So, all of that work has been undertaken already. But this really is a big and important, difficult structural reform, that has been script before, but we are taking on because everybody deserves a better aged care system that is sustainable not just in years but in decades to come.”

The New South Wales Nurses and Midwives’ Association (NSWNMA) labelled the final report disappointing and urged the government to rethink its approach to aged care. The union raised concerns providers will gain more power, and be less accountable, if the recommendations are introduced.

“We are yet to see independent evidence of aged care providers being universally financially unsustainable, especially when the Royal Commission evidence demonstrated so many examples of aged care being significantly profitable, often at the expense of vulnerable residents and workers,” NSWNMA General Secretary Shaye Candish said. 

“Until providers come clean and show transparency, the federal government and residents in these facilities should not be topping up their bank accounts. 

“These recommendations will not improve the workforce shortages being felt across aged care, nor will it address the quality of care being received within the facilities. We are still seeing providers failing to comply with mandatory care minutes which were introduced as a result of the Royal Commission.” 

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