Albanese government rules out new aged care tax and levy, no changes to home means testing

As more and more Australians turn to aged care, there are questions about how the country can afford it. One option is off the table.

Australians won’t be slugged any new levies or increased taxes to fund the growing aged care sector, but the federal government is still tossing up whether to make older people use their superannuation if they need to take up a bed.

A report by an expert taskforce, commissioned by Labor to chart a path forward post-royal commission to keep the “under stress” sector sustainable in the long term, will be handed down on Tuesday – three months after its initial planned release.

Aged care will grow to be one of the biggest strains on the federal budget over the next coming decades, with the number of Australians aged over 85 on track to triple by 2050 and the cost blowing out to 2.5 per cent of GDP by 2062-63.

As such, the report found “additional funding was needed” to meet future demand and ensure the sector was “financially viable” and efficient.

A taskforce did not recommend slugging Australia with more taxes or levies to fund aged care but suggested making older Australians use their super. Picture: NCA NewsWire / Flavio Brancaleone/Pool via NCA NewsWire

The taskforce handed down 23 recommendations but did not suggest slugging taxpayers with additional taxes.

It pointed to “substantial” intergenerational equity issues in asking the working-age population – which is becoming proportionally smaller – to pay more for those services.

It instead recommended older Australians make “a fair co-contribution to the cost of their aged care based on their means”, pointing to the role of superannuation as a retirement income that “should be drawn down in retirement to cover health … and aged care costs”.

“There is a strong case to increase participant co-contribution for those with the means to contribute – noting that there will always be a group of participants who need more government support,” the report said.

Aged Care Minister Anika Wells will not immediately announce the government’s final response to the report – or how Labor plans to sustainably fund the sector in the long term – but confirmed on Tuesday that the government would not introduce any new levies or taxes.

She also ruled out changes to the means testing treatment of the family home.

Aged Care Minister Anika Wells said the government was still considering its response to the taskforce’s recommendation. Picture: NCA NewsWire / Martin Ollman

Ms Wells said it was in the interests of all Australians in ensuring the aged care system was “sustainable, high quality, and dignified”.

“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,” she said.

“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.”

Ms Wells said the government had already taken action to strengthen the aged care sector, including putting nurses back in nursing homes and lifting wages, but it was clear there was more work to do.

Other recommendations from the taskforce include greater transparency around aged care costs, better priced and more flexible daily living co-contributions, strengthening at-home care, and improving accommodation and facilities.

Ms Wells said the government would continue to analyse the report and finalise its response to other recommendations.

It’s understood the government is hoping to have its response finalised before the May budget.