It’s not a generation war, charging the wealthy more is essential to fix our aged care disaster

The needs of our ageing population is not being met by an aged care sector that is being squeezed on all sides.

Beds in residential homes are sitting empty around the country despite long waiting lists – some homes are operating at just 50 per cent capacity and some have closed altogether – in part due to chronic worker shortages.

People are also being held in hospital due to the lack of beds – a miserable situation for those affected and a waste of taxpayer money. There is very little new investment or new construction in the pipeline even as demand for beds is rising.

Poor pay rates have made it difficult to attract long- term staff into aged care.Credit: Marija Ercegovac

A report this week in this masthead about the scale of the funding crisis and the shortage of beds is a warning that the government must act swiftly to introduce its aged-care changes into Parliament in September.

The expected changes to how older Australians will pay for care – in which Australians with more assets will pay a greater share of their everyday costs – are an important first step to secure the financial sustainability of a system desperately in need of investment and workers.

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

A recent report for the UTS Ageing Research Collaborative shows more than half of aged-care homes are losing money and nearly two-thirds have not met their mandatory minimum care minutes.

The sector is not financially sustainable and we are likely to hear more reports of homes closing unless there is action.

The efforts both sides are making to secure bipartisan support for the new funding measures are crucial and show just how serious the challenge is – neither side will be able to escape the looming budget pressures of our ageing population.

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

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

Lifting the lifetime contributions cap – currently just over $76,000 – for means-tested residential care fees is an important step.

But we will need to review the cap over time to ensure it remains appropriate and adequate in light of future care expectations and demand.

The government should also consider increasing the means-test threshold for the family home from just over $200,000 to around $500,000, reflecting the significant rise in home values over the past decade.

This is also a question of the principle of means testing and intergenerational fairness.

As the government’s industry taskforce highlighted, older Australians are generally wealthier than in previous generations while the taxpayer base – which relies too heavily on working-age Australians – is shrinking.

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.

The argument by some that “I’ve paid my dues” through a lifetime of paying tax ignores the fundamental social compact of our system – taxes are a collective investment in our society.

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

The aged care royal commission emphasised the need for more care, not less, for most people entering into care, with a need for more specialised care.

Despite this need, three years ago we forecast a shortage of nearly 400,000 workers in the sector by 2050 and we have seen little to suggest this has changed.

More must be done to attract and retain staff to the sector.

Recent wages increases are a welcome part of this, but pay on its own will not solve this problem. We must continue to look at ways to encourage workers to join and stay in the sector, noting that migrants already make up one-third of the aged-care workforce.

New labour agreements to bring qualified and motivated workers to Australia have proven hard to implement and are insufficient for broad application across the industry.

The government should enable the direct recruitment of personal-care workers by introducing a new “essential skills visa” to allow aged-care workers to migrate, with long-term residency opportunities.

This kind of targeted migration should work with increased education and training of local workers and the ongoing professionalisation of the sector to help sustainably address staff shortages.

Without further action across all of these fronts, we will be unable to provide the care the community rightfully expects.

Melinda Cilento is chief executive of CEDA, the Committee for Economic Development of Australia. Cassandra Winzar is chief economist of CEDA.

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