A government-run “star rating scheme” for aged-care facilities is one of the most promising innovations in a budget with a range of targeted — if limited — measures that will affect older Australians.
One of the few significant initiatives not previously “leaked”, the five-star ratings scheme for aged-care homes will encompass all facilities: public and private and non-profit.
Government-backed comparison systems are well-regarded by the wider public, especially in difficult and complex areas — just ask the superannuation funds which are to be compared based on the government’s recent “heat map” research for super fund performance.
As part of an ambitious $1.7bn aged-care package the government will launch the star ratings service partially modelled on the “CMS system” operated by the US government — it will be substantially based on face-to-face interviews drawn from 10 per cent of the aged-care residents in Australia each year.
Consumers trying to make choices within the troubled aged-care system currently struggle with a range of difficult-to-interpret data available at the MyAgedCare service: the launch of the ratings service promises a much-sought-after road map for anyone who will need to know how the system works.
In the wake of the royal commission into aged care the range of data to be collected from the aged-care system is expected to widen substantially to include all aspects of the aged-care experience.
Alongside well-flagged changes to the downsizer super scheme and the scrapping of retirement “work tests” for those aged 67 to 74, the budget also announced key improvement to the government’s pension loan scheme (the state-sponsored alternative to privately offered reverse mortgages).
Though broadly competitive with the private sector, the pension loan scheme has not been widely popular due to limitations in terms of time taken to process loans and limits on lump sums. (Under a reverse mortgage, homeowners can access equity in their homes in exchange for a deal where funds released by the later sale of the home will cover debts owed to the lender).
Until now users of the pension loan scheme could only get limited running fortnightly payments, now they can access a lump sum — eligible people will be able to receive a maximum lump sum advance payment equal to 50 per cent of the maximum age pension. Based on current age pension rates, this is about $12,385 per year for singles. The scheme will also fall into line with the private sector by offering a “no negative equity” guarantee where anyone participating in the scheme will never owe more than the market value of their property.
Similarly unannounced until budget day, the government has moved to allow an elderly cohort of investors trapped in so-called legacy products such as market-linked funds and lifetime products — originally sold with very tight exit provisions — to exit the schemes under a two-year amnesty.
Separately, the government confirmed a range of significant changes or enhancements to existing schemes. Among the most interesting are:
• A reduction in the eligibility age for the Downsizer super scheme from 65 to 60 — under the scheme anyone who owns their home longer than 10 years can sell it and contribute $300,000 over and above all existing contribution caps.
• The first-home super saver scheme where potential home buyers can make voluntary contributions into super which will be channelled into a special account used for a home loan deposit — the maximum allowable under the scheme moves from $30,000 to $50,000.
• The first-home loan deposit scheme, where the government provides the mortgage guarantee so a potential homebuyer may only need a 5 per cent deposit, is given an extra 10,000 places.
• For many investors and superannuation savers the biggest super news in the budget is not a new measure but the indexation changes which will kick in on July 1 this year — under those changes the amount you can contribute on a pretax (concessional) basis to super per annum lifts from $25,000 to $27,500 a year and the amount you can contribute on a non-concessional (post-tax) basis lifts from $100,000 to $110,000 a year. Also, the total balance cap which determines the amount that can fund a tax-free retirement income increases from $1.6m to $1.7m
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