Argument for user pays in aged care must be heard

The recurring theme for the Albanese government is that more money is needed to deliver the sorts of social programs it wants to champion. This is true for childcare, welfare, nursing, skills training and particularly aged care. The latest news for the government, which agreed to underwrite higher wages for workers in the sector, is that Australia’s residential aged-care system is under critical threat, with seven out of 10 nursing homes operating at a financial loss. Rapidly declining occupation levels and severe staff shortages are jeopardising the care of hundreds of thousands of vulnerable older residents.

As Stephen Lunn writes on Friday, a new analysis shows the loss per bed tripled between September 2021 and September last year to an average $21.29 per bed a day from $7.30 in the previous corresponding period. In 2018, the homes were making a profit. Operators say past profits had come from land sales, not operations, and money that had been put away for maintenance and other capital works has had to be spent on recurrent expenditure. Given the strict requirements that govern the aged-care sector, it is not a simple matter of homes being able to pass increasing costs to residents. The latest numbers equate to an annual loss for the sector of about $1.4bn, despite a government funding boost in 2021 of $10 per bed a day to improve quality and range of food and supplements, costing the taxpayer an extra $3.2bn across four years. The StewartBrown aged-care financial performance survey calls for an urgent cash injection from the federal government to address the current crisis and for longer-term system-wide change.

Like healthcare generally, aged care has always been a difficult policy area for government. There is a longstanding cultural reluctance by Australians to use high-value assets such as the family home to fund the aged-care needs of individuals. Outgoing Bupa Asia Pacific boss Hisham El-Ansary spoke candidly when he said wealthy Australians should pay a greater share of the aged-care bill after selling their “multimillion-dollar homes” to give those who look after them a much-needed pay rise and fix a broken system.

Grant Corderoy, the author of the latest report, recommends older Australians who can afford it pay more for the accommodation component of their aged care, potentially through a higher daily accommodation payment or by using a portion of their refundable accommodation deposit. Currently, the full deposit paid on entry to the aged-care home must be repaid to the family of the resident after they depart. As for the costs of everyday living, such as food, utilities, cleaning and laundry, Mr Corderoy proposes deregulation, which would allow providers to charge a greater amount than the currently mandated $54-a-day basic daily fee.

As the demands for government spending continue to mount, the Albanese government must think carefully about how it intends to proceed. Aged-care providers cannot be expected to persevere with government mandates that produce a loss. But budget discipline demands that not every call for more money can be agreed. Families must be persuaded to consider more fully the welfare of elderly members in care as well as the preservation of valuable assets to inherit. Those going into aged care must think about their own immediate needs as well. There is a persuasive argument that those who can afford it should make a bigger contribution to the aged-care services they receive.