Cost of aged care living set to rise for wealthy older Australians

Labor is set to push on with a plan to hike the contributions of wealthier nursing home residents for their care.

The government is under pres­sure on aged care costs.

The Albanese government is poised to push ahead with a plan to hike the personal contributions of wealthier nursing home residents for their care, despite concerns about its potential impact on cost of living.

The government is under pres­sure on aged care costs as it faces calls in a looming Fair Work Commission case to fully fund a 25 per cent wage increase for all residential aged care workers.

Aged Care Minister Anika Wells is expected to release the final report of her aged care taskforce next week, almost three months after it was finalised.

It is understood Ms Wells convened an urgent meeting of her taskforce on Thursday to explain why the report’s release has been delayed.

It is also understood the final report remains unchanged from its original form after being seen by key figures in the government.

The report is widely anticipated to recommend more means-tested consumer co-­contributions from aged care residents for their accommodation and other services such as cleaning and laundry.

This is part of a broader attempt to make the sector financially sustainable, but has generated concern about its potential impact on cost-of-living pressures at a critical time for the economy.

It is understood the taskforce and government have accepted any cost-of-living impact is diluted across the broader population, given there are only some 200,000 nursing home residents in Australia.

The taskforce also looked to recommend changes to support older people to remain in their own home for as long as possible as well as examined the possibility of using superannuation to cover the cost of care.

One source familiar with the final report said the government would look to roll out a large education campaign to help people understand how aged care ser­vices were funded, saying “people don’t realise the government pays in excess of 90 per cent in aged care”.

Despite greater government funding in the past six months leading to improved recent outcomes for those in residential care, many providers in the sector remain on a financial tightrope.

Figures from the most recent Quarterly Financial Snapshot of the Aged Care Sector put 66 per cent of private providers as operating at losses.

The sector is scrambling to implement a suite of reforms including mandated minutes of care per resident, quality and safety standards, and full-time nursing requirements as it adjusts to a new funding model recommended by the aged care royal commission.

The government has previously been called out by independent aged care overseer, the Acting Inspector-General of Aged Care Ian Yates, for “significant slippages” in other aged care reform priorities, including on critical legislation and homecare reform.

The imminent publication of the taskforce report comes as Australia’s largest non-government provider of aged care services urged Labor to fund a $1.9bn a year wage rise for direct care workers and residential indirect care workers.

With the wage case before the Fair Work Commission, Catholic Health Australia said indirect care workers such as gardeners and administration staff must get a 25 per cent pay rise amid concern that the cohort was yet to receive anything.

The organisation, which represents more than 350 providers, has also called for direct care workers to receive a further 10 per cent increase after the group received a 15 per cent pay increase last year.

In a pre-budget submission, CHA says the sector is finding it “extremely” difficult to attract and retain staff, with estimates suggesting it is facing 60,000 care and nursing vacancies, with that tally projected to hit 110,000 in six years.

CHA says it will be forced to close aged care services if it is unable to get qualified staff at current pay rates.

Writing to Jim Chalmers, CHA chief executive Jason Kara said a suite of government reforms had exacerbated workforce shortages. He also noted a massive increase in the use of expensive short-term contract workers in a bid to fulfil strict new staffing reforms, rapidly escalating the cost burden on providers and threatening their viability.

“There are significant shortages of staff which has been exacerbated by expanded staffing responsibilities under ongoing commonwealth government reforms,” Mr Kara said. “In addition to increases in costs associated with CHA members’ own workforces, this has led to a sector-wide increase in the use of agency staff in the second half of 2023.

“It remains to be seen if the market can adjust to this increase in use of agency staff.”