Budget 2022: $2.5bn to give nursing home residents more care

Funding for aged care is guaranteed despite the fast-rising bill, Jim Chalmers says.

The government has also pledged to cap administration and management fees charged by in-home care providers and abolish exit fees when recipients no longer require the service. Picture: Istock.

Labor has pledged to meet the full costs of providing care to older Australians even as they are anticipated to jump by more than 6 per cent each year across the next decade.

The government will spend $27bn on in-home and residential care this financial year, rising to $34.7bn by 2025-26, the budget reveals. A $2.5bn commitment over four years to increase the number of daily care minutes provided to nursing home residents, a key recommendation of the aged care royal commission, will be partly offset by a $420m saving due to lower than projected occupancy rates in residential care as older Australians stay home longer.

The government has also pledged to cap administration and management fees charged by in-home care providers and abolish exit fees when recipients no longer require the service.

But there is a looming, still un-costed, hit to the aged care budget, with a wage increase for 300,000 care workers due to be finalised by the Fair Work Commission next year. The government says it will fully fund the pay rise, whatever it is, and has set aside $19bn in its contingency reserve over the forward estimates to be used in part to cover the additional wages.

Jim Chalmers has identified aged care, driven by an ageing population, as one of the five big cost pressures on the federal budget in coming years, but was adamant the government would back in the extra costs and extra pay.

“We choose to pay for better aged care, and better wages for those giving care,” the Treasurer said in his budget speech.

“This budget invests more than $2.5 billion to put nurses back into nursing homes, improve the quality of food, and respond to the recommendations of the royal commission.”

The budget details the extra nursing care, one of the key royal commission recommendations. “From 1 July 2023 aged care facilities will be required to have a registered, qualified nurse on site 24 hours a day, 7 days a week,” it says. “Average care minutes will increase to 215 per resident, per day, from 1 October 2024.”

But it notes that government payments for aged care services are expected to decrease by $420 million over the four years to 2025-26 “reflecting lower than projected occupancy for residential aged care in line with consumer demand and the shift to in-home care.”

The budget commits to funding to keep the nation’s 245,000 nursing home residents each year safe from Covid, though in-reach testing will wind up at the end of 2022.

Health and Aged Care Minister Mark Butler said those requiring nursing home or in-home care were neglected under the previous administration.

“Older Australians deserve respect and dignity in aged care and this budget takes the first steps to deliver the reforms that they so badly need,” he said.

The government said home care administration and management fees charged by providers will be capped and exit fees from service contracts will be abolished as it looks to ensuring more of the funds provided by government are being spent on the direct care of older Australians.

“Our investments help restore safety, dignity and respect of older Australians,” Aged Care Minister Anika Wells said. “The budget steers a course for the aged care sector towards a system that is focused on quality care.”