It’s even worse than we thought in aged care

An industry report published in January by aged-care specialist StewartBrown put the average daily losses per nursing home resident at $21.30.

For months, Jim Chalmers has been flagging the rising cost of aged care as a key budget concern. On the figures contained in the government’s inaugural quarterly financial snapshot of the aged-care sector, things are likely worse than he thought.

An industry report published in January by aged-care specialist StewartBrown put the average daily losses per nursing home resident at $21.30.

It was based on data from about 44 per cent of the sector. Annualised, the losses come to about $1.4bn. The situation was described as “critical for many providers”.

But the new quarterly snapshot covers 99 per cent of private providers, revealing they are losing much more – up to $27.90 per resident per day.

More than $465m was lost in the September quarter alone, and situation critical has become situation catastrophic.

So much for the image of the Maserati-driving, cigar-chomping profiteer in aged care.

There may be a few ­sharpies at the margins, but most businesses are doing it really tough on ­current levels of government funding.

With other budgetary pressures the Treasurer acknow­ledges are gripping the government – the NDIS, defence, healthcare and servicing debt – he will be ­calculating what more he can reasonably do in the budget process to dig the aged-care sector out of this hole.

Already aged care is one of the government’s biggest-spending programs, budgeted to cost $27bn this year, rising to $34.7bn in 2025-26.

Beyond that Chalmers must find a further $1.9bn a year to cover interim pay rises awarded to aged-care workers – a bill that could steeple further if the Fair Work Commission accepts the union’s case for a full 25 per cent rise.

And covering the annual losses in the residential care sector ­exposed in the quarterly snapshot would require something north of a further $1.4bn. That’s just break even.

Aged care’s financial woes have led to some “break glass” ideas resurfacing. Providers are calling for a new conversation around richer Australians co-contributing to their care, a policy option they admit has been off the table for decades.

And the royal commission’s proposal for a Medicare-style levy to pay for aged care has also resurfaced in some quarters, as the ­extent of the sector’s financial situation becomes clear.

There is a caveat on this. A new care funding model, known as AN-ACC, was introduced by the government in October, not in time to be included in the quarterly statement. It is as yet ­unclear how this is impacting care support.

When Chalmers sharpens his pencil for the budget, he will no doubt be bearing in mind that aged care touches millions of ­Australians, whether they are receiving care themselves, have a relative or loved one who is, or are working in the sector. Provided they are spent ­efficiently, giving people a dignified final chapter is what taxes are for.