Treasurer Jim Chalmers has admitted delays to his government’s aged care reforms will cost the budget almost $1 billion, after Labor deferred the introduction of higher resident fees, new home care packages and stronger regulatory powers until the end of the year.
The delayed changes to the $42 billion sector add to a growing backlog for the Albanese government, which is also yet to ink a deal with the states on hospital funding and a new system to take pressure off the National Disability Insurance Scheme.
The delay to aged care reforms from July to November will cost the budget almost $1 billion.Credit: Sydney Morning Herald
Health and Aged Care Minister Mark Butler conceded providers and older Australians needed more time to prepare for the system, which will reboot the home care scheme and change how fees are structured for new aged care residents. It now starts in November rather than July.
Butler and junior portfolio minister Sam Rae decided after strong lobbying by aged care providers. “The scale of this reform program is very ambitious, and I want to be crystal clear that I remain absolutely committed to it,” Rae said on Wednesday.
“This brief deferral is about ensuring that both the new act and the Support at Home program are ready to best support older Australians and to care for them and their families as it was intended.”
Providers welcomed the delays on Wednesday. “The simple truth is we’re not ready to introduce all the sweeping reforms by July 1,” Ageing Australia chief executive Tom Symondson said.
“The additional time will give us the critical space we need to finalise agreements, systems, and processes.”
But opposition aged care spokeswoman Anne Ruston said the situation was predictable, noting the Coalition had suggested a 12-month implementation process but was knocked back.
“The government was warned,” Ruston said. “The minister clearly believed the job was done once the legislation passed through parliament, but the reality is that that’s when the real work begins.”
Chalmers said the was likely to cost about $900 million over the four-year forward estimates. “We’ve done this in good faith … It wasn’t ready to go, and so we’ve got a responsible delay here,” he said.
But he said the changes would have a positive impact on the budget in the long term by making aged care – one of five significant areas of budget pressure – more sustainable, pointing to Wednesday’s national accounts figures that also showed moderated growth in the $52 billion NDIS.
“These are really important reforms … for the budget … One of the reasons why public demand fell in the quarter is because of the progress we’re making on the NDIS, aged care as well,” Chalmers said.
The new Aged Care Act will expand in-home services – replacing current packages with a new “Support at Home” program – and increase how much wealthy people pay when they move into residential care.
Those with more than $500,000 in assets on top of the family home are forecast to pay $13,400 more each year once the new scheme takes effect, while the lifetime contributions cap will be raised from about $80,000 to $130,000. The act also beefs up regulatory powers to improve oversight of the sector.
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