Fixing aged care

While the high number of COVID deaths and cases in Victoria in recent months highlights the health crisis in private aged care facilities, the royal commission into the sector will turn its attention to funding next week.

Two independent reports released ahead of the upcoming hearings into the funding and financing of aged care have already provided considerable insight into the problems and how they could be tackled.

One report laid out a plan for high-quality care and suggested that the increase in federal government funding to achieve the level required was much less than taxpayers were willing to pay, while another independent report investigated transparency relating to how government funds were being spent, and found gaping holes.

Modelling by Deloitte Access Economics suggests that a wide-ranging reform package being considered by the royal commission would cost less than one-third of the amount taxpayers are willing to spend on the sector.

The reform package includes:

  • mandatory four-star staffing levels in aged care homes
  • other workforce improvements such as mandatory Certificate III training for personal care workers and a national personal care worker register as in other professions that work with vulnerable people
  • uncapping the number of Home Care Packages so people receive the care they need rather than languish on a waiting list
  • significant improvements in health services, including access to GPs, psychologists, dentists, and rehabilitation
    greater access to respite services to support informal carers
  • getting young people with a disability out of aged care homes into accommodation appropriate for them
  • new teams of case managers giving face-to-face support to people who need help to access aged care services
  • improved resourcing for public guardians to help the most vulnerable elderly people without family or friends to support them.

According to the Deloitte modelling, these changes would need new funding, equivalent to a one percentage point increase in income tax rates. A separate study by Flinders University has shown that the average taxpayer is willing to pay 3.1 percentage points so all Australians can access high-quality aged care.

The reforms would also create around 30,000 additional full-time equivalent jobs in aged care by the end of the decade on top of more than 50,000 extra full-time equivalent workers that will be needed because of population trends.

Wages in the aged care sector would also rise to levels equivalent to other healthcare sectors to attract the required workers.

The royal commission also engaged BDO to analyse where approximately $25 billion in federal funds for aged care are currently being spent, and their independent report found “insufficient financial transparency”.

BDO’s report claims that the Department of Health reporting obligations are so limited it cannot work out how the $25 billion is being spent.

BDO used the Department of Health data, which is not available to the public, and concluded that there are large differences in the way in which individual aged care providers structure their operations and the costs they incur such as interest, management fees and rent.

These expense items can range from zero to 100 per cent of total expenses for different individual aged care providers.

BDO’s view is that the aged care industry’s overall financial performance is unclear because of what they consider to be limited reporting obligations set by the Department of Health, aged care providers’ use of group entity structures, transactions between related entities and the delivery of non-aged care activities by some providers.

Would you be happy for the federal government to spend more money on the aged care sector to ensure all Australians can access high-quality aged care?

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Written by Ben Hocking

Ben Hocking is a skilled writer and editor with interests and expertise in politics, government, Centrelink, finance, health, retirement income, superannuation, Wordle and sports.

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