HomeHealthAged CareThose with means should pay more for aged care: report

Those with means should pay more for aged care: report

Wealthy people should pay more for aged care to ensure those with fewer means can also access care services, a government report into the sustainability of the aged care system has found.

But the Aged Care Taskforce stopped short of recommending any new taxes or levies be introduced to increase funding to the sector.

It also ruled out any changes to means-testing rules relating to the family home for aged care funding.

The recommendations were part of the taskforce’s final report into how to ensure Australia’s aged care system can remain financially sustainable in the face of an ageing population.

The number of Australians aged 65 and over is expected to more than double, and the number aged 85 and over to more than triple, over the next 40 years.

“Australia’s aged care needs are increasing as the population ages, and expectations of quality improvements are high,” the report’s introduction reads.

“However, the aged care sector is currently not in a financial position to meet expected demand, deliver on the required quality improvements or invest to meet Australia’s future aged care needs.”

Specifically, the taskforce reported on a number of different aged care funding issues including how to fairly assess the financial means of older people and user contributions for both at-home and residential care.

The report is a part of the ongoing efforts to improve our aged care system after the findings of the 2018 Royal Commission into Aged Care Quality and Safety, which found a number of structural problems with the way in which aged care is funded.

“Australia’s aged care system is under stress,” aged care minister Anika Wells said.

“There is universal acceptance that something must change in order to ensure all Australians can age with the dignity, safety and high-quality care they deserve.

“After spending their lives building up our country, we have a solemn responsibility as a nation to respectfully care for older Australians as they age.”

Those who can should contribute

A key issue identified in the report was the fact that as the proportion of Australians aged 65 and over grows, the younger generations – and therefore the number of working taxpayers – are shrinking.

The report says it’s clear that with more people needing aged care, and fewer people working to pay for it, that older Aussies will have to fund more of their aged care needs privately, specifically a means-tested co-payment from your super.

“The superannuation system supports Australians to save for retirement,” the report reads.

“The government’s proposed objective for superannuation is ‘to preserve savings to deliver income for a dignified retirement, alongside government support, in an equitable and sustainable way’. Income from superannuation should be drawn down in retirement to cover health, lifestyle, other living expenses and aged care costs.

“As a result, there is more scope for older people to contribute to their aged care costs by using their accumulated wealth than in previous generations.”

However, the report did stop short of recommending people be forced to set aside part of their super for aged care costs.

But those who can’t shouldn’t miss out

While the number of older Australians with accumulated wealth is growing, the report acknowledges there will always be “a substantial number of people with limited means”, including pensioners or people who don’t own their home, and that a robust safety net is needed for these people.

The taskforce gives no specific outline for how that safety net should operate but notes: “Settings will need to ensure those who cannot make a greater contribution are not asked to do so, and rules are in place to support equitable access to high quality aged care services for all participants, regardless of their means.”

What are the experts saying?

Not-for-profit advocacy group Council on the Ageing (COTA) says its members support the idea of co-payments and a robust safety net for those without means – if the quality of care improves.

“Older people have told COTA Australia over many years that they would be prepared to pay more for aged care if the quality is improved; a clear safety net to protect those who can’t afford to pay is in place; there are strong consumer protections for all participants; and providers were accountable and transparent about where and how taxpayer funds and individual contributions are being spent,” the group said in a statement.

Similarly, Mary Delahunty, CEO of the Association of Superannuation Funds of Australia (ASFA), also supported the ‘user-pays’ recommendations and praised the non-compulsory nature of the proposed rules.

“The recommendations of the taskforce are in line with ASFA’s submission and include changes to charging and means-testing arrangements, which will ensure that those with accumulated wealth and scope to contribute to the costs of their aged care can do so,” she said in a statement.

“Importantly, the taskforce has ruled out ring fencing part of individuals’ superannuation for aged care, which is entirely appropriate – given the true objective of super.” 

However the aged care system is funded, it’s clear the current arrangements are unsustainable and will not be fit for purpose in the future.

Would you be willing to use your super to contribute to your care? Is it fair that those who haven’t saved get theirs paid for? Let us know what you think in the comments section below.

Also read: What to do if your parent is refusing aged care

Brad Lockyer
Brad Lockyerhttps://www.yourlifechoices.com.au/author/bradlockyer/
Brad has deep knowledge of retirement income, including Age Pension and other government entitlements, as well as health, money and lifestyle issues facing older Australians. Keen interests in current affairs, politics, sport and entertainment. Digital media professional with more than 10 years experience in the industry.


  1. Are these reports and “expert” analysis purposely designed to annoy people? If so, well done.

    I’ve read the 65 page report and I see no mention of encouraging the extended family unit to support their own aged loved ones. I also don’t see a definition of what “well off” means in terms of those “well off” paying more.

    Read the report and you may see a further dehumanising of society and another think tank basically saying we need to chuck more money at it to solve the problem and we intend to get that money from those that may have some.

    Funny how successive governments can pull money out of thin air in the billions to fund submarines, foreign aid, campaigns for useless referendums, funding their own pay increases and non means tested fat pensions and the like, but never enough in the pot to fund a proper healthcare and aged care system without passing it on to hard working folk.

    • Oh! For goodness sake, what next? We are not one of the wealthy by any means, but, if folk have worked hard all their lives and perhaps even paid the high tax rates most of their working life, why penalise them in later life. This is just a joke as far as I’m concerned, there is simply no incentive to work hard and plan for retirement in this country. The powers that be are simply not managing the budget, so much money being misdirected. End of rant!!

    • Agree, Mark. And did you see the news that the govt is splashing a massive $4 billion dollars to build homes for Indigenous Australians at an eye-watering cost of $1.45 million per house?
      That’s money that could fund aged care, and the same number of houses could be built for just 1/6th of that cost if there was proper management.

      • Disgraceful ageism. This policy is all about mindless boomer-bashing, with nothing about better support for older Australians.

        It speaks volumes the Task Force was not set up to examine better support for older Australians, but ways of extracting vast sums of money from those unfortunate enough to need care.

        Nothing so far has indicated how supports for older Australians will be improved, or how to prevent continued abuses so well documented by the Royal Commission.

        Disabled people banned from the NDIS for the “crime” of being 65yo are in particular cruelly disadvantaged by the new proposals.

        The government has ignored the substantive recommendations of that Commission including the levy, an essential tool for providing more certainty of funding.

        The policy seems to be to abandon “care” for older Australians to international hedge funds, a rather precarious idea given that such funds will be driven by profit, rather than care for the elderly.

        NB re boomer-bashing : in any event most in residential aged care are older than baby boomers: https://www.gen-agedcaredata.gov.au/topics/people-using-aged-care#Aged_care_use_by_age

      • Absolutely we need a party. Remember Gray Power back in the day?
        It made the politicians jump until it splintered into opposing groups.

        We need similar – voters 65+ are 25% of the electorate, higher than in the Gray Power era.
        Voters 65yol+ constitute a third of the electorate.

        Plenty of potential influence

  2. This report did not recommend how the aged care industry can improve the services for those who need them. The quality of services, the standards of the facilities, the ratio of medical staff to those in care, and the financial structure to support this industry other than the richer older people pay more. This is an opt-out. Superannuation Funds were established to look after workers in retirement. This begs the question, why don’t superannuation funds have some responsibility in taking aged care financing? Let’s ask for another industry to help out this aged care industry other than pinning down “wealthy” individuals. This is a societal issue and not a rich versus poor problem.

  3. When will they stop penalising those of us who have made something of ourselves. We already get a strong F off from the government and now they want to do it more. If they look at reducing the costs of too many politicians with all their after work care and pension rorts it might help claw back some of the overspend.
    Maybe we need to look at retiring somewhere they value the older generation and have reasonable costs to have any required care. Thailand anyone?. YLC needs to look at alternate options to an overcharging and punitive Australia.
    Sorry but this all makes me very cross.

  4. I agree with the notion / policy that all should receive a standard level of aged care, and through our taxation system, it is well-established that those that have or earn more, (should) pay more. (There are inequities in this system where some – mainly business, the wealthy, asset owners etc. – are able to arrange their affairs so they pay less than if on an income). Asking those needing aged care that have worked hard, studied, saved, been good money managers, paid their taxes etc. to contribute more to cover the basics runs the risk of disenfranchising these people. I’m thinking here that some might divest their wealth in order to avoid such impositions. Finding some balance where those with more are incentivised to get more for their dollar (a higher standard of aged care) might be a way of achieving this. To some extent, this happens with health care – if you earn above a certain threshold, you pay a Medicare surcharge. You are also able to buy private health care to provide a higher standard (or more bells and whistles).
    The key issue here that we continue to struggle with on many fronts – not just aged care – is how do we ensure that there are enough incentives (for those with less) to contribute towards the basic standards without expecting those with more to increasingly fund the basics – which they might feel they have done their whole lives through taxation and via voluntary super contributions to fund their retirement.
    The other issue this matter raises will be the impact of such a policy on intergenerational wealth transfer. Much is said about intergenerational ‘theft’ e.g. expecting future generations to pay for the current generation’s benefits. However, this initiative from the task force – if it becomes policy and law – will mean that less wealth is passed to the next generation because it will be used to pay for the current generation’s aged care. I’m not saying that’s a bad thing – I’m just saying we’ll need to understand this consequence.

  5. They don’t actually mean that wealthy people will pay more. What they really mean is that people who can’t or don’t arrange their assets to APPEAR poor will pay more. That means the honest, ethical, hard-working, responsible living people who are now denied an age pension as punishment for their integrity. They will be punished again paying for aged care.

    Lesson: DO NOT BE HONEST. Find ways to arrange your affairs before turning 62 so that at pension age you APPEAR to be poor. Multi-million dollar family home is a good start. My friends gave $3 million to their kids with a verbal agreement that the kids pay all their bills in retirement. They get a full pension and pay NOTHING in rates, water, electricity, gas, registration, insurances, medical costs, phone, internet.. Kids even funded a lavish overseas holiday for them. Wow! Imagine how well they live! And they won’t pay for aged care. They are ”poor”!

    • yes a good plan but I am sure they would get you somehow. Kids might pay tax on the gift and I am sure there are C-link rules about gifting money to family. You’d have to do it all in cash and hide it under the mattress.

      • There are ways around the gifting rules. If you do it a few years before retirement age Centrelink can’t asset test it as it doesn’t exist in your assets. Same as when businesses go bankrupt all assets etc are in the wifes, kids and dos’s name so can’t be touched by creditors.
        The kids would be smart enough put as much as possible into their own super accounts to minimise tax as much as possible.
        This is what the rich do and can afford to have the right advise on how to do it.

  6. Sounds like part of the same old government plan of rewarding failure and penalising those who work hard, pay tax and are successful due to their efforts. If you’ve ever wondered why productivity in this country never improves, it’s because success and hard work is always penalised.
    What happened to the tax contributions those massive foreign companies which operate here were to pay, the Treasurer constantly banged on about prior to the last election?

    Remember too that some of the biggest aged care companies are foreign owned so those retirees who have worked hard are being told they have to pay more towards towards bloating the profits of these foreign companies.

  7. I give up! I am still working full time at nearly 67 so that I am not a burden on the taxpayer. YET anyone who finishes work early, uses up all their savings on holidays and anything else they choose to spend it on will be able to waltz in and get the same care when needed. It’s not about how much money you have – it’s about having a properly funded system where EVERYBODY pays a fair share throughout their life. With what is proposed it is simply unfair to have aged care funded on the basis of how much is left in the individual’s kitty. Should I quit my job now and spend most of my super so I will be on an equal footing as those who didn’t bother to save? I know there is a sector who are not in a position to pay for aged care but the fair way to fund this going forward is definitely not to penalise those who save and work hard. That could quite honestly be classed as robbery!! We have evolved since the days of Robin Hood!!

  8. Gifting rule only applies for 5 years … so donate your millions etc as its unlikely to have a negative impact if you have that amount of money. That said, gifting rules need to change to allow reasonable and sensible “gifts” eg I know someone who gifted $150k to help a child have a modest home. That is costing her heaps in reduced age pension and increased retirement home costs.
    Similarly, if you help pay the refundable accom deposit (RAD) for a relative in aged care – as a documented loan – then Centrelink treat that as their asset and increase the means tested payment.

  9. While I worked, I paid substantial taxes, and I believe that Australia needs higher taxes in order to provide better services. Governments have become tax-shy, hence the inability to provide adequate aged care, either in home or residential. It sounds sensible for the very wealthy to pay to contribute more, but who decides where that line is? It’s unfair to penalise those who’ve worked hard but are not millionaires. Due to life circumstances, I rely on the full age pension and have no super. I “hope” that in the proposed system , I’ll get adequate care. Who knows? One thing I do know, people won’t be happy if they pay more for the same substandard care, especially in residential aged care.

  10. Why can the government can afford $368bn on nuclear submarines we don’t need, but can’t afford to fund age care.
    Why does the government continue to allow the rorting and over expenditure on Shortens NDIS, but can afford to fund age care. This is an appalling cop out proposal.

  11. I thought this was now the common practice. If you require aged care, they first want to know how much dough you have, including all assets and the value of your home if it is to be sold. When they have all your financial data they work out all the costs, particularly if you are going into an aged care home. If this is the case, what are all these new scare tactics that could now be implemented? Nothing would be in our favour.

  12. My fear is if I go into a care home my daughter will have nowhere to live because my house will become an asset and have to be sold to pay for my care. She has been looking after me for years living with me.

  13. Another attack on Superannuation yet again. Please stop. Agree with all comments, except would like to live long and enjoy. Sorry Jennie. Labour will be a 1 term government, which will be a disappointment if implemented.

  14. Sorry am a bit late.
    After a 12 year journey with Alz my wife has succumbed.
    4 in Agedcare and I spend 10 hours a day helping her and others.
    I can tell everyone that this a straight con job by the govt and because the system is complicated media does not research and the govt gets away with this tripe.
    I am a self funded retiree and I started paying $50 a day means test.
    Now only $30.00 a day.
    In its spin neither the Agedcare homes nor the Govt mention this.
    Over 12 months ago the Agedcare Homes requested exactly what the committee has delivered!
    All the media has to do is look at the press releases.
    Examine the Committee.!Stacked with money people or Agedcare homes reps,Cota excluded.
    I have houses and Hours making thought out suggests.
    This Govt is using smokes and mirrors with money and conditions.
    I am consumed with looking after my wife’s arrangements so I recommend pummell Labor members of Parliament who I don’t even think they know what day it is in Agedcare.
    Their party room has told them that this matter will be socially engineered to ensure those with money pay more.
    Bring on the election

    • Great points. The media have been totally snowed. Last week we heard nothing but providers promulgating their spin. Nothing from real people.

      Alas, the Coalition will probably back this horrorshow, so an election merely replacing Tweedle Dum with Tweedle Dee won’t help.

      Best give this info to the cross-benchers – they are free to speak without fearing party heavies – IF they want to. It’s our job to motivate them.

      Also we need to hit talkback radio – I’ve done it

      but we need all of us to have our say in dispelling the barrage of misinformation..

  15. Current Age Care:- this is primarily serviced by the PRIVATE SECTOR, where they look at / are controller by, Profit and dividends to Investors. This has absolutely NOTHING Whatsoever to do with the Care and Welfare of their Clients (so long as they Pay, Pay, Pay through the nose).
    THIS NEEDS TO CHANGE, But which Political Party has the “BALLS” to fix it ??????

  16. Surely this is what Superannuation was meant for, to cover your living expenses in retirement, not as a means of leaving a legacy when we pass on. I agree with Gordon Nussey who thinks that many current for-profit providers treat it as a means of making mega profits for the benefit of their executives and share-holders.

  17. This is all nonsensical spin – it’s not about “paying more for care” but giving corporations free capital for their own investment purposes.

    The infamous “Bonds” are continued in the new Act, despite the Task Force recommending they be abolished. Apparently, they will be taken for the next decade at least.

    $1 million bonds paid to providers are obviously unjustified. Obviously most people don’t have a lazy $1 million, so are charged interest.

    Already residents are paying a fortune in fees and charges, which so far nobody has bothered to tell the media.

    It needs to be pointed out that under the new regime frail, vulnerable Australians will be at the mercy of huge commercial operators, including international investment funds.

    Australians deserve much better than this after a lifetime of paying taxes, and supporting generations of kindergartens, schools and childcare long after their own children have grown up.

    “Intergenerational equity” is a fatuous concept – we all contribute across the generations. That’s how a decent society works.

    Today’s 30 yos are tomorrow’s 80 yos -by funding aged care the young will obviously be helping their future selves.

    I’m optimistic that the toxic political ageism behind boomer-bashing will be called out and ultimately fail.

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