Older Australians who own their home are more than 20 times better off than those who rent, according to data from the Australian Bureau of Statistics (ABS), and a major aged care provider wants to tap into that ‘wealth’.
As Treasury considers submissions to its retirement income review, Catholic Health Australia (CHA) chief executive Pat Garcia says the federal government should force these ‘wealthy’ older Australians to pay more for aged care services – especially those living in multimillion-dollar homes in Sydney and Melbourne.
“Many Australians are sitting on a huge financial resource,” Mr Garcia told The Age. “It’s only logical and fair that people who have access to millions of dollars tied up in their home should be paying more for their aged care.”
Government subsidies for aged care and home care are means tested, but only the first $169,079 of the value of a person’s home is taken into account. Research conducted by the Australian National University (ANU) shows that about 242,000 pensioners are outright owners of properties worth more than $1 million.
Mr Garcia says a “fairer” model would be one where wealthier Australians have the full value of their home taken into account, as recommended by former public servant David Tune in his 2017 review and as proposed in some quarters in relation to assets tests for the Age Pension.
The government has, however, ruled out that possibility in its current review.
Mr Garcia believes the CHA submission would “bring a huge amount of money into the aged care system” and free up federal funds for those who were less financially secure. It wants caps on fees to be abolished, with daily fees of more than $100 to be approved by the aged care pricing commissioner.
“The funding model for aged care is so broken that nearly half of [aged care] homes are operating at a loss and staff are chronically underpaid,” he says.
“[But] if we expect people to pay more, we have to deliver much better care,” he says, acknowledging the aged care royal commission interim report that detailed widespread abuse and neglect in the sector.
“We need to find better ways of unlocking private wealth.”
In 2017-18, the ABS found that property-owning households – where at least one of the occupants was at least 65 – had a median net worth of $960,000. Similar households paying off a mortgage had a median net worth of $934,900.
But similar households that rented had a median net worth of just $40,800.
Nicki Hutley, partner at Deloitte Access Economics, told the ABC’s 7.30 that Australia is in danger of creating a separate class that will not reap the many benefits that come with home ownership.
“Are we allowing one class of Australians to build for their retirement more easily than another class of Australians? The answer to that is unequivocally yes,” she says.
What is your view of the Catholic Health Australia submission on aged care fees? Should older homeowners’ ‘wealth’ be unlocked to benefit that sector?
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