Aged Care Summit: leaders debate $30 billion gap

Australia’s aged care leaders will come together at an historic summit in Canberra to debate the $30 billion aged care funding gap today (Thursday, 1 June).

The group will consider ways of bridging the $30 billion gap between what the nation spends caring for its older citizens and what is needed to bring the country up to international standards.

The Financial Sustainability Summit at Old Parliament House will bring together experts from aged care providers, unions, consumer groups, academics and public policy specialists to consider the optimal care funding model for the next 20–30 years.

The Prime Minister released the Australian Government’s draft National Strategy for the Care and Support Economy on Sunday. He acknowledged that government cannot provide all the answers alone and has sought input from the private sector.

Opposition leader Peter Dutton provided in-principle support for greater co-contributions in aged care to make the system more financially sustainable.

Attendees include the major aged care providers, COTA CEO Pat Sparrow, HSU’s Lloyd Sampson, UTS Prof. Mike Woods and StewartBrown’s Grant Corderoy.

The challenge

Australia currently spends around $34 billion per annum on aged care, or 1.2% of GDP, which is only half of the OECD average.

The funding challenge is likely to grow in the future. More than 4.1 million Australians, or almost 16% of the population, are currently over the age of 65. By 2057, that will rise to 8.8 million, or 22% of the population, and by 2097 it will reach 12.8 million people, or one in four Australians.

Possible solutions

Last month, the Australian Government announced the creation of an Aged Care Taskforce to “review funding arrangements for aged care”, including greater co-contributions by older Australians themselves, with its recommendations to be released later this year.

Case for change

• The Royal Commission into Aged Care Quality and Safety acknowledged that current financing arrangements for aged care are not well designed to support a sustainable system into the future.
• The Aged Care Financing Authority (ACFA) has previously found that a sustainable aged care system can be achieved with more co-contributions from older Australians who can afford to make them. The government’s taskforce will also look into these options.
• The federal government’s 2020 Retirement Income Review Report found that “most people die with the bulk of the wealth they had at retirement intact”.
• Aged Care services provider CompliSpace last month released a report that found that almost three-quarters (73%) of Australians are willing to forego some of their inheritance so their older family members can have the retirement they deserve.
• According to the Productivity Commission, almost $1.4 trillion has been gifted by Australians in inheritances, or about $67 billion a year. The average recipient of an inheritance receives about $125,000, is about 50 years old, close to peak earning capacity and established in a house.
• The Royal Commission into Aged Care Quality and Safety found there are currently 4.2 working age (15–64 years) people for every Australian aged 65 years or over. By 2058, this will fall to only 3.1.

The summit will consider questions such as:

• What role can taxation, levies and social insurance play in the long-term financial sustainability of the aged care system to deliver quality care?
• What are the benefits and outcomes, risks and barriers to each policy option?
• What role can changes to consumer contributions, including means testing, pre-funded financial products and pay as you go, play in ensuring an equitable and sustainable aged care system?
• If adopted, what principles should underpin consumer co-contributions?

The Aged & Community Care Providers Association (ACCPA) commented and said a financially sustainable aged care system should be equitable, efficient and effective across four key dimensions:

• Fiscal sustainability: taxpayer affordability of public-funded services, both now and over the longer term.
• Societal sustainability: community satisfaction with the quality of care and support for senior Australians in need and the equitable distribution of costs and benefits across consumers, taxpayers, providers and their workforces.
• Workforce sustainability: ongoing availability of a sufficient aged care workforce with appropriate knowledge, skills and professional attributes.
• Financial sustainability: provider viability and confidence to invest in the sector.

Image credit: iStock.com/Mlenny