Aged Care Taskforce releases funding recommendations

You might have noticed a lot of action on the aged care front in the media over the past week or so. The Aged Care Taskforce’s final report on how to sustainably fund the aged care system has been released publicly at last.

National Seniors Australia (NSA) contributed to the Taskforce through a submission in August 2023.

We have welcomed the final report as an important milestone in what is proving to be a long road towards a safe and quality system of care.

The Taskforce’s key principles, proposed to the Federal Government as a guide for funding decisions, tack closely to those proposed by NSA – support older people to age in place in the home as long as possible; equitable and sustainable funding arrangements; and quality, innovation, and transparency in the aged care system. A series of specific recommendations support these principles in the report. 

Importantly, the Taskforce addresses the key question of interest: where will the additional funds come from to improve the system?

The current aged care system is funded largely by the government from general revenue, with a smaller proportion coming from co-contributions from older people using the system. 

(Government funding constitutes around 75% of the total costs of residential aged care funding, and 95% of home care funding). 

But with increasing numbers of older people needing care and a need to improve the quality of care, the budget for aged care will grow significantly in the future.

In our submission to the Taskforce, we conveyed strong support by NSA members and supporters (from our research) for a Medicare-style levy to fund aged care. Notably, this approach was also proposed by the Royal Commission into Aged Care Quality and Safety.

However, the Taskforce has recommended against a levy or other taxes, citing intergenerational fairness and cost-of-living concerns. Instead, it focuses on expanding co-contributions from those who can afford to make them, with a strengthened safety net for those who cannot.

The Taskforce report makes it clear that the government must be the main funder of direct care services in the system, such as nursing care.

It recommends that increases in co-contributions focus on living costs, such as care recipients' accommodation, food, cleaning, washing, gardening, lifestyle activities, and similar. The Taskforce report points out that these are costs that people pay for themselves throughout all stages of life.

What that looks like in practice is yet to be determined in detail, should the government accept the Taskforce recommendations.

However, the Taskforce recommends that changes in residential care be grandfathered for those already in the system and changes in home care only occur as people’s needs change.

The Taskforce recommendations are not the final word and have to be considered by government.

At the time of writing this article, the Albanese Government has said it wants to consult with the community and Parliament about the recommendations of the Taskforce.

It has said that it will not impose any increased taxes or a new levy to fund aged care costs or change to the means-testing treatment of the family home for aged care.

NSA has always maintained a need for multi-partisan support for aged care funding reform, because fixing the system to care for vulnerable older Australians should be above politics.

NSA and other stakeholders will engage closely with the government as it deliberates how to implement any new arrangements. This is not only a crucial moment for ensuring fairness in funding aged care, but also the right time to simplify the currently overly complex and hard-to-navigate financial aspects of the system which lack transparency and accountability.