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Budget delivers election promises, but not on aged care workforce

Jim Chalmers’ first budget has followed through with the Labor’s election promises to seniors. But could it have done more to fix the workforce shortage in the care sector?

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The first budget of the new Labor Government deviated little from the promises made to the electorate. The government made a range of commitments laid out in Tuesday night’s budget.

These included:

  • Freezing deeming rates for two years for pensioners and other payment recipients, regardless of changes to the RBA cash rate.
  • Increasing the income test threshold used to determine eligibility for the Commonwealth Seniors Health Card, so 44,000 more self-funded retirees get access to concessions.
  • Legislating for a registered nurse on site in aged care homes at all times of the day.
  • Supporting an increase to aged care workers' wages through the Fair Work Commission.
  • Lowering the cost of medicines by $12.50 to a maximum of $30.
  • Lowering the eligibility age for downsizing into a superannuation scheme from 60 to 55.

What is new?

The only new items in the budget were:

  • A target to build one million new homes, under a national Housing Accord.
  • A downsizing incentive.
  • A temporary increase to the Work Bonus limit.

The Housing Accord will bring together all levels of government, with institutional investors and the construction sector to ensure new houses are built to ease shortages. This is coupled with an investment of $350 million to boost the supply of affordable housing by 10,000 homes.

We hope that some of this housing will be age-friendly for older people who need access to care services that keep them safe and well and out of residential aged care.

The so-called downsizing incentive extends the means test exemption of excess proceeds from the sale of the family home from one year to two, bringing it in line with the exemption offered when a person enters residential aged care.

However, as we said in our submission, we do not expect this to do much to encourage downsizing because most people will still be concerned about the impact on their pension after the two-year period expires.

The budget includes a commitment to temporarily increase the pension Work Bonus limit by $4,000 until 30 June 2023, promised during the recent Jobs and Skills Summit. 

The legislation for this is currently before the parliament. As part of the passage of the legislation, National Seniors put forward a submission to a parliamentary inquiry, noting the amount offered ($4,000) and timeframe proposed (approximately seven months) would undermine the benefits of this initiative. 

Despite this, we believe it will benefit pensioners and are hopeful it may strengthen to maximise workforce participation.

The aged care workforce is still a big problem for the government

National Seniors was also hopeful the budget would include measures to address the dire state of the care sector workforce.

There are 74,300 job vacancies in the critical Health Care and Social Assistance sector, which includes aged care, disability care, childcare and health.

Skills and Training Minister, Brendan O’Connor, released a report from the National Skills Commission in the weeks leading up to the budget, highlighting the investigation into the care sector workforce.

It found a shortfall of 100,000 workers in the care sector by 2027. This figure predated the Omicron outbreak.

Many seniors and those with older relatives would read this report with worry and wonder how they will get the support and care they and their loved ones need when the workers are not available.

We believe the workforce crisis in the care sector could be eased by allowing pensioners to work, and work more, without being financially penalised. We want to work with the government to deliver a stronger incentive to retain pensioners in the care workforce.

A two-year trial of a targeted exemption should be delivered in the May 2023 Budget if we have any hope of arresting the growing workforce shortages.

Better still, if only 8.3 per cent of pensioners rejoined the workforce and worked more under an opt-in exemption of employment income, the cost to the government would be neutral and beyond that revenue positive.

Letting pensioners work in the care sector without being penalised is a win for the government, the economy and pensioners.

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