"The Taskforce report on aged care funding leaves more questions than answers" say aged care advocates

The Aged Care Taskforce was appointed by the Australian Federal Government to provide advice about how aged care should be funded, options for a system that is fair and equitable, and ways to build on the recommendations of the Royal Commission in Aged Care Quality and Safety. The final taskforce report on aged care funding has finally been released, containing 23 recommendations – many of which concern community aged care advocates Aged Care Reform Now (ACRN).

“More funding does not mean more care. I don’t want my son’s inheritance to pay for care I won’t receive” states Alwyn Blayse from ACRN.

The Government has confirmed that, in accordance with Recommendation 2, a tax or new levy will not be imposed to fund aged care costs. Decisions on the other recommendations will be released in the Government’s response. There is concern though that despite the Government’s assurances that there will be no levy to fund aged care, recommendations such as user pays, superannuation charges, and removal of refundable accommodation costs will amount to the same thing – an aged care ‘tax’ that disadvantages those who can least afford care, and more cost to those who want reasonable care.

Risk of a two-tiered system

The taskforce report on aged care funding focuses on how superannuation should be drawn upon to fund a person’s aged care through increased co-contributions, and advises that ‘the Government is and will continue to be the major funder of aged care’. ACRN Member, Yvonne Buters, states that, “the Government is proposing a quasi-inheritance tax, which will not be paid by all. We risk having a two-tier system between those who can pay and those who can’t. A consumer of aged care services would be happy to pay for high level clinical care, but this Report does not address how we can be sure that high quality care is going to be delivered with additional funding”.

There is already a risk of a two-tiered system if the current draft of the Aged Care Act is passed into legislation. Advocates including Aged Care Reform Now, Carers’ Circle and Aged Care Justice are concerned that the current Aged Care Act Draft only applies to Commonwealth funded aged care services. In its latest submission, the organisations said “There is also concern that because the legislation only applies to Commonwealth-funded aged care services, privately funded services will not be subject to the same level of regulation, placing private residents and home care recipients at disadvantage and risk. As the private aged care sector continues to grow, more older Australians will not be safeguarded by the Draft’s protections.” Having the Act only apply to funded aged care services also means that providers could look to avoid the compliance of the system and move to a shadow unregulated private market – and now with the Taskforce Report recommending more user pays, there may be little difference between the cost of a regulated and unregulated environment for the consumer which only serves to benefit providers.

Middle bracket to bear the brunt

The taskforce report on aged care funding says “Generally, older people are expected to be wealthier than their predecessors, largely due to the maturing superannuation”. However, Australia is one of the leading OECD countries in terms of older people in poverty (22.5% of over 65s).

ACRN is concerned that those in poverty and the homeless will be left without enough care in the safety net, and the middle wealth bracket, and women with less super, will be disproportionately affected by increased co-contributions. “Those who do not have the means to pay will be protected by the Government’s safety net, and those who fall in the high wealth bracket will easily be able to pay, but it is those in the middle who will be paying the highest percentage of their wealth, which is unfair” states Amina Schipp from ACRN.

One recommendation is the phasing out of Refundable Accommodation Deposits (RADs) by 2035, following an independent review in 2030 to ensure there is adequate capital to meet future demand. Without RADs, the sector is to be funded by a ‘rental only model’ with ‘block funding’ continued in ‘thin’ markets such as rural and remote areas. This is a major change to the current funding framework. “The question is how will the sector acquire capital investment? The taskforce report on aged care funding is vague on how Providers can support this change,” says ACRN member and Aged Care Justice CEO, Anna Willis.

Home care overhaul needed to prevent wasted funds

Home care programs will also undergo an ‘overhaul’ to improve fairness as the current system ‘can leave significant funds unspent, while others can wait for months to access services’ per the taskforce report on aged care funding. There is a list of inclusions and exclusions as to which home services will be funded, however it remains unclear as to what a home care recipient will be paying or how any funding wastage will be monitored. “When my mother received home care, she was paying for certain services that were being delivered free of charge through different programs, unbeknownst to us. Providers should be disclosing which free services are available elsewhere instead of charging for those services. There is definitely a lot of wasted funds in the system, how will that be prevented?”, asks Buters.

Funds not linked to highest quality care and other concerns

The taskforce report on aged care funding recommends increased transparency in reporting how funds are allocated by Providers. ACRN is concerned that increased reporting requirements are not sufficient in ensuring funds are used to deliver the highest quality care possible. “We know that when Providers are allocated funds for allied health, for example, they have the option to hire a graduate over an experienced professional, saving them money which is often not passed on to the package holder. This does not ensure the care recipient is receiving the best care outcomes the funding can provide, nor does it promote the presence of professionals in aged care” states Buters.

Under Recommendation 19, the Aged Care Quality Safety Commission (ACQSC) will be tasked with ‘supporting innovation by identifying innovative practices and promoting these across the sector’. “Would the ACQSC even be equipped or capable at identifying innovative care models? Tasking the ACQSC with an innovation role would be adding more responsibility to an already overburdened Regulator, which should have been replaced by now if the Royal Commission recommendation was followed” says Buters.

‘Fee flexibility’ is another Report recommendation whereby care recipients or ‘consumers’ should be enabled to negotiate ‘better or more daily living services for a higher fee’. There is no definition of ‘daily living services’ however there is a caveat that this recommendation should only be implemented ‘provided appropriate consumer protections and complaints processes are in place’. If the individual is to fund a larger portion of their aged care services, there needs to be more power given to the individual in selecting and curating their own services, and legislation needs to support that.

There are also concerns about the reliability of the data, figures in the Report state that 69% of residential care operators made a loss in 2021-2022 but more recent data released in March 2024 shows that 3/4 of providers had made a profit, see here. “If $14.6 billion was spent by the Government on residential care in 2021/22, and we now know that spending fell short in consistently delivering quality care, then we have the wrong system – more money is not the answer”, says Willis.

“Why did we have even have a Royal Commission if the recommendations on funding have been changed by a Taskforce, not democratically elected, with a group of 16 individuals, many linked to aged care providers and chaired by the Government’s own Minister of Aged Care, which is relying on data from sources with possible conflicts of interest?”, asks Blayse.

It is unclear how the taskforce report on aged care funding impacts the new Aged Care Act. Funding is crucial, however, if the new Aged Care Act does not appropriately respond to gaps in clinical care, governance, and rights enforcement, then how can we allocate additional funds to a system which still needs fixing? Interestingly, the Taskforce Report was made public the week after submissions closed for feedback on the draft Aged Care Act.