18
Apr
2021

Aged care worker talking to senior people

Boost spending by $10b a year to help fix aged care: Grattan

by Stephen Duckett


The Federal Government should boost funding by about $10 billion a year to help fix Australia’s broken aged care system, according to a new Grattan Institute report.

The extra spending could be funded by some combination of a new Medicare-style levy on taxable income, changes to the pension assets test and/or the residential aged care means test, and/or reductions in excessively generous tax breaks on superannuation.

Properly administered, the extra money could transform the aged care system: clearing the 100,000-long waiting list for adequate home care, providing higher-level care at home for longer, employing at least 70,000 more aged care workers, and lifting the amount of care per person and ensuring a qualified nurse is on site 24/7 in all residential care homes.

‘The aged care system is a stain on Australians’ conscience,’ says lead author and Grattan Health and Aged Care Program Director, Stephen Duckett.

‘None of us want to end up in the present shameful system. Many of us feel guilty if we decide to pack our elderly mum or dad off to care.

‘The Prime Minister and the Treasurer must get serious about fixing aged care. This is more than a political problem, it is a moral imperative.’

The Grattan report, The next steps for aged care: forging a clear path after the Royal Commission, calls for a streamlined and integrated aged care system under a new, rights-based Aged Care Act that guarantees care and support to all who need it.

It recommends universal funding of care costs, just as there is universal funding through Medicare of patients’ costs in public hospitals. This would provide universal insurance for people who have high care needs, and would mean people would not need to worry about how they are going to fund their possible care needs in older age.

The cost of a reformed, universal aged care system will only grow as Australia’s population continues to age and there are fewer working-age people paying taxes to fund the care of retirees.

The Government could consider a 1 per cent aged care levy on taxable income, and it should find more money for aged care by reducing the excessively generous tax breaks for wealthy older Australians.

More of the value of the family home should be included in the Age Pension assets test. And superannuation earnings in retirement – currently untaxed for people with superannuation balances of less than $1.6 million – should be taxed at 15 per cent, the same as superannuation earnings before retirement.

‘Surveys consistently show that Australians are willing to pay more tax to fix aged care,’ Dr Duckett says.

‘The time to act is now. The Aged Care Royal Commission report leaves the Government with nowhere to hide. This Grattan report shows how a better funded and designed aged care system would protect the rights, uphold the dignity, and celebrate the contribution of older Australians.’

For further enquiries: Stephen Duckett, Health and Aged Care Program Director
M. 0447 837 741
E. stephen.duckett@grattan.edu.au