Navigating our path to recovery
The government has announced a record additional funding of $17.7 billion, allocated over the next five years, or roughly $3.5 billion per annum. In 2021-22, spending on aged care is estimated to be $25.9 billion. This is in response to the Royal Commission into Aged Care Quality and Safety which handed down its final recommendations in March 2021. The government’s aims are for this funding to contribute to a more accessible and sustainable needs-based system, to support older Australians to stay in their homes for longer, reform the residential aged care sector, and to grow the size and skills of the aged care workforce. Key measures for the funding include:
The budget announcement is a significant improvement on the funding allocation by the government over the past few years and it is targeting many of the key areas, as guided by the Aged Care Royal Commission’s final recommendations. Mercer welcomes this commitment of the government to addressing the “neglected” and “broken” industry, in the words of the Aged Care Royal Commission’s final report. The budget announcement, however does fall well short of additional funding called for by the Aged Care Royal Commission, the industry and other forecasters who believe the funding required is closer to $50 billion over the same period.
The budget funding and measures provides the foundation to begin to transform the industry. The new Aged Care Act and additional governance reforms are critical. These are directed towards supporting a needs-based systemfor living at home as Australians age, moving away from the rationed system of previous years based on expenditure targets regardless of the shortfall for Australians. The measures are also directed toward improving the sustainability of the residential aged care sector with increased financial support and measure aimed at improving the quality and safety for older Australians. There are also measures to increase the size, skills and quality of the sector’s workforce.
A major “unspoken” issue within the Federal Budget relating to aged care is the need for greater private contribution to the funding. The government may have chosen not to address this ahead of the likely 2022 election, not wanting to be perceived as raising taxes ahead of an election. This is an important aspect highlighted within the final recommendations by the Aged Care Royal Commission and will need to be addressed in the not too distant future. The result however, is that the funding in support of the aged care sector reforms need to be much larger and can be achieved with a more meaningful funding contribution from individual Australians, as opposed to predominantly relying on the government funding only.
The aged care workforce is another aspect of significant weakness currently. Weakness in the sense of the number of qualified care workers, registered nurses and other related health professionals is well below the level required and is rapidly becoming less adequate as our society ages. In addition, within the existing workforce, the level of training and qualifications is falling short of what is required for a system which consistently delivers high quality care. The budget includes some measures to support training for new personal care roles. However it does not sufficiently address the seriousness of the issue including the need for a better more equitably paid workforce, which will in turn attract newcomers, plus the significant gap left by an estimated 174,000 fewer migrants over the next two years due to COVID-19 impacts. Treasurer Frydenberg concedes that filling vacant jobs without opening borders to migrant workers is a significant issue. The flow on also impacts the ability to properly provide the care required for the additional 80,000 home care packages announced.
The allocation of 80,000 new home care packages is a further relief for Australians who have been assessed as eligible and in need of them. There is roughly 100,000 older Australians awaiting the right level of home care package, typically much longer than 12 months. The budget measures will take time to take effect and leave some Australians waiting for the home care they need, leaving them to either fund their needs privately, if they can afford to, or to receive less care or for families and their adult children to provide greater support.
Implications for employers
Implications for individuals
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