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Taskforce recommends wealthy Australians pay more for aged care services

Catherine Henry Lawyers
Catherine Henry Lawyers

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Taskforce recommends wealthy Australians pay more for aged care services

March 1st marked the third anniversary of the delivery of the Final Report of the Royal Commission into Aged Care Quality and Safety. The Report made 148 recommendations, identifying widespread issues relating to quality and workforce, and an urgent need for significant funding increases.

Total government spending on aged care in 2020-21 was $24.8 billion, or 1.1% of GDP. This is projected to increase to 2.5% of GDP by 2062. Additional investment needed by 2050 is estimated to be $19 billion.

The Aged Care Taskforce was established in June 2023 to review funding arrangements and develop equitable options. It received 180 submissions and delivered its report this week, making 23 recommendations. These recommendations centre around creating sustainability for the aged care system by allowing greater contributions by wealthier consumers, particularly for non-care services, while ensuring safety nets are in place for those less well-off. It further recommends that those living in remote areas receive targeted funding to ensure equity.

By 2026, more than 22% of Australians will be aged over 65 – up from 8.3% in the 1970s. By 2063, there will be two Australians aged over 65 for every five of working age: the “old-age dependency ratio”.

As the Australian population ages, the aged care system needs to expand, and the funding mix needs to change. The Federal Government currently funds 94% of the care component and the report recommended increasing this to 100%.

Responding to the report, Louise Biti, Director at Aged Care Steps, observed “The taskforce realises that generally older people are wealthier than previous generations and should consider accessing their increasing superannuation and property assets to fund their aged care needs.” But this should continue to be underpinned by a strong safety net for low-means participants to meet aged care costs.

The taskforce recommended the phasing out of refundable accommodation deposits (RADs) and replacing them with a rental model, such as a Basic Daily Fee with supplement, and introducing a co-contribution model for homecare.

Although recommended by both commissioners, the taskforce rejected a proposal to impose a levy and instead suggested a means-tested approach, based upon whether the participant receives a full pension, part pension, or is a self-funded retiree. The report also rejected both changes to the tax treatment of the family home and an increase to the Goods and Services Tax.

“While the taskforce supports government maintaining its central role in funding aged care, it does not support a specific increase to tax rates to fund future rises to aged care funding,” the report said.

Prime Minister, Anthony Albanese had already ruled out changes to the tax treatment of the family home in Parliament.

Taskforce chair, Aged Care Minister, Anika Wells has confirmed that the government endorses the taskforce’s views on increasing taxes.

“The government confirms today 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,” the aged care minister, Anika Wells, said.

“There is universal acceptance that something must change in order to ensure all Australians can age with the dignity, safety and high-quality care they deserve.”

The government is expected to deliver its formal response in the coming weeks.

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