It was a narrow escape, a damnably close run thing. It looked, briefly, like the press gallery was going to have to actually devote time to analysing a complex area of policy that resisted simplistic polarised reporting. Editors and producers were mortified that their journalists might concentrate on policy rather than personalities.
Luckily, the prospect of having to assess the government’s aged care package was averted by Peter Slipper, and we got to wallow in allegations of s-xual harassment and dissections of the implications of a Speaker standing aside for a minority government.
Which is a shame, because getting aged care right is one of the most difficult policy challenges facing us and Labor appears to have taken a significant step towards doing just that. Along with the Future of Financial Advice reforms, aged care is likely to be the most significant reform package Labor undertakes this year.
Aged care is one of Australia’s many hybrid industries: sectors with a significant or even dominant role for the private sector (in this case, both for-profit and not-for-profit), but which fundamentally depend on government regulation or funding, or both. Reform becomes a matter of translating government funding and regulation into market price signals.
But overlaid on its hybrid nature is the intense politics of aged care: there are few issues that generate stronger concern in the community than how we manage and finance the care of our elderly relatives who can no longer live independently. That’s one of the reasons the issue has been reviewed so often over the past decade, including last year by the Productivity Commission. And it’s an issue set to increase significantly as the population ages and baby boomers enter their twilight years.
The Commonwealth’s funding on residential aged care alone has increased by 46% since 2006, to $7 billion last year. And in that time, the health and caring sector of the workforce has become Australia’s biggest employer, and after mining its fastest-growing. Getting aged care right has major fiscal and economic implications.
Currently the price signals in aged care are wrong. There simply isn’t enough government funding available to make investment by private providers in new aged care facilities worthwhile, and there are limited options for extracting more funding from consumers. And the price signals in the workforce are wrong: aged care nursing pays less than nursing in other health sectors. The result is the sector struggles to attract staff and retain good ones.
The result is what happens when demand outstrips supply and pricing can’t adjust: queuing. That’s why it’s so hard to secure a nursing home spot and why families have to make rushed decisions about their circumstances for fear of missing out.
The government’s reforms treat the symptoms and the illness, if you like, of the undersupply: by massively increasing funding for home care packages, it hopes to reduce pressure on existing nursing home places, by keeping people in their own homes for longer. It is also providing (a little) more support for carers and quite a bit more support for people caring for dementia sufferers. Dementia will now become a national health priority, along with a range of chronic diseases and cancer, that inflict major costs on our health system.
And it is significantly increasing funding for nursing home places, to dramatically lift the incentive to build new aged care facilities. It is also investing over a billion dollars in trying to improve the attractiveness of aged care nursing remuneration, while the sector works out how to achieve a long-term solution to its workforce needs.
But to supplement public funding, the government will also tap the one other source of funding available: consumers. Means testing will be introduced for home care packages and residential care funding, albeit with expenditure caps, and with the family home exempted from the means test. As Tony Abbott rushed to point out on Friday, that means some people entering aged care facilities, or their families, will pay more than they would currently. In fact, that’s the entire point. There’s no magic pudding. Either the government pays for it or consumers do, and in particularly consumers who have a greater capacity to pay.
It’s also investing in a new one-stop information gateway to make it easier for people to obtain relevant information about local options available to them, with the intention that eventually you’ll be able to see performance information such as complaints data about each institution. It’s the extension of the MySchool approach to aged care — it is already being extended to hospitals via the government’s health reforms — with the intention that people should be able to obtain objective data about services they use before making a decision about them.
The aged care sector has been on an unsustainable footing for years — one of the reasons it had been reviewed so often. The crisis point was reached on Labor’s watch. To the government’s credit, it has taken a major step in the right direction, and consulted the sector widely before moving. It could have gone further — for example, by including the family home in the means test — but that would have entailed significant political risk. And in an environment where the media’s interest in good policy is at the lowest point ever, it’s understandable that it shied away from doing so.
Thanks Bernard for this perceptive article. It is one of the more
analytical and informative pieces that we have had from our press
for sometime.
It is sad that the MSM have diverted by their salacious focus on
personality politics.
I didn’t think Abbotts attention to explaining policy, that he displayed
at a business dinner last week, would last long. The hollowness of his
explanation exposed him to serious questions that couldn;’t be
responded to by advertising aphorisms and pejoratives.
His response to the above policy announcement was to run for cover until
Peta Cruden could dig out some aphorism.
Thanks again Bernard.
You can’t escape the fact that leaving the family home out of means testing is adding to middle-class welfare. It’s also another contributed to the housing bubble, depending upon locality ownership dynamics.
Productivity commission… Pfff, how about an equity commission?
One correction…
“And in an environment where the [media’s] Opposition’s interest in good policy is at the lowest point ever, it’s understandable that it shied away from doing so.”
More regulation, more red tabe, another regulatory body (Aged Care Finance Authority), $1.6 Billion ripped from care funding and $1.2 Billion promised to the Unions for aged care workers in a “workforce compact”. As usual the figures do not stack up and too much devil is left in the detail. All in all this smells like a desperate government trying to save its skin by achieving a fiscal surplus that became unreachable when they botched the original mining tax. This government couldn’t tie its shoe laces let alone find a way to improve aged care.
The situation my parents are in highlights the exact single reason that the family home shouldn’t be means tested.
My mother has Alzheimer’s, progressively getting worse. She now has to live in nursing home (she’s over 80) as my father (who is 87) could no longer fully care for her (and his health is failing).
They own their home, pretty much their only asset, given they both worked and retired before compulsory superannuation kicked in. Mum is now rotting in a nursing home, while my dad frets and copes, barely, at home.
Their pension allows Mum to be cared for, with enough left to keep Dad in groceries and pay the electricity, rates and such. If the house was means tested, then their pensions would both be cut, meaning they would have to sell the house, sending my Dad into either a nursing home or a small apartment somewhere, something that is a terrifying prospect for the elderly.
Allowing them to hang onto their home means Mum can cling to the fantasy that she can come home when she gets better, and Dad to live surrounded by friends they have known for decades.
Both don’t have many more years, but it’s longer than they would have if they had to deal with the stress of selling the home they have lived in for decades and the place they raised their family in.
The Government got PAYE taxes out of each of them for 45 years, plus my father served the nation in three wars. I think they have both done enough without having to forego living their last few years with what little dignity they have left stripped from them.