Another intergenerational report is out, and with it, the perennial scare campaign about the sustainability of public services.
According to Labor’s Aged Care Minister Anika Wells, aged care is now on the frontline. Speaking at the National Press Club on June 7, Wells ominously warned: “We must act now. The baby boomers are coming.”
Some in the media have picked up the message, dutifully painting a terrifying picture of an impending demographic crisis: a tsunami of senior citizens wiping out the nation’s prosperity with their seemingly outrageous demands of dignity, care and human rights. The AFR’s Phil Coorey ran a piece in July approvingly reporting on Wells’ desire for “generational equity”, which, he wrote, means “increasing means testing and user pays”.
Wells has also appointed an aged care taskforce and charted an aged care “reform roadmap”, supposedly aimed at “improving the quality of care for older people and making aged care equitable, sustainable and trusted“.
The subtext here is all about costs. According to its terms of reference, one of the primary objectives will be to ensure that “aged care funding is affordable for the Commonwealth” and will “balance equity and fairness between older and working-aged Australians”.
Who’ll be paying?
The “big consultation process” that Wells promised has not quite lived up to the hype. In a series of pointed questions in the department’s aged care engagement hub, the taskforce asks: “What costs do you think consumers in aged care should contribute to and to what extent?”
The rhetoric assumes that aged care is somehow a nirvana of public provision. Far from it. User contributions accounted for 27% of aged care provider revenue in 2020-21. Older people and their families battle a Frankenstein’s monster of complex means testing and eligibility arrangements during one of the most stressful times of their lives.
The decision by the Abbott government to introduce consumer contributions in 2014 ushered in a sub-industry of aged care brokers and financiers, ever ready to spruik reverse-mortgages or shepherd pensioners through Centrelink’s home equity access scheme, which exposes debtors to compounding fortnightly interest payments of 3.95% until the debt is clear.
The looming demographic cliff of ageing baby boomers that Wells is so worried about is probably not the long-term problem facing aged care. The intergenerational report predicts that while the old-age dependency ratio — the ratio of older to working-age Australians — has remained on a steady incline since 1982, most boomers will have worked their way through the system by the 2030s.
On the other hand, asset-poor gen-Xers and millennials are in real trouble. Saddled with HECS debt, low rates of home ownership, and uncontrolled rent rises, middle-aged millennials might have put away some super, but are well behind their parents when it comes to generational wealth levels. This exposes them to major risk in a system built around the assumption that most older Australians will own their own homes.
One-third of people aged 35 to 54 are renters, which leaps to three-fifths for people under 35. Increased superannuation contributions will be a buffer for some, but many will reach retirement age deep in debt, or at the mercy of the private rental market.
“Changing trends in home ownership rates and in mortgage indebtedness present a fiscal risk to age pension spending in the future and may impact patterns of how superannuation is drawn down,” the intergenerational report admits.
Who uses care, and why?
It is important to understand who uses aged care and why. Like health, aged care is an essential service. Characterising aged care as a lifestyle choice ignores the hard truth that people are in residential aged care because they need 24-hour care.
Forty-one per cent of entrants to permanent residential care entered permanent care within three months of their aged care (ACAT) assessment. Such is their level of frailty and ill-health, people admitted to permanent residential care generally live only for another two years.
Governments say they want to let people remain in their own homes. However, this is not always possible. Australia’s home-based care model already relies heavily on unpaid family carers to fill the gaps; 29% of people use home care to access allied healthcare (for example, physiotherapists and occupational therapists), while 13% require home nursing. More than one in five people are on the highest level of support available. It is reasonable to expect that people receiving this level of care require daily nursing.
Providing dignity in our ageing society will become more expensive. But as a society we can afford better quality aged care if we choose to. After all, the intergenerational report forecasts a big increase in defence spending. It also implausibly insists that long-term taxation levels will remain at 24% of GDP.
The Albanese government’s ideas for aged care “sustainability” are all about placing the burden on individuals. But Wells and Treasurer Jim Chalmers could equally raise taxes if they really wanted to. The Health Services Union took a proposal for a 0.65% healthcare levy to the ALP national conference. A whopping 85% of Australians support a levy to fund aged care.
For gen Xers and millennials facing increasingly uncertain retirements, the sustainability rhetoric looks like just another aspect of a profoundly unequal generational skew. Wells’ aged care taskforce says it wants “to ensure that the aged care system is fair and equitable for all Australians”. A user-pays system won’t be either.
Would you be happy to pay an aged care levy? Let us know by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.
The neoliberal created this muck and their label to instigate a false narrative said it all;
” The Intergenerational report” – Well
it takes attention away from grotesque rorting of top olligarchy, cartels, multinationals pirating our sovereign wealth and local ownership – But the narrative “young people” and ageist generalities only serve to weaken and separate the voting democracy and exposes an unhealthy fear of ageing and misogynist abuse particularly for women who have little super and are forced into indentured care due to workforce hiring echochamber – dumb dumbest
Reintroduce death duties, thus taking from those who no longer care, and use the money, equitably, to support those who need it
Absolutely the right idea, but political suicide, unfortunately. I can’t even convince my wife this is a good idea, and she’s educated and liberally-minded. And if inheritance tax is levied at a state, rather than a federal level, then you open the door to another unscrupulous Joh Bjelke-Petersen type premier saying “Move to MY state, and you can leave all your inheritance to your kids…”
Couldn’t the federal government legislate it?
Yes but it’s politically difficult, and making it politically easier through concessions opens up loopholes to exploit.
It’s all well and good to tax already well-off people inheriting millions upon millions of dollars worth of stuff, but it’s a bit different when some poorer family loses their only opportunity to own a home, or some grandma can’t leave her car to a grandchild.
Easy enough to tax say 10 per cent on estates over $2 million only.
Sure, but that’s then unfair when eg: it’s being divided to five heirs compared to one.
Inheritance tax needs to be based more on the recipient I think, not the estate as a whole.
IMHO – and this is more a suggestion of principles rather than implementation details – there should be probably no inheritance tax for spouses, a pretty generous (at least a million, probably two, to make it politically palatable) tax-free limit for any direct heirs (ie: children, including adoptees) and after that probably start getting a bit more serious.
what so kids get no house – what about a super profits tax of 28 billion instead – get some out of tge filthy rich Ceos too
Why not both?
No because the asset is owned and has already been bought years ago by taxable income — false narrative the intergenerationall report due to high immigration the aging pop is or must be rubbish; property is being bought up by multinationals with biggest bucks to bid in a small market – go to Michael West – he puts a limit on the thing – but the issues are brought about by overcharging poor Australians made to compete with cashed up corporate raiders and bad policy naking it a free for all – the propaganda is blind to the reasons why we cant compete – we dont make cars anymore and we pay price gougers to pirate our sovereign wealth and companies under what Howard claimed was a ” free trade ” dream – ironic name might serve us to see this is a one way road to our demise – Gerry Harvey said we should just use volunteers to work for free for him not genuine charities but you can get that label assigned these days ; he also reckons democracy is bad for business cause too many will complain about unfainess and get their way
House bought for 3 times average annual income, now worth 10 times. Earned income?
duh
Lets rip off the elderly – strip their assets so we can get our inheritance before they die , just in case they use the assets they accumulated to look themselves then blame the aged care providers for being money hungry.
The government then gets blamed for not doing enough for aged care – so the governments continue to ‘fix the problems” by establishing more bureaucrats, like Aged Care Commission, to make sure there is no one to actually look after the elderly as the workers have to spend their time at work doing paper work for the bureaucrats . Its a mess isn’t it ?
Perhaps the families should be made to contribute more for their own relatives rather than farm out the responsibility. Looks like Child Care and Aged Care are the actually the same problem at the different ends of life in Australia.
what about not generalising based on age and false labelling – how bout a super profits tax of 28 billion
well easier to steal from vulnerable older workers and inparticular older women by silencing and blaming – grow a psir and blame the real culprit neoliberal ideology based on myopic generality based on economic theory trickle down so called efficiency – duh it don work without a big competitive and fair accountability – taxing the richest and not hiding behind a corporate profiteering mostly elite – lots of younger men there btw under 50
Oh how about legislation that makes it actually possible to hold down a job look after those that need you and still be able to set up a future for yourself , rather than having to pay someone else to do it . This is just neoliberal ideology writ large, go to worm to pay for someone to look after your loved ones , what a shit system if that is the only alternative.
working women provided free early childcare, did the bulk of domestic free labor, caring ; and got screwed by the structural economic inequality – when their husbands took off with a younger models they mightve split assets ; getting the house and tge kids whikst tge blokes kept tge hidden assets and their own high super for one example – real estate has been forced up due to free trade and immigration based on economic rather than social movements – Women make up the majority of those stuck in age care institutions ( profiteers like this business and they are a large part of tge problem charging for their middle men profits ) Awful joints – property development property capital aquiring under the veil of providing this ” service ” via any cheap mean – deslths in aged care you pundits seem to care less – its cruel – oh and the women and their kids are getting blamed even though these women propped up the country for nothing for their lives the a few blokes and fewer women aquired windfalls but – its the influx of profiteers and the facts we have been pirated
Its mostly water off a duck’s back.
Governments in the early 1950s realised that the then “baby generation” were going to cause a problem. There were just so damned many of them and they kept popping out. And all these little squeakers had the unfortunate tendency to grow and grow, in both numbers and years.
Governments did little to cope and prepare for the future some 70+ years ago and they are still doing little.
Just saw after posting my comment 🙂