The release of the Aged Care Taskforce’s final report into the future funding of Australia’s aged care system caused quite a stir earlier this week, setting off a flurry of responses.
Comments came in thick and fast from both industry experts and YourLifeChoices members, with opinions sharply divided between the two groups.
What report?
The report in question is the Aged Care Taskforce final report into the financial future of Australia’s aged care system, which was identified as an area needing reform in the 2018 Royal Commission into Aged Care Quality and Safety.
The report made a number of recommendations around who should fund aged care services, as well as how to improve these services and outcomes for older Australians.
But it was the recommendation that “wealthier” individuals increase their personal co-contribution towards aged care that caused the most controversy.
The taskforce argued that such a change was necessary to ensure the future viability of the aged care sector in the face of an increasingly ageing population. The report highlights people using their superannuation to pay for aged care as a more sustainable model.
“Income from superannuation should be drawn down in retirement to cover health, lifestyle, other living expenses and aged care costs,” the report reads.
“As a result, there is more scope for older people to contribute to their aged care costs by using their accumulated wealth than in previous generations.”
Opinions on the recommendation seem to be split between what businesses want and what the people think is fair.
Industry mostly in favour
The super industry has mostly come out in favour of the recommendations, but Mary Delahunty, CEO of the Association of Superannuation Funds of Australia (AFSA), says it is important that nobody is forced by law to set aside any of their super to pay for aged care.
“Importantly, the taskforce has ruled out ring fencing part of individuals’ superannuation for aged care, which is entirely appropriate – given the true objective of super,” she says.
It probably comes as no surprise that aged care providers have been generally supportive of increasing co-payments from customers. Sandra Hills, CEO of Benetas aged care group, says a change such as this will ensure high-quality aged care continues to exist in Australia.
“The recommendation to increase consumer co-contributions for those who can afford it, while ensuring appropriate protection for those who need assistance, is essential to supporting the long-term viability of the sector,” she says.
“We need more education for older Australians and their families regarding the true cost of care delivery in residential and home-care settings.
Louise Biti, director of Aged Care Steps, says today’s older generation is in a unique financial position compared with other generations.
“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,” she says.
But Ms Biti notes that the proposals are, for the moment, just recommendations. It remains to be seen which of these proposals the government will act on, if any.
“All eyes will be on the May Federal Budget, when it is anticipated that the government will formulate its response and proposed changes,” she says.
But the people say it’s not fair
If the government is looking to court the votes of older Australians at the next election, then they would do well to reconsider these proposals.
To say that YourLifeChoices disagreed with this proposal would be an understatement. Comment after comment under the original story decried the unfair nature of making those who have worked hard, paid tax and saved for their retirement pay more simply because they have more.
One member, Mark, wondered if the taskforce had deliberately set out to get older people offside.
“Are these reports and ‘expert’ analysis purposely designed to annoy people? If so, well done,” he said.
“I’ve read the 65-page report and I see no mention of encouraging the extended family unit to support their own aged loved ones. I also don’t see a definition of what ‘well off’ means in terms of those ‘well off’ paying more.”
And it’s true, the report does not define what ‘well-off’ is, leaving it as a rather nebulous concept that’s likely to be changed by future governments.
Another member, Andrews, pointed out that changes like these act as a disincentive to be financially responsible earlier in life.
“If folk have worked hard all their lives and perhaps even paid the high tax rates most of their working life, why penalise them in later life,” he says.
“This is just a joke as far as I’m concerned, there is simply no incentive to work hard and plan for retirement in this country. The powers that be are simply not managing the budget, so much money being misdirected.
Member ‘Curious’ highlighted the report’s lack of recommendations on how to actually improve aged care services.
“This report did not recommend how the aged care industry can improve the services for those who need them,” says Curious.
“The quality of services, the standards of the facilities, the ratio of medical staff to those in care, and the financial structure to support this industry other than the richer older people pay more.
But Curious also says super funds themselves should be doing more in the aged care space, if only to improve member retirement outcomes, which is meant to be their goal.
“Superannuation funds were established to look after workers in retirement,” Curious says.
“This begs the question, why don’t superannuation funds have some responsibility in taking aged care financing? Let’s ask for another industry to help out this aged care industry other than pinning down ‘wealthy’ individuals.
“This is a societal issue and not a rich versus poor problem.”
Do you think it’s reasonable to ask people to pay more for their aged care? Or is the government abdicating its responsibilities? Let us know what you think in the comments section below.
Also read: Retirement homes – right choice or rip-off?
People needing aged care are already paying out a lot of their life savings for it.
I don’t actually see how this report changes that.
The wealthy usually put themselves into up market care homes for which they pay a lot.
If the government and the report think that “generally older people are wealthier than previous generations,” they are sadly mistaken. Many are not . I’m really angry. This is a failure of government. This should have been foreseen decades ago, and measures put in place then. When I was working, we were a high taxing country, and very sensible, too. I want to know, where is the line of “well off”? I’m not well off, but have some savings. I read one report that said, $60,000 is the dividing line. That’s not wealthy! This approach will be a disaster for the current government. The really wealthy will already be consulting their financial advisors, to reduce their wealth.
It was the previous LNP government that set up this review five years ago. That may be why they are staying fairly quiet about it’s findings.
The initial Rudd government commissioned a report on how to deal with the aging population, and particularly the bubble that is the aging post-war generation, and how the changes to the age care system implemented by the Howard government (under which Age Care providers took the bonds of incoming residents/patients and had to use them to fund expansion and building) could be changed from a growth as top priority to a service delivery model. Just as it was to be delivered to the parliament, the then incoming Abbott government had every copy pulped and ignored the whole thing. So consider that when you say the issue has been ignored – and who the issue has been ignored by – not by both sides.
Can you link the report that mentioned cutoff at $60,000?
If I have saved all my life and now have a few funds to see me through retirement, why should I be disadvantaged and have to pay extra for aged care against those who have taken cruises, spent lavishly on their life style, and now have no funds to pay for aged care? We would both be getting the same level of care I would presume.
It would appear that the Government are considering discriminating the older generation who have worked hard, put finances aside for their retirement and are self funded rdtirees, now they want them to fund those people who, in some cases, have been receiving benefits their whole lives. The cost of aged care should be the same per person irrespective of their wealth. Their daily costs would be the same for the condition they are being admitted for. It would be fair to say that this would discourage people for planning and saving for their retirement years.
When I was in my twenties and studying Accounting, the Taxation Act was called “The Income Tax and Social Services Contributions Act.”
Somewhere along the way that was changed!
This of course is just another socialist tax on those who’ve spent a lifetime living within their means, restraining the urge for an annual Bali binge and watching their dollars to ensure a comfortable retirement. Of course the Government (and it IS a Government Report, the Minister chaired the whole thing) has been careful to make no reference to the family home which is where most of the real money is “concealed”. If they want more money there are plenty of ways but of course they might lose a few too many votes from those who are eager to get their hands on other people’s money.
Where is the guarantee of value for money? My mother paid a lot for aged care (despite not being well off at all, but she committed the crime of having saved moderately well from a meagre pension, and sold her very modest little home unit to pay for a room in an aged care facility). The standard of care was good when she went into care. Then Bupa management determined that the Home she was in was not profitable so they replaced the manager, and the standard fell to fair, then thoroughly dreadful. No refunds or reductions in the amount she paid because it was determined by the government through a means test. This is WRONG. It leaves residents paying based on their means, with no control over what they get for their money. The system stinks!
I would pay more for aged care if it got me better quality care, but using a means test to determine how much someone pays isn’t acceptable. It means people have no bargaining power. People who paid NOTHING were getting better care than my mother, merely because they had been there longer or the staff liked them better, or they needed less care and the nurses liked people who imposed on them less.
David Ryder is correct. Aged care fees are already based on means. People who save and live responsibly are punished at every turn.
I feel totally cheesed off. We’ve worked hard all our lives and have a modest amount put aside. We will never get a pension due to being very frugal and ensuring we can support ourselves with a hopefully comfortable retirement.
I think aged care should be funded by government.. it seems so unfair that self funded retirees get slugged again if they need additional care while so many seniors get a generous pension that we don’t. Now people who haven’t saved will get free aged care and again we will be forced to pay. Many of our friends didn’t save as hard as we did and actually earned way more money than we did over our lives but spent their money on cars snd holidays etc. It’s getting to the point that you’re mad to save and look after your own retirement needs as you’ll just have to pay more and others simply get a free ride by spending their earnings and not saving for retirement. If we have surplus earnings when we die we want to be able to pass this on to our children.
To make us pay for our aged care as well as not get a pension at all us just unfair!
I am currently trying to hold onto my private health insurance to reduce health issues in the future. It is going up and up. Do I drop this as my own future fund for aged care? Many might just stay at home until death , instead of going to aged care. Not a good future in the lucky country. Let’s have a conversation holistically.
I am going to give up work now. No point in working now.
Person next door will have free care and I’ll be paying.
And my care will be no better than the person who gets free care.
Where is the incentive ?
So True.
Finally the penny drops! Super savings will be used to pay for what you would get free if you didn’t have assets saved over your entire working life.
I am a self funded retiree i.e. I get zero Old Age Pension and unless I sell my current house and use my super assets to buy a McMansion in an exclusive suburb no prospect of ever qualifying for a pension.
Currently I enjoy good health and live in the family home. I have no plans to move into retirement care (my mother did so at age 89) and if I did I have no problems with the concept of paying a significant amount for my care. Superannuation is not a vehicle to give the children a large inheritance (family assistance is better when the children are younger and looking at getting into housing) and should be used for the costs of older age.
But this not about “paying for one’s care” – the strategy is that commercial corporations will extract free investment capital from the frail elders in their “care”, via massive compulsory bonds and all sorts of other charges.
They are not interested in looking after elder Australians. The open slather extraction of investment capital is what attracts the big corporations – and if this horrorshow goes ahead, they will buy out everyone else.
Who feels ok with handing greedy corporations, including foreign hedgefunds., free investment capital to engage in real estate plays?
Nobody I’ve met so far.
Agree with Alan. Super is not for funding the kids. Spend it and contribute to society while still able or pay towards aged care when you can’t. Oh and sell those multi million dollar homes that pensioners are sitting on.
Whinge, whinge, whinge. The Government is broke and you have cash in Super saved over your working life which is to be used ‘for a more comfortable retirement. … what’s wrong with paying for your Aged Care when people with no assets get the same for free?
That’s only fair. How else could those who have no assets be provided with Aged Care if you don’t help them out as you are cashed up!
This is not about a “comfortable retirement” – people in nursing homes are not there as a retirement lifestyle choice, but as a result of catastrophic circumstances that mean they are no longer able to live at home. Entry into a nursing home is more in the nature of unavoidable hospitalisation and should be government-funded like public hospitals, schools, etc.
And it’s not about care – large corporations including foreign hedge funds intend to use the frail Australians in their “care” as an unlimited source of free investment capital.
Totally unreasonable.
Totally agree PeterRJ.
I am really cheesed off. We are self funded retirees so no pension for us even though we are only just above the cutoff and plan to stay independent of government for our income.
I believe that Aged care should be an extension of Medicare funded hospital care where basic services are provided free by government but if you want more than this basic shared room facility you take private cover through something like a new private health cover or you could buy or simply pay yourself if you can afford to! Simple! Aged care is a basic right like hospital care is for other needs.
Don’t penalise self funded retirees any more or you’ll remove the incentive to provide and save for our own income needs.
Providers have an inherent conflict with the Australians in their “care”. The tone has been hostile and adversarial from the start.
Not one syllable of compassion for frail elders, nor any mention of improved services or an end to the horrific abuses that led to the Royal Commission.
Their conduct demonstrates that commercial providers should not be allowed to dominate policy – let’s hear from real people for a change.
Do we really want frail Aussies to be commodities to be exploited for free investment capital?
This proposal will always be controversial, particularly for people who started working prior to the commencement of compulsory superannuation, 1 July 1992. Some people had superannuation prior to the compulsory superannuation but generally it was restricted to those employed by government departments and statutory bodies. In general, the level of superannuation in relation to income received during the working lifetime will be less than people starting after 1 July 1992. The accumulation period is less on a lower income for a large proportion of the working population prior to this date. The group includes a large number of the maligned baby boomers. I am in the baby boomer group and I had superannuation for my full working life. Even so, my superannuation is nowhere near what we are told that we require to modestly retire. Many will be in the same group. Some will be worse off. When I started work in 1977, I started on an income of $5,082p.a. This was a little over $150 a fortnight after tax. Superannuation was 8% of gross income. This was considered a good income at the time but does not allow large superannuation balances to accumulate. Baby boomers are supposed to be considered a rich generation. As a generation, that could well be true. The wealth is probably held with a small percentage of the generation, the same as other generations. The number of people contributing under the proposal by the government could well be much lower than anticipated for some time to come. Is it all worthy of debate? Definitely yes. What will be the result? No one really knows.
Baby boomer wealth is generally in their real estate. It increased in value 4 to 5 times in their lifetime purely as a right time right place scenario. It is time that particular asset totally funded retirement and everything that comes after that. Including putting it into the asset testing pool for pensions. Start making things a tad fairer for the younger generations.
While nursing homes keep being run by greedy corporate Money grabbers, things are only going to get worse. They treat employees badly, have no regard for their elderly clients. The care is taken out of the caring care givers by budgets and costs. It used to be if you had a family home it would cover your RAD. Not anymore. You either have to be very rich or very poor own nothing. No one is rich when RADS keep going up and the bar keeps rising higher and higher. Superannuation is all that is left for the aged care system to milk from .
For years now we have had private enterprise run Aged Care Homes and also Home Care. This has led to poor conditions for many older people in both areas as profits take priority over conditions. Back in the 1990s Nursing homes got approx $33,000 per bed (what an incentive for dying residents to look forward to), what do they get now? Even wages for staff are subsidised by the taxpayer. Isn’t about time profits were tied to the effectiveness of all of this and not ignored. In a better system, we would have the government running this. For all its faults there is more chance of accountability with government control. In Sweden the central government, the county councils, and the local authorities. run Aged Care and they are considered to be role models for the rest of the world. We fund Childcare, we also fund Aged Care, but when you get horror stories like allocating $6 per resident per day for food, something has to be done. And don’t get me started on Home care and the huge rorting that goes on there, very similar to the NDIS. We need to think outside of the box on this.
This is a cop out by the government. When every industry was classed as National belonging to the government. Everybody was happy, healthy and big issues were dealt with by a government voted in by the people to look after their people.
Now it is all private and the whole country is treated like, dog eat dog! Take care of yourself. Greed has become the big winner and if you can’t keep up then it is time to pop off!
There are no morals left, no ethics and so many uncaring human beings.
This will eventually lead to mass destruction.
It seems yet again those that have done the right thing and provided for their retirement without imposing on the Social Security system are being dis-rewarded’ for their efforts. Instead of encouraging behaviour to avoid future drain on the Social Security system, the government message is clear – spend it all now – don’t save for the future as we will take it all away from you. One feels like spending whatever funds and nest egg, built over a lifetime and then get treated like everyone else . I am seriously considering cashing in my super and living the highlife to make up for all the years of saving and holding back so we could become self funded retirees and not become a burden on future generations.
Seems we are turning into a society the encourages spending and then relying on government welfare in the future.
Sad state of affairs especially for our grandchildren and those thereafter.
My wife has just passed after 4 years in an Aged care home.
I have contributed ideas and directions to govt over that time.
They just don’t listen.
I found it very hard as a partner living apart and paying rad, means test, running my house because that will be my capital if I fall ill.
I need that to pay the rad but that means I can’t pay the other fees.
The Agedcare customers are really kept out of the debate.
It’s labor’s and the Agedcare companies woke social engineering policies that need a total rethink.
I attended my wife in agedcare for 10 hours a day and that’s what it needs from family.
The children of baby boomers are still education their children and can’t provide this care.
This should be about care not money.
The current group of loved ones had no ndis.
Why can’t they have a levy.