Calls for greater transparency in how aged care dollars are being spent


Understanding how government dollars are being spent in aged care facilities is turning out to be one of the most contentious issues facing the sector.

Billions of dollars are being poured into the sector every year, but we don’t know how the money is being spent.

When HelloCare asked our readers if they were prepared to pay a one per cent higher tax rate to fund the necessary reforms in aged care, our readers came back with a resounding ‘no’.

The vast majority of our readers commenting on the article on social media said they would rather see greater transparency in how the existing dollars going into aged care are being spent, rather than tipping more funds into the system.

They want to know how much is being spent on care staff, how much on food, how much on activities for residents – and how much is going into management’s pockets.

The perception that government money is being misspent in the embattled aged care sector is causing rising feelings of resentment among aged care staff, and that is damaging to the sector. For aged care to overcome its problems, the staff need to be on board, and improving transparency is going to be one of the core ways to achieve that outcome.

What is transparency?

When organisations are transparent, it’s easier to trust them.

“Organisations are transparent when they enable others to see and understand how they operate in an honest way,” the Australian Institute of Company Directors states

“To achieve transparency, an organisation must provide information about its activities and governance to stakeholders that is accurate, complete and made available in a timely way,” the Institute states.

“Transparency enables accountability.”

Aged care lacks transparency

The Royal Commission into Aged Care Quality and Safety flagged the system’s lack of transparency as a core concern in its Interim Report.

The aged care system “lacks transparency in communication, reporting and accountability”.

Witnesses told the royal commission “very little information is available to the public about the performance of service providers. The number of complaints against them are not published. The number of assaults in their services are not published. The number of staff they employ to provide care are not published.”

“This… must change,” the Interim Report states.

Complexity weakens link to quality care: report

A report commissioned by the royal commission released overnight titled ‘Report on the profitability and viability of the Australian Aged Care Industry’ tackles the issue.

The report says the current model of aged care favours sophisticated providers that can use complex structures and financial tools to maximise returns.

These providers, the report argues, ease the financial burden of the aged care sector on the government.

However, “a possible issue” with this “complex model” is that it “arguably weakens the link between the drivers of return and the quality of aged care service provided by the provider”.

In plain language, what this means is that providers are making their profits from complex financial arrangements, not from the delivery of care. That could be a problem.

Age care providers can use “group structures to maximise their returns”, the report states. “This is a perfectly legitimate model, however it does reduce transparency over the financial transactions within the aged care sector.”

The report recommends increasing transparency in transactions involving “related parties” and “non-aged care related activities” conducted by approved providers. It also recommends the creation of a “reliable, consistent set of data as the ‘source of truth’” for the sector to improve understanding and analysis of aged care’s performance.

Improving transparency could have “significant implications on the return on investment for investors” and therefore on the sector as a whole, the report says, urging a cautious approach to reform.

Peak body’s cautious support for transparency

Council on the Ageing chief executive Ian Yates AM, told HelloCare his organisation “totally supports” complete financial transparency.

However, he said that with most of the residential aged care sector operating at a loss, according to both the Aged Care Funding Authority and Stewart Brown, any extra funding should be directed to increasing the number of home care packages being released, adequate and appropriate staffing, and higher quality care. 

Neither of Australia’s largest aged care peak bodies said they supported increased transparency in the way government funds are spent in aged care facilities, but they supported the concept of transparency. 

Leading Age Services Australia CEO, Sean Rooney, told HelloCare that his organisation wants to “help people understand the costs [of providing aged care services] through better sharing of information”.

Rather than having transparency in how government funds are spent in aged care facilities, Mr Rooney said consumers of aged care services only want to know about the “amenities, the qualifications of staff, and what sort of quality outcomes are being achieved”. 

“These are the sorts of areas where we think the focus should be, to clarify transparency,” he said.

Mr Rooney said the industry’s financial practices are already closely monitored, with ACFI claims able to be audited against what is delivered, and providers reporting their financial performance to the government annually. 

Aged & Community Services Australia CEO, Patricia Sparrow, told HelloCare, “The aged care system can be complex, and it’s crucial residents and their families… can access meaningful and transparent information that can support important decisions and help build trust.”

Ms Sparrow said ACSA is listening to the community’s needs, which are “evolving”. 

“As a community, we need to decide how we fund aged care so it can deliver the quality of care that the community expects.”

Image: Markus Spiske, Pixabay.

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  1. Why is Sean Rooney not entirely supporting transparency in how government funds are being spent? This absolutely should be made available amongst other metrics to assess the quality of a provider.

    1. It’s important that you should know that there is absolute transparency between facilities and the government. Every home is required to deliver independently audited accounts to the government each October. These accounts clearly show how every dollar and how it’s spent. Wages, food, maintenance, cleaning, rates, gas, electricity, insurance, training and education and let’s not forget the mortgage on the building.
      What you should be asking is why the government doesn’t make this information available individually or as a sector.

      Also ask yourself why the government refuses to legislate staff numbers, why don’t they who control award rates improve the much maligned nurse wages. They have all the power to do so.
      The reason is quite simply, if they implement staff ratios and improve wages they will have to fund it.
      Traditionally homes were spending 60-65% on staff costs but since the massive funding cuts that is now 80_85% and there is just not enough government funding. No one can deny this fact, it’s very well known but the government does nothing.

    2. I think it’s due to the conflict of interest. LASA and other associations happily represent the Home care sector that indescriminately take 30% of government funding straight off the top of Home care packages.
      It would be difficult to say it’s OK for one group (that they represent) that are getting government funds and have very limited scrutiny and can claim huge fees while holding a billion dollars of taxpayer money and have very little reporting requirements and, on the other hand say that residential care facilities have to show where every dollar goes, suffer suffocating scrutiny and run at a loss due to that billion plus dollars being raped out of their businesses.
      I guess that’s why they have been so ineffective in fixing the chronic underfunding situation.
      They are so conflicted that they don’t even have a plan forward.

  2. If it wasn’t so serious you would have to laugh at the stupidity of Ian Yates statement. “Knowing that most of the residential sector is running at a loss funding should be directed to home care”. Really? Clear evidence that residential facilities are grossly underfunded but that should be left broken and unfixed. Absurd at best!!
    While home care, provided by taxpayers and the funds governments have taken from residential facilities is at best a bandaid and not a solution. There will always be a need for residential care and that is obvious to anyone that cares to look.
    Each and every facility has indepentantly audited accounts delivered to the government every October. These figures are the transparency that every one seems to believe don’t exist. These accounts clearly show the cost of service delivery, food, staff, cleaning etc.
    Why doesn’t the government collate these figures and distribute to the public? Answer… Because it would clearly show that the government has failed its duty of care to provide adequate funding for the provision of appropriate funding for the services required to keep older Australians safe in care.

    All Australian businesses should be held to the same laws but it seems nursing homes aren’t allowed that privilege.
    Lots of people are annoyed at the multinational organisations but spare a thought for the vast majority of homes run by hard-working families that are working for no return, not even wages in many cases. There are around 700 of these out of less than 1200 homes across the country.

  3. I’m a PCA and we have had hours cut to staff which is causing undue stress to residents and staff, I would like to know why when the federal government has put more funding into the aged care sector why they are not accountable as to were this funding is being spent, I can only hope that the royal commission can find a solution to this and bring in transparency into the sector

    1. Kathleen, I would have hoped that an employee would have known this but the federal government deliberately confused things by lumping residential and home care under “aged-care”.
      The liberal government took 1.7million out of ACFI in 2015/16, they have made other cuts since then and I’m happy to elaborate.

      The government has put a lot of money into “aged-care”. As the last paragraph suggests the money has gone to home care exclusively and most facilities are having trouble paying the bills just to stay open.


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