Oct 17, 2018

Has the Government cut funding to aged care – or not?

While the Opposition claims that cuts to Government funding have contributed to a decline in aged care standards, the Government maintains that funding has risen every year.

Who should we believe?

The ABC Fact Check team has looked into the numbers, and its analysis shows that government funding has in fact risen every year over the last decade.

But Sean Rooney, the CEO of Leading Age Services Australia, says even though funding has risen, it hasn’t risen by as much as it would have under previous funding arrangements.

The ABC Fact Check team takes the view that cuts to future spending are not really cuts when overall spending continues to rise, supporting its view that funding has actually risen.

It’s hard to know who to believe when the numbers can be sliced and diced in so many ways.

What is fair to say is that more money will always be welcome in aged care, to help deliver the standard of care our society expects for our elderly.

ABC Fact Check: Funding has risen

When Prime Minister Scott Morrison announced a Royal Commission to investigate “the quality of care” in Australia’s aged care facilities, the Labor party quickly responded by accusing the Mr Morrison of slashing funding to aged care by $1.2 billion when he was Treasurer.

The ABC Fact Check team has looked into the numbers, and revealed that in fact funding to aged care has increased every year over the last decade. Even looked at funding per person, government funding has risen.

In Mr Morrison’s first year as Treasurer, in 2016-17, total Government funding for aged care was $17.4 billion – an increase of $1 billion over the previous year.

The increase was achieved, even though the Government created “efficiencies” of $1.2 billion over four years, in part by cutting subsidies to aged care providers to address potential over claiming.

It’s hardly surprising that Government funding of aged care has increased every year for the last 10 years, when we consider Australia’s ageing population. But even spending per person has risen.

The latest report of Government spending by the Department of Health showed that for the 2016-17 financial year, the latest data available, funding per person was $184.06 per resident per day, a 6 per cent increase on the previous year.

LASA chief: Funding hasn’t risen as much, more is needed

But the Chief Executive Officer of Leading Age Services Australia (LASA), Sean Rooney, proclaimed that the residential aged care industry would have received more funding if previous funding arrangements had remained in place.

“The fact is that the residential aged care industry has had around $3 billion less in funding over the past five years than it would have had under previous funding arrangements.”

“”This funding shortfall has been further compounded by rising operating costs, and annual funding indexation much lower than CPI – this year just 1.4 per cent on top of successive minimum wage rises of 3 per cent and 3.5 per cent in July 2017 and July 2018,” he said.

Mr Rooney said the sector is caring for higher numbers of residents with greater needs.

The sector “has also had to meet the care needs of not only an increasing number of older Australians, but older Australians coming into care with more complex needs,” he said.

Mr Rooney says the government has to look at the “true costs” of delivering age services and adjust funding accordingly.

“Our industry’s ability to deliver what older Australians need and deserve is at serious risk,” Mr Rooney said.

Nearly half of all aged care facilities operating at a loss: Stewart Brown

Mr Rooney said the fact remains that nearly half of aged care facilities across the country are operating at a loss, and the situation is “even more dire” in rural and regional areas “where access to staff and higher operating costs are further compounding financial stress”.

According to the last report by industry analysts StewartBrown, more than 45 percent of residential facilities reported a before tax operating loss during the 2017-18 financial year.

“The report said that regulatory changes and funding pressures” led to the “disturbing” statistic, said Mr Rooney.

The report showed that more than 63 per cent of facilities in remote and regional areas are operating at a loss.

“These figures clearly show that the current funding model is inadequate,” said Mr Rooney.

Mr Rooney is calling for “significant investment” into aged care in Australia, and the need for all sides of the industry to explore “sustainable and robust solutions to the funding and operational business models”.

Mr Rooney said last year’s Tune Review noted that “meeting projected future demand will need additional investment by government beyond that currently planned”.

“We must get on with funding reform as a matter of priority while the Royal Commission proceeds,” he said.

So in conclusion, we think it’s fair to say that even if Government funding to aged care hasn’t been ‘cut’, more money will always be welcome if we hope to deliver the standard of care we’d expect for our seniors, who have already given so much to this country.

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  1. Yes they have cut funding. They have cut the ACFI component of the funding severely. This is the care part of the funding. The daily fee has risen slowly in line with the pension, and there are more people accessing aged care, so that is why they can say they are paying more to aged care now. It is very hard to manage to give the same care as before and the quality agency wants higher standards all the time. There needs to be a solution to allow the correct funding without some facilities skimping on care. I have been in the industry over 30 years.

  2. Has funding to aged care been cut… or not?

    A very reasonable question that could just as easily be answered. LASA and other aged care peak bodies used to represent Residential Care Facilities only. Now they represent RACS and Home care which is a real conflict of interest.
    Funding to RACS has been severely cut but when questioned the Government statistics say that funding has increased to the AGED CARE SECTOR and technically speaking it has. Home care has prospered at the expense of RACS and that’s a fact.
    How did they do that? The easiest way to explain the ACFI cuts is, under the changes 5×2 used to equal 10 and you could claim for a 10.Under the reforms 5×2 now equals 8 so we can never claim the right amount.

    Plus, over recent years CPI has been axed or reduced.
    Plus, The Government withdrew its Payroll Tax Subsidy (still available to the non profits)
    Plus, The Government withdrew its High Care Dementia Supplement, this was put in place in recognition that ACFI didn’t reflect the true cost of care.
    Plus, In Canberra (uniquely) RACS operators now have a new state driven burden with the “Portable Long Service Scheme” where we now have to contribute 1.6% of payroll to the ACT Government for them to manage.

    Funding has been slashed. But also, technically it has risen due to more people in care with higher care needs.
    All the studies and independant audits have painted the true picture and additionally all RACS have to provide independentally audited accounts by the end of October each year. It is no surprise to the Government of the day that we are on very shakey financial ground.

  3. Can someone answer the following:
    Would spending per resident in residential care alone have increased due to the fact that residents being admitted now have stayed in their home longer and therefore are requiring higher levels of care when they are admitted due to being more dependent/sicker/closer to dying?

    Would increase in aged care funding be due to the number of home care packages released and was this fact a large contributor to the budget increase overall?

    As a pair of feet on the ground I feel the impact of funding cuts due to shortage of staff and supplies on a daily basis.

    1. G’day,
      People are definitely entering care later and with higher care needs, regrettably the average time spent in care has decreased.

      The overall budget increase is certainly due to the massive injection into Home care but as above, under the ACFI system the higher the care needs.. the higher the Government contribution. So the cost of care might rise by a couple of dollars per day the reality is that they will only stay for half the time they would have. A few years ago the average stay in RACS was about 4.5 years, now it around 2.1 years.
      Obviously with the huge government push to Home care RACS are now suffering with falling occupancy figures.


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