When Professor David Cullen is asked the question every politician dodges – how much is a human life worth to the Australian taxpayer? – he does not hesitate.
“My number would be $300,000,” he says.
That is the maximum he believes Australian taxpayers can sustainably spend per person per year on high-needs care, whether in aged care or disability support. Any higher and the ledger simply does not balance.
“Of course,” he adds, “the value of each life is infinite. But society doesn’t have infinite resources and so government’s need to prioritise.”
Cullen is no outsider. He was the inaugural Chief Economist of the National Disability Insurance Agency, former Chief Economist at the Department of Health, principal adviser to the Royal Commission into Aged Care Quality and Safety, and the architect of the 2013 Living Longer, Living Better microeconomic reforms.
For 25 years he has designed the very funding models that decide who gets care and who does not, and the financing models that sought to raise the funds needed to provide the care.
In an exclusive interview with HelloCare, he applied that cold economic lens to the new aged care contribution rules that took effect late last year.. His verdict is devastating: the system is not only failing the vulnerable, it is failing the most basic test of any wealthy society. How much is too much to keep one older Australian alive and cared for with dignity?
The hard ceiling no one wants to admit
Cullen is unflinching about the arithmetic.
GDP per capita is roughly $100,000. The Australian Government collects only about 25 per cent of GDP in tax, roughly $25,000 per person. That money has to cover social security, health, education, defence, and everything else.
“If the Australian Government spends more than $300,000 on keeping someone alive for a year… you’ve got sustainability problems,” he says.
He compares it to the Pharmaceutical Benefits Scheme, where drugs costing more than roughly $50,000 per quality-adjusted life-year-saved, are routinely rejected, no matter how many lives they could save.
“There are many, many drugs which could save people’s lives but which are just considered to be far too expensive.”
Yet in aged care and disability we pretend the ceiling does not exist. Cullen points to NDIS plans costing $1.3 million a year for one person, ten times what the same individual would cost in residential aged care.
“I’m sure their quality of life is probably slightly better because taxpayers spend $1.3 million. But if you think about the number of things that we could have done with that $1.3 million, we could have fully staffed a women’s shelter. Would that have been a better spending of the $1.3 million? That’s the real value for money question that we should expect every government to ask about everything that it does.”
The $300,000 figure he defends is not cruel. It is the realistic outer limit.
“There would be with a lot of caveats – for example, funds spent on building capacity to reduce future costs should be considered very differently,” he adds, “but that’s essentially the most that we’d ever sustainably spend in aged care under the current system.”
The new rules that make the problem worse
Instead of facing that limit honestly, the November 2025 reforms introduced a contribution system sold as “fair share”. Cullen calls it something far harsher: “Totally wrong. Illogical and stupid from an economic perspective.”
The new means test is not based simply on wealth. It is scaled by how many services you use. The more care you need, the higher the dollar co-payment, even if you are a full pensioner with almost nothing.
“A full pensioner with a $10,000 package of aged care services to support their independence needs (showering, medication management, respite) is asked to pay a co-payment of $500. If the full pensioner is frailer and has a $50,000 package of aged care services to support their independence needs, then their co-payment is $2,500. “Basic economics tells us that the frailer person (the one who needs the help most) is the one most likely to say I can’t afford this,” Cullen explains. “So it is those who need care most who will be forced out of the system – and into the higher cost hospital system.”
Providers are already reporting full pensioners skipping meals and showers. The very people the system was meant to protect are being priced out of the care designed to keep them out of hospital, where they will cost taxpayers even more.
At the top end, self-funded retirees with incomes over $100,000 face paying up to 80 per cent of subsidised home care costs. Cullen is blunt.
“Most people are going to say, well, I won’t buy it through the programme. I’ll just buy it myself.”
The wealthy simply walk away. The middle class loses generational wealth. And the poorest and sickest are left carrying the heaviest load.
Cullen’s sympathies are clear.
“I’m not too worried about what they’re doing to self-funded retirees – and I am a self-funded retiree. I’m more concerned about the full pensioner out there who is now being asked to pay, even though they’ve got nothing.”
Older Australians who paid tax for 40 or 50 years now find themselves paying again, often by rationing basic dignity. Many have lost all confidence that their taxes ever bought them security in old age.
Cullen acknowledges the emotion but insists the books must balance.
“The taxes you pay are not for what you get in the future. The taxes that you pay are for society now. And that is the root cause of the problem. Because the number of taxpayers is not growing at anywhere near the rate as the number of people who need support in their old age. “
“When I was a young man,” Cullen continues, “there were 44 people of working age for every person aged 80 or older. Today there are 14. By 2060 there will be 7. The number of tax-payers is shrinking relative to the number of people needing aged care.”
“I agree with the Government that we cannot continue to just fund aged care through tax -which passes the cost of each generation onto the next. But the most recent changes are not the way forward.”
The fix Australia already invented – and politicians ignored
The real tragedy, Cullen argues, is that Australia already knows how to solve this. We did it with superannuation.
“We had exactly the same problem with the pension system 35 years ago… And so the clever people of the day invented compulsory (tax incentivised) superannuation. That’s what you have to do for aged care,” he says.
The solution is simple and proven: force people to save for their own aged care in a dedicated, tax-incentivised bucket, exactly as we did to support the age pension.
Split super contributions, for example 10 per cent for retirement from age 65 and 2 per cent locked until 85 or until care is needed. Compound interest does the heavy lifting. Or create a genuine long-term care insurance product so risk is shared and costs fall.
Cullen calls Australia’s superannuation system “the best example in the world of solving an intergenerational equity problem”.
Yet when the Royal Commission and experts recommended a similar levy or dedicated savings mechanism, it was rejected outright.
Governments, he says, are “incredibly bad at doing long-term planning”. They prefer to draw on today’s aged care budget for short-term political wins rather than build a pre-funded system outside the annual spending cycle.
“Perhaps the most shocking section of the new Aged Care Act,” Cullen says, “is section 91(4) – which says that the Minister for Aged Care must consult with the Finance Minister when they determine the number of aged care places that will be available for allocation each year.”
“Since 1985 governments of both sides have been committed to growing the number of aged care places each year in line with needs,” Cullen says, “but that commitment no longer exists. Instead, each year, the government will decide how much it is willing to spend and everyone else will just have to wait.”
The result is a system that is simultaneously too mean to the poor, too expensive for taxpayers, and too unwilling to tell the truth: there is a limit to what we can afford, and we are already hitting it in the wrong places.
The question we can no longer avoid
The population is ageing. The number of people drawing from the system is growing rapidly while the number paying in is shrinking. The best time to fix this was 20 years ago. The second-best time is now.
Instead, we have a contribution regime that Cullen, the man who helped design the modern system, labels financially illiterate. We have a hard fiscal ceiling of roughly $300,000 per person per year that no one in Canberra wants to admit exists. And we have older Australians who paid taxes their whole lives now being told they must pay again, often by skipping the most basic acts of human dignity.
Professor David Cullen has spent a quarter of a century inside the system. When he says the sustainable price of a human life in high-needs care is $300,000, and that the current rules make the problem worse, not better, the government dismisses him at its peril.
The question is no longer whether the aged care reforms have failed. The evidence, delivered in Cullen’s own numbers and words, is stark.
