Jul 09, 2020

Let’s do better for our elders

Ageing and death can be difficult issues. Most of us prefer to distract ourselves from these fundamental realities. As a result, however, our political discussion on aged care has been characterised by gingerness, euphemism and indecision.

We have failed to grapple practically with a concrete political problem.

Since 2002 the government has released four intergenerational. Another is due this year. All have identified our ageing population as a core national challenge. None has triggered meaningful reform to address it.

But while the ageing “problem” can be fiendishly complex in some respects, at its core it’s quite straightforward: if we want to treat elders with respect and dignity in their final stages of life, then we need much more money. Indeed, about $20bn a year more, according to a discussion paper just released by the Royal Commission on Aged Care Quality and Safety.

This amount is rarely disputed. Although there is some room for debate at the edges, no one credibly disputes that a significant amount of funding is required to fix our ever-worsening aged-care crisis.

More than half of aged-care homes operate at a loss. In rural and remote areas, that figure rises to almost three-quarters. Before COVID-19 struck, 15 per cent of aged-care providers suggested they would close their doors within a year. The pandemic is likely to have made things significantly worse.

The waiting list for home-care packages has 104,000 names on it. Carers in the sector have always been underpaid and jobs are getting much harder to fill.

So the national discussion we need to have is not about whether the money is needed but, rather, the fairest means of raising it. It’s a debate we’ve squibbed to date.

Despite what modern monetary theorists may tell us, there’s no pain-free way to find funding. Any method will raise a squeal from someone. And for the past 20 years every squeal has been met with a hasty retreat.

At the beginning of the year I advanced the idea of tighter means testing so seniors who owned wealth would be required to use it to pay for their care. The reaction Catholic Health Australia received was predictably impassioned. Many agreed with me. Many did not.

That’s completely understandable. Any floating of tighter means testing immediately leaves you open to charges of “coming after grandma’s home”, an idea I don’t don’t relish. But if you wish to reject the option you need to front up honestly with an alternative.

In this respect, the aged-care royal commission has done a valuable service to the national debate by putting a hard proposal on the table.

To raise the additional billions we need, the royal commission estimates we will need to raise income tax about 2 per cent. For the average income earner that’s near $1700 a year. The royal commission anticipates the figure will have to rise steadily as the population ages.

The royal commission suggests that if we do this, we take a Medicare levy-style approach so it’s safe from tinkering by future governments. This makes sense.

Admirably, the royal commission doesn’t shrink from the ethical issues with this approach. It notes that an aged-care levy, introduced now, would hit younger taxpayers today disproportionably because they would be forced to pay for their own care as well as the care of their elders. Older Australians, who had never had to pay the levy, would be the winners.

Nonetheless, accepting this reality may be the only way forward. But, to make such a deal more palatable politically, government should take a deep breath and another look at fairer means testing to help mitigate the impact on taxpayers.

User contributions represent 20 per cent of aged-care spending. Taxpayers pick up the rest. What we require users to contribute is based on an arcane tangle of red tape that aligns neither to the person’s wealth nor the value of the services they receive.

And we quarantine a potential source of billions in funding: housing wealth. It’s only the first $171,000 of the value of a home that is means tested for personal and nursing care. It’s a profligacy we can no longer afford.

There is any number of ways we can make it easy for seniors to draw down against the value of their homes. The Pension Loans Scheme, for example, could be made more attractive with better rates and easier access.

Of course many seniors don’t have significant wealth of any kind and they too deserve dignity and comfort. While the injection of funding from wealthier Australians would help lift standards across the board, significantly more public funding will always be needed.

As the royal commission has made stark, there are no easy options here. To better provide for our parents and grandparents, all of us must sacrifice a little — whether through a general levy or through greater levels of private contribution. Either way we need to square up to the challenge and make a call. The alternative is that a fifth intergenerational report comes and goes, and a system we know is failing many elders continues to crumble.

This article first appeared in The Australian.


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  1. Why don’t our advocates of the elderly speak up more on behalf of the elderly/disabled? We need to demonstrate in our streets and yell for elderly rights! As it is and has been such a problem forever and there is no clear fix that I can see in the near future, we should be so much more proactive! What is wrong with Australians? I have said it before and I will say it again, Aged Care and disability care should be free for all as should childcare. There are just so many people taking money from all angles from the system begining with our Super! Scrap the Superanuation! Tax everyone for the “luxury” of care for the youngest and the eldest and take the big business out of the equation! Most of us don’t work in government jobs with all the lerks and perks and big wages, pay rises with too many staff that the rest of us have to pay for. Yep anyone working in small self employed business or working for private businesses are the least likely to benefit from Superanuation and lerks and perks. If everyone paid more tax with the promise of free aged care and childcare then we would all be “In this together” and never need to be ripped off by all governments and all the other greedy rats making huge profits from the vulnerable. Take $70 a fortnight out of my small aged care wage to cover all this. I don’t mind! Politicians and all the government workers can pay more to compensate the lower paid. We need to look after our people guys. No more red tape. When it is time to start kindy or begin your new life in an aged care facility, no more paper work to see what you are covered for. The multi rich should pay more to cover our weak and vulnerable. It should be mandatory. They will be fine, don’t worry about them. This country is going down the moral sewer!


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