Price gouging or policy failure? Aged care CEO fires back at Butler’s combative language

When Health Minister Mark Butler told ABC Radio National listeners last week that the government would “crack down on any price gouging by providers,” he may have intended it as reassurance. For Frank Price, Chief Executive of RFBI, one of Australia’s largest not-for-profit aged care providers, it landed as something else entirely: a public verdict delivered before a single case had been proven.

“Language matters, particularly when it comes from the Minister,” Price says. “Terms such as ‘price gouging’ and ‘crack down’ carry an assertion of wrongdoing. When used before investigations are complete, they cast the cloud of poor behaviour over all providers.”

It is a concern that is gaining traction across the sector, and it raises a question that goes beyond politics: when a government uses the language of misconduct to describe an industry it also funds and regulates, what are the consequences, and who bears them?

A verdict without a finding

Butler’s comments came in the context of the government’s delayed price cap for Support at Home services, which was due to commence on 1 July but has now been deferred indefinitely. In the interim, the government has announced a package of “price protections,” including publishing service prices so consumers can benchmark what they are being charged.

The Minister was unambiguous in framing the problem. The government, he said, had been “worried about reports of price gouging in this sector.”

Price’s response is pointed: where is the evidence?

“What happens to trust, confidence and reputation when strong public accusations are made first, but the evidence does not support them?” he asks. “If the Department’s findings show no system-wide unreasonable prices, it is important that the public narrative reflects that reality just as clearly. Otherwise, the damage is already done, creating uncertainty and defensiveness in a sector that should instead be focused on stability, improvement and meeting growing demand.”

He is not arguing against oversight. The legislation, he notes, already sets out that prices “must not be unreasonable,” a standard he says he supports. What he objects to is the leap from regulatory concern to public accusation, particularly before any findings have been made.

“We all should be looking at what is actually happening and understand the implications when casual and emotive language is used by people in authority,” he says.

What does ‘price gouging’ actually mean?

Central to Price’s critique is a more practical problem: nobody has yet defined what “price gouging” actually means in an aged care context.

“At present, there appears to be limited guidance on what specifically constitutes ‘price gouging’ in the aged care context,” he says. “Without clear benchmarks or definitions, it becomes difficult for providers to distinguish between acceptable pricing and behaviour that may attract regulatory concern.”

This is not a trivial gap. Aged care services are not uniform commodities. The cost of delivering a home support service in inner-Sydney is fundamentally different from delivering the same service in rural New South Wales or remote Queensland. Workforce availability, travel distances, insurance costs and overheads all vary significantly, and legitimately.

“Pointing the finger at providers for the price of a service demonstrates a limited understanding of the business of aged care,” Price says. “In the RFBI experience, the cost of delivery of like services is not uniform across the State. People who engage cleaners, gardeners and meals deliveries understand the range in quality that is available.”

His preferred solution is straightforward: hand the definitional work to an authority with the credibility and independence to do it properly. “My preference is for Ministers to stop using emotive language to draw a headline and look to the requirements in the Act that the price ‘must not be unreasonable.’ It would not be that challenging for an authority such as the ACCC to provide guidance as to the meaning of unreasonable in this context.”

The real costs of combative framing

There is a particular irony in the government’s communications approach, Price suggests. The sector it is publicly criticising is the same sector it is relying upon to deliver an enormously complex reform.

“Broad public characterisations of misconduct can undermine workforce morale, consumer confidence and the collaborative environment needed to make reform succeed,” he says.

He is not alone in this assessment. Providers across the country are simultaneously managing rising wage costs driven by Award increases, significant new regulatory requirements under the Aged Care Act, and the operational demands of transitioning clients to the new Support at Home model, all while fielding anxious questions from older Australians and their families who are confused about what the changes mean for them.

Into that environment, the language of “crackdowns” and “gouging” lands badly.

“Providers operate in good faith within complex and rapidly changing systems,” Price says. “The risk of inappropriate characterisation is now evident from the media reports. Users of the language need to be clear what they mean by ‘price gouging’ rather than throwing it around carelessly.”

There is also a structural argument here that the Minister’s framing obscures. The financial data does not paint a picture of an industry extracting excess profits. Recent StewartBrown data shows operating margins have fallen to around $1.44 per client day, with EBITDA at levels Price describes as “not investable.”

“The sector is already operating at or near its limit,” he says. “Decisions taken by regulators from here, particularly in relation to pricing oversight, will have a material impact on whether providers can continue to deliver services at the scale required.”

A policy problem dressed as a provider problem

Underlying Price’s concerns is a broader argument about where responsibility actually lies.

“The policy settings are put in place by Government,” he says plainly. “The challenges we are seeing in aged care are complex and reflect a combination of policy design, funding settings and implementation issues. Providers are operating within the framework set by government, while managing rising costs and significant structural reform.”

He points to the government’s own Budget decisions as evidence. Recent moves, including the removal of co-contributions for showering and hygiene, represent an implicit acknowledgement that affordability problems in the system are at least partly a function of policy design, not provider behaviour.

“The welcome initiatives in the recent budget are a clear illustration that Government has accepted that the problem lies in the policy settings,” Price says.

Yet the public narrative continues to frame providers as the source of the problem. Price finds this not only unfair but counterproductive.

“If the Government wants to review the appropriateness of prices, they should nominate an acceptable margin and place the responsibility for oversight in the hands of a competent authority in the area, such as the ACCC,” he says. “The problem will not be solved by Ministers asserting the problem lies with providers. The problem is in the system design and subsidy structures.”

The stakes

None of this is merely a dispute about tone. Pricing regulation in aged care has direct consequences for service availability, particularly in regional and remote Australia, where access is already most constrained.

“If pricing oversight does not adequately reflect these conditions, the unintended consequence will be reduced service availability in exactly the locations where older Australians already face the greatest access challenges,” Price warns.

He also raises the spectre of the NDIS pricing experience, which Butler himself acknowledged in the same radio interview as a cautionary tale. When price caps in the NDIS became de facto market prices rather than ceilings, competition was distorted and the policy objective of driving efficiency was undermined.

“In aged care, the risk is compounded by an already constrained financial environment,” Price says. “If pricing settings are not carefully aligned to the actual cost of delivering care, there is a real possibility of distorting the market further, either by driving uniform pricing or by reducing service availability in higher-cost areas.”

The delay on price caps, he says, is the right call, but only if the time is used well. “This period must be used to establish clear, evidence-based pricing parameters that reflect the real cost of delivering care across different markets. That means genuine co-design with providers, not just consultation with consumer bodies and provider associations.”

What the sector is asking for

Price is careful to position his critique not as opposition to reform, but as a call for a different kind of engagement. What the sector needs, he argues, is not to be managed from a distance through public pressure, but to be genuinely included in the design of the system it is being asked to deliver.

“Aged care reform must be built with the sector, not imposed on it,” he says. “We need a genuine shift to co-design based on intellectual rigour, where policy is shaped by those delivering care every day and tested against real-world conditions before it is implemented.”

The alternative, policy designed without adequate provider input and enforced through the language of misconduct, risks achieving the opposite of what the government intends.

“A sustainable aged care system cannot be built by placing providers and government at odds,” Price says. “It will only succeed if we work together, openly and constructively, to address the real challenges in front of us.”

For now, that partnership feels some distance away. And until the government defines what it actually means by “price gouging,” the damage to trust and confidence in the sector may prove harder to reverse than the pricing problems it is trying to solve.