Sep 18, 2020

The system wasn’t broken, the government deliberately broke it

Finally the royal commission is hearing from experts and others regarding residential care funding. It is a dire situation with over 70% of the sector experiencing financial hardship.

I believe it is well accepted now that existing funding is inadequate and that this business, to grow and to meet future needs, must be profitable. The government has failed in its duty of care to provide adequate funding to the residential care sector and this must be addressed now.

The royal commission has seen federal treasurers, senior partners of prominent accounting firms and other experts offering ideas on how to possibly fund the sector sustainably going forward.  

I fear that the industry, media and interested individuals are allowing the royal commission to skip over HOW the sector became underfunded.

It is as though the residential care sector has grown enormously and there simply isn’t funding for the number of residents requiring care. This is not the case as those looking at it well know.

There wasn’t an over funding scenario at any time. Until 2015 the industry operated under the radar and from my perspective most residents were comfortable and safe. 

Things began to decline when the then treasurer Scott Morrison attacked the funding instrument (ACFI) and introduced “efficiencies” (cuts) that took $1.7 billion away from the system. The government then attacked private facilities by taking away the payroll tax subsidy that is still enjoyed by the not-for-profit sector. Since then other funding has also been frozen.

The system wasn’t broken, the government deliberately broke it. It took all that money and created the home care system. Home care has proven to be unsafe and unsustainable. This is due to the government simply not getting the numbers right and the unprecedented number of Australians shirking their responsibilities to the previous generation.

One of the issues raised at the Royal Commission this week was the entry fees to care. I remind everyone that the same government brought this “user pays” system into being. I fully appreciate those with assets contribute more while those less fortunate are fully covered by the government subsidy packages.

For those that don’t know, the government controls fees, income, quality, safety and pay rates. The industry is fully regulated and operates under government rules.

What irked me in the royal commission hearings were the comments of RAD “gouging”, amounts of $800,000. In truth, the system mostly operates with a maximum $550,000 RAD.   

In the case of a “concessional” resident who doesn’t have the means to contribute, the  government accommodation payment to a facility is around $19,000 per year. That’s what the Government believes is the cost of supplying care beyond pension contributions. 

So even with an RAD of $800,000 on deposit earning 1.5%, a facility earns only $12,000 per year, $6,000 less than the government payment. 

It bothers me that this issue is not being addressed by associations and individuals.

The federal government set up the system, they left the care of elderly Australians to the sector and it generally worked very well. Nursing homes were not a topic of conversation previously because there was very little wrong. Elderly folk entered care and were well looked after. 

There has always been and always will be unscrupulous individuals who will ruin a system. We have all heard about the big organisations having trucks loaded with flash equipment and furniture arriving just before the accreditation teams announced visits. I hope that is now over with unannounced visits the norm.

Residential care will always be required. Home care is a band-aid that isn’t working and is unsustainably expensive. If we live longer we can expect to spend time in residential care so let’s get it right. And please, let’s tell the whole story, not just part of it.

Leave a Reply

Your email address will not be published. Required fields are marked *


Government left aged care “woefully underprepared” for COVID-19, royal commission hears

  The royal commission has wrapped up its examination of the aged care sector’s response to COVID-19 with a scathing assessment of the government’s failure to prepare the sector for what it should have known lay ahead. “We will be submitting that it was not well prepared,” said counsel assisting Peter Rozen QC in his... Read More

Six out of 10 aged care workers face unfilled shifts every day

Recommendations to the Royal Commission to adopt minimum staffing levels in residential aged care would be “transformative” for aged care workers and residents, United Workers Union aged care director Carolyn Smith said today. “But there is a need for many of these recommendations to be accelerated. The disaster in aged care is happening right here,... Read More

We all hope for a ‘good death’. But many aged-care residents are denied proper end-of-life care

Death is inevitable, and in a civilised society everyone deserves a good one. It would therefore be logical to expect aged-care homes would provide superior end-of-life care. But sadly, palliative care options are often better for those living outside residential aged care than those in it. Read More