With the Federal Budget slipping further into deficit over the next four years, the Mid-Year Economic Fiscal Outlook (MYEFO) 2024-25 has revealed the Albanese Government is looking to save on spending with aged care in its sights.
Presenting the Government’s “responsible approach” to fiscal strategy today (18 December 2024), Treasurer Jim Chalmers and Minister for Finance Katy Gallagher announced the budget deficit is set to climb from $21.8 billion to $143.9 billion over the next four years.
The Government has identified a further $14.6 billion in savings and reprioritisations over the five years to 2027-28 including in aged care.
The MYEFO statement reveals the Government will transition to paying providers in arrears rather than in advance for the provision of services over two years from 1 July 2026.
This will save the Budget $2.5 billion over three years from 2025-26 and $234.1 million per year ongoing.
The statement says that “provides will not have their funding reduced through this measure.”
However, when the Government introduced payments in arrears for home care in February 2021, operators reported significant cash flow disruption.
The Government is also seeking $233 million in savings over four years from 2024-25 (and $109.7 million per year ongoing) by adjusting the 24/7 Registered Nurse supplement to “align with changes recommended by the Independent Health and Aged Care Pricing Authority (IHACPA) in its Residential Aged Care Pricing Advice 2024-25”. It is unclear which changes in the advice this statement refers to.
“We’re disappointed the sector wasn’t consulted”
The move has been met with disappointment by the aged care peak body Ageing Australia, which was not informed of the changes prior to the MYEFO announcement.
“It’s unhelpful the Government has chosen to take this funding approach at a time when aged care is facing so much change as part of the biggest reforms we’ve seen in decades,” said CEO Tom Symondson.
“Aged Care has had to endure more than $5 billion dollars in losses over the past few years, while at the same time striving to improve the lives of older Australians every day.
“These are unnecessary changes to funding and do nothing for older people, while placing a greater burden on struggling providers in the short term.
“We’re disappointed the sector wasn’t consulted, and we will be engaging further with the Government to find workable solutions.”
Interestingly, the MYEFO statement says the Government will also link care minute funding to the delivery of care minutes from 1 October 2025 for residential aged care providers in metropolitan areas.
Does this mean that operators that fail to meet care minutes will have their funding reduced?
We will have more information on this announcement as it comes to hand.