In a pre-budget submission to government, Catholic Health Australia has called on the government to properly include housing wealth in means testing for aged care and to allow providers to set their own daily fees.
The Not For Profit peak body has long been a supporter of higher consumer contributions, but this is the first time they have included the policy suggestion in a submission to government.
CHA represents 12% of Australia’s aged care facilities, and in its submission notes that the aged care sector is under severe financial pressure. The latest StewartBrown data shows that 70% of residential aged care homes operated at a loss in the September 2022 quarter.
According to modelling commissioned by CHA, the aged care sector needs a capital investment of $48 billion by 2030 to provide enough places for the ageing population.
CHA proposes that wealthy Australians who can afford to contribute more should do so.
When an older Australian is means tested for personal and nursing care services, the government currently considers their housing wealth up to the value of $186,331.20. CHA believes this figure should be increased – the median dwelling prices in Australia is now more than $700,000.
The Basic Daily Fee is currently set at 85% of the single person rate of the basic age pension – it does not reflect the actual cost of delivering care. CHA is proposing that the cap on the maximum Basic Daily Fee that aged care homes are allowed to charge should be removed – allowing operators to charge fees that cover the cost of delivering services.
CHA believes these principles should also apply to the home care sector.
CHA's CEO, Pat Garcia, told The SOURCE, “Aged care homes are straining under the weight of inflation and COVID-19 costs while facing long-term financial headwinds as our nation ages.
“The sector needs huge investment and there are two places it could come from: government coffers or increased user contributions from those who can afford to pay. Taxpayers already provide approximately 75% of funding for residential aged care, and this contribution has grown at roughly double the pace of consumer contributions over the last decade. (see graph above)
“Given the median value of an Australian home today is about $1 million, the outdated means test cap of under $200,000 means the government is turning a blind eye to a staggering amount of money.
“Asking users to contribute more not only makes logical sense it has support from the aged care sector.
“If we are to continue to care for our older Australians, then it is fair that we have to dig deep into our accumulated wealth now and not sheet the bill home to future generations.”
The momentum towards Plan B is gathering pace.
