Older Australians with more wealth should have to pay more for the cost of their aged care, a government-appointed expert panel has recommended, potentially from their superannuation balances.
But the government will not pursue a new levy or tax to pay for rising care costs, including ruling out changes to tax treatment of the family home, after the report of the aged care taskforce urged against such reforms.
In a bid to keep the system sustainable as the proportion of elderly people increases, the group of aged care experts recommended a set of changes in various parts of the system – including phasing out the accommodation deposit that residents are expected to pay and incentives to accept less-wealthy residents – to keep the industry afloat.
“The government confirms today it will not impose any increased taxes or a new levy to fund aged care costs or change to the means testing treatment of the family home for aged care,” the aged care minister, Anika Wells, said.
“There is universal acceptance that something must change in order to ensure all Australians can age with the dignity, safety and high-quality care they deserve.”
Tuesday’s release of the taskforce report, anticipated for months by industry sources, sketches potential reforms which could be pursued federally. The Albanese government is expected to give its formal response to the report in coming weeks, after considering the recommendations.
In releasing the report, Wells confirmed the government would heed the recommendation of no new tax. Prime minister Anthony Albanese had already ruled out changes to tax treatment of the family home in parliament.
Wells gave no signal about how the government would approach calls for greater user contributions, but has previously indicated she thought people were open to the idea of paying more if they wanted to.
Noting an ageing population with greater wealth than previous generations, the report said the number of elderly people with superannuation balances would “grow considerably” over coming decades, “with a greater proportion of people having significant funds available”.
“As a result, there is more scope for older people to contribute to their aged care costs by using their accumulated wealth than in previous generations.”
“Given the increasing wealth of many older people and the declining working age (that is tax paying) population, there is a strong case to increase participant co-contributions for those with the means to contribute,” the report said, “noting that there will always be a group of participants who need more government support.”
“Over the next 40 years, the number of people over 80 years of age is expected to triple to more than 3.5 million,” it said.
“Government spending on aged care as a proportion of gross domestic product (GDP) is projected to grow from 1.1% in 2021–22 to 2.5% in 2062-63.”
The number of people aged over 65, compared with the working-age population, is also expected to sharply rise over the same period.
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The report says the government must continue to be the “major funder” of aged care, particularly in “thin markets” where there are few services available, with a focus primarily on the costs of delivering care.
But it suggested that personal co-contributions be encouraged for upgraded accommodation or living costs. One example given was if a user wished to pay extra to get additional subscription TV services in their room.
“It is appropriate older people make a fair co-contribution to the cost of their aged care based on their means,” the report stated.
It stressed there would be “a substantial number of people with limited means”, including pensioners or those who don’t own a home, who the government must continue to support.
The report said public funding was “essential” for such residents, and went further in suggesting incentives for facilities who catered to less-wealthy people, to avoid homes focusing on those making additional contributions.
“Older people with limited means need to be protected.”
Other recommendations included the phasing out by 2035 of refundable accommodation deposits, a large fee residents pay when entering care and have refunded when they leave, and instead moving to a rental-only system. This was recommended to make fees simpler for residents and avoid providers having to quickly pay out large sums when a resident leaves.
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