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Editorial by Rafal Chomik

May13
Rafal Chomik

Words by Rafal Chomik, CEPAR Senior Research Fellow at UNSW Sydney


Australia’s aged care system is rarely out of the spotlight. It is where the pressures of population ageing are most apparent. Back in 2014, when CEPAR released its first research briefs on aged care (‘Aged Care in Australia: Part I - Policy, Demand and Funding and Aged Care in Australia: Part II - Industry and Practice), we noted that Department of Health and Productivity Commission projections for staffing in the sector needed to be higher. Instead of linking places and staffing levels to the typical benchmark population of aged 70+, it was better to pay attention to the population aged 85+ which is much more likely to need care and is growing faster.

We have since heard from the Royal Commission about the need to raise quality and quantity of the sector’s workforce. Both political parties in Australia have made promises to increase the number of minutes of direct care and the availability of nurses, just as wages in the sector may see a 25% increase. Neither major Australian party has so far detailed how it will pay for the extra costs.

But this is the tip of the iceberg. The current system effectively rations the supply of care. Research by CEPAR Chief Investigator Michael Sherris suggests that moving to a demand-based model, as recommended by the Royal Commission, could see costs between 4% and 25% of GDP by 2060, depending on the level of disabilities among the elderly.

So, the sustainable funding of aged care remains an open question, and one to which CEPAR researchers have devoted much attention. Since the main parties in Australia have so far ruled out an aged care levy, they will need to find more cash in consolidated revenue or require greater co-payments from care recipients. Yet, current means testing caps and thresholds – which differ markedly from those for the Age Pension – require too little from those with greater means and require too much from those with modest means. The regime also favours homeowners, couples, and those receiving care at home. So one area of reform could be pursuing better and simpler means testing that raises more funding, reduces distortions, and improves fairness.

Some of the outputs of CEPAR’s research on aged care are evident in this newsletter edition. For example, Professor Michael Sherris discusses the seven ways to achieve sustainable aged care funding and a recent paper by CEPAR Co-Deputy Director Professor Hazel Bateman and colleagues looks at the role of flexible insurance products. You can also find out more by reading CEPAR’s submissions to the Royal Commission into Aged Care Quality and Safety, watching recent CEPAR presentations on the topic, or browsing our fact sheet on aged care policy, provision, and prospects.

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