This week, the royal commission is tackling the enormous problem of how Australia should fund its aged care system in the future.

In his opening remarks, Counsel assisting the Royal Commission into Aged Care Quality and Safety, Peter Gray QC, noted some of the “surprising” features of the current way the system is funded.

For example, he said home care providers are not required to tell the government what it is spending $2.5 billion in Commonwealth subsidies on.

Mr Gray also noted there is not enough transparency about how government funding for residential aged care is spent. He said a recent report by experts BDO found the current reporting requirements mean related party transactions are opaque.

In another example of inadequate transparency, there is no requirement for government subsidies to be spent on staff. There is only a “vague” requirement for the workforce to be “adequate and appropriately skilled”, Mr Gray said.

Mr Gray said a recent survey found that only 15 minutes per fortnight was spent on “nursing and allied health”, a result Mr Gray said was “disturbing”.

Paul Keating proposes ‘post-paid’ aged care funding

The royal commission heard from former prime minister, Paul Keating, who proposed an innovative HECS-style “post-paid” system for funding aged care.

Under his suggestion, Australians would receive all the aged care services they need, whether it be in the home or in residential care, and the costs would be covered by the government. When the person dies, the cost would be deducted from the person’s estate.

For those with no assets, the government would pick up the tab.

Council of the Ageing chief executive Ian Yates said it was “worth exploring” the scheme, but “the devil will be in the detail”.

Mr Keating said Australia’s superannuation scheme relieves some of the pressure on the aged care system because it provides funding “to do the things that make life worth living”.

Australians aged 80-85 and older are not properly catered for in the aged care system, Mr Keating said. Superannuation will have been “run down” by that age, he said. Australians born in the 1970s should expect to live until they are 100-110, placing a huge burden on the aged care system. 

Australians should not expect younger generations to fund the long retirements of the older generations, a problem which is compounded by the deteriorating dependency ratio.

Mr Keating delivered a trademark quip on the current government, observing its failure to deliver innovative policies around aged care. “It’s called policy dexterity,” he said. “There’s none around.”

Home care waiting lists propping up nursing homes

Mr Yates said some of the 100,000 on the home care waiting list make the move into residential aged care prematurely, meaning that in effect the waiting lists are propping up aged care facilities where there is not a waiting list. He said there are operators that should not be operating in the market.

Mr Yates said the government will have to make “huge” increases in funding, but that Australians should expect to make contributions too. 

If the government is going to ask Australians to pay more for the care they receive, they will have to make sure it’s the care they want, Mr Yates said. 

He thanked the royal commission for giving the aged care reform process “traction”.

Declining quality over decades

Paul Versteege, policy manager at Combined Pensioners & Superannuants Association, told the royal commission he hoped the aged care industry has “a session of self reflection” and comes to accept the care that has been provided over the last 20 years has been of “continuing deteriorating quality”.

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