Aged care in crisis: Warns opposition

By Dr. Ananya Mandal, MDJul 29 2010

According to opposition Leader Tony Abbott, the coalition's aged care policy will be suffering a cash crunch. The aged-care sector is critically underfunded and needs more than $50 billion to deal with the increased demand from an ageing population say the Aged Care Association. Mr. Abbott said, “I want to caution people against expecting enormous dollars.” Although he said some very important sectors in the aging population would be addressed but, “It would be a lot easier to help in so many areas if we hadn't been on such a poorly targeted spending spree from this government.”

Both parties have not yet released plans for the elderly during the election campaign.

The Aged Care Association meanwhile has written to the government asking for more funds because of the expected demands that would double by 2030. The Aged Care Association wants a new approach to how the sector is funded.

According to Chief executive Rod Young, “Between now and 2030 we need to invest $51 billion just to keep up with demand…If we don't, we are going to have a whole raft of children and grandchildren looking after their parents and grandparents who can't get into care because there simply will not be enough places…If we don't do that, those same people are going to be housed in hospitals.”

According to Cynthia Payne, head of the Summit group that runs nine aged care residences in Sydney and the Hunter Valley, “It is an amazing story. At 16 months and we are already at 98 per cent occupancy, because it is new accommodation…That's not necessarily the case where you have older building stock…There are still a number of aged care facilities that have four-bed rooms and everyone would be in agreement that the consumer of today and tomorrow, they don't want that accommodation.” She explained the need for funds to upgrade current facilities as well as build new ones. “You have a total cost of building, let's say $20 million. If all you are getting is a daily fee at about $36 a day, you don't have to be Einstein to work out that that is not going to recover the debt associated with a $20 million development,” Ms Payne said.

The Aged care Association has also released a report calling for residents, who can afford it, to pay an accommodation bond to help fund investment. The report states that Australia will experience a shortage of residential aged-care places within five years unless funding arrangements are made on time. The report, prepared by Hynes Lawyers and PKF Chartered Accountants and Business Advisers, recommended that nursing homes be permitted to charge accommodation bonds to high-care residents who could afford to pay them. Prospective aged-care residents with a spouse or carer living in their family home would not be required to sell the property to pay a bond. Under current rules, only low-care residents can be charged bonds. The Association also wanted a review of rules governing the compulsory reporting of abuse of residents.

Report author Julie McStay, a partner at Hynes Lawyers in Brisbane, says 84 per cent of aged care providers surveyed could not maintain existing facilities with the current accommodation charges and government subsidies. She explained, “So an accommodation bond is in essence like a loan that is a capital amount paid by the resident to the approved provider when they come into care…The approved provider is able to use the income on that bond to assist them to build new facilities, and at the end of the time when the person leaves the facility, then they get back the major portion of that bond with some amounts taken out.”

On their part the Federal Government had commissioned the Productivity Commission to look at aged care and Prime Minister Julia Gillard says she is committed to reforming the sector.