The Guardian • Issue #2058

Aged Care Crisis: background

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Privatisation is one of the major causes of the present aged care crisis (see Guardian #2057 “Not for profit!”) and the accompanying lack of accountability and transparency in the private sector. The shortage of government-subsidised home care packages is another.

The present crisis in residential aged care is no accident – it is government induced. It is a direct result of the privatisation and deregulation of the sector commenced by the former Howard Coalition government in 1997 and the failure of governments since to build new residential aged care centres.

These policy failures left a huge unmet need for private operators to fill. The care element has been replaced by the profit motive as big corporations cherry-pick the least costly residents and hence the most profitable.

Under Howard’s aged-care legislation, the number of registered nurse (RN) hours that a typical nursing home with 60 residents was funded for was 308 hours in a week. Ten years on, it had fallen to 198.

The number of enrolled nurses (ENs) also fell. “These clinical roles were replaced by low-paid and low-skilled personal care workers, often migrants who are given little or no support and face language barriers in the workplace.” (The Saturday Paper, 12-18/09/2020).

Deregulation saw the share of all bed licences in residential aged care held by private for-profit companies rise from 27.6 per cent in mid-1999 to 41 per cent in mid-2019. There is virtually no accountability or transparency on how the billions of dollars of government subsidies are spent.


Under Howard low-care private nursing homes were permitted to charge resident bonds (deposits). Then in 2012 Labor’s Mark Butler extended this to high-care homes, thus enabling private homes across the entire sector to charge bonds, subject to approval from a new Aged Care Financing Authority. These bonds run into hundreds of thousands of dollars – in effect providing the private owners of the homes with lucrative interest-free loans to expand their empires.

The system is class based – the rich can afford luxurious care.

The Abbott Coalition government and its successors made cuts to funding and to indexation of the aged care budget.

By 2019 the total pool of deposits held by private nursing homes was a whopping $30 billion – guaranteed by the government (taxpayers) if a provider went belly up. Private providers are free to invest these deposits wherever they like. This could be on building new aged care facilities, the stock market, or even transferring them to another related company in a complex corporate company structure.

The interest or profits from these investments belongs to the aged care provider, not the aged care resident. Only the deposit is returned to the resident or their estate when they leave or die.

In research for the Royal Commission, Professor Kathy Eagar from the University of Wollongong found the average Australian nursing home resident receives just 180 minutes of care each day – low by international standards.

Good practice is considered to be between 242 and 264 minutes each day. Eagar said this would require an “overall increase of 37.2 per cent in total care staffing.” The Albanese Labor government has since legislated for 200 minutes a day.

The Royal Commission also revealed that since 2000, the cost of providing residential aged care had risen by 116.3 per cent but government funding rose by only 70.3 per cent.


Since the Royal Commission, the United Workers’ Union has established Aged Care Watch, a crowd-sourced reporting tool allowing age care workers, residents, family and community members to share their experiences of unfilled shifts and understaffing issues.

They can report them online ( in one place with the aim of putting pressure on decision-makers to fund additional care hours. The site also provides useful information for the wider public regarding performance of nursing homes.

The reports from aged care workers reveal the heart-breaking reality of life in aged care facilities, exposing the widespread understaffing and how it leaves older Australians unsafe. There are harrowing stories about the impact of inadequate staffing including older Australians left in distress, experiencing serious injuries from falls while unattended, or being left soiled and unattended for extended periods.

Aged care workers routinely report being unable to complete their work, missing breaks, and suffering injuries and abuse on the job due to understaffing problems.

The reports also show aged care workers, sick of inaction, delays and federal government bungling, are speaking out to hold their facilities and the federal government accountable.

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