The Guardian • Issue #2092


Aged care

Photo: Australian Ageing Agenda

The ageing population is portrayed as a burden on the budget and taxpayers because the priorities of the Labor government are pedigree neoliberal: user pays and privatisation are its objectives. Those who no longer pay tax or have their labour exploited are of no use to the capitalist system. It’s why the former Coalition government of John Howard privatised aged care so as to churn profits for the private sector.

The Albanese government set up an Aged Care Taskforce to make recommendations on how to introduce so-called ‘sustainable funding’ with a view to users of the system paying more for their care.

The Taskforce come up with a set of recommendations to cut costs, but also to further fund the privatisation of the sector in true neoliberal fashion. The aged will be required to pay a much larger proportion of the costs of aged care. The government released the report on 13 March, the same day that the work value case findings were handed down for aged care workers.

The Taskforce was chaired by Aged Care Minister Anika Wells. The deputy chair was Nigel Ray who has served terms as an executive director of the World Bank and the International Monetary Fund as well as having had a career at Treasury. Other members of the Taskforce included Rosemary Huxtable, a former Secretary of the Department of Finance under the Coalition and Liberal NSW former state Premier Michael Baird.

The report provides principles for funding accompanied by clichés such as equitable, flexible, person-centred, transparency, and accountability – all largely contradicted by the recommendations.

The report expresses concerns about an ageing population and their cost to taxpayers. “Over the next 40 years, the number of people over 80 years of age is expected to triple to more than 3.5 million.” The “taxation burden for funding aged care services grows for a segment of the population that is becoming proportionally smaller.”


“Government spending on aged care as a proportion of Gross Domestic Product is projected to grow from 1.1 per cent in 2021-22 to 2.5 per cent in 2062- 63.”

Should this be considered a burden on the taxpayer? Hardly, when the government is spending more than 2 per cent of GDP on war preparations, has just legislated billions in tax cuts for the rich, and dishes out billions on fossil fuel subsidies.

The report proposes a “significant role” under a fee-for-service model for Support at Home that makes participants pay a co-contribution for services.

The report talks in terms of raising “awareness of existing financial products that enable older people to utilise their wealth in retirement and provide confidence they can afford future aged care costs.” It also eyes superannuation balances: “Balances for people aged 85 are projected to be significant for high wealth people.”


The report divides residential aged care into two categories: “direct care”, and “indirect care” for “daily living services” such as food, cleaning, laundry, and rental of a room. It says caring services should be fully funded by government, and there should be a supplement on indirect care for those on lower incomes such as pensioners.

At present Refundable Accommodation Deposits are paid by residents when they enter a facility. These can range from $100,000 to $1 million. They are refundable when a resident leaves, but without interest. This capital, which is held by the provider, can be used to build new facilities or take over existing ones, and hence expand their operations. These deposits equate to interest-free loans.

The Taskforce recommends that deposits be replaced by rental charges for accommodation. From the perspective of new entrants to facilities, not requiring a large deposit upfront is a positive step forward.

However, it opens up avenues for the finance sector to move in with loans adding to costs as interest must be paid on them. These costs will be passed on to residents.

It will be possible to negotiate better or more daily living services for a higher fee – maintaining the two-tier system. So much for “equitable” care!

There is an emphasis on users of the system using their accumulated wealth to pay for care. Despite calls from some quarters, including the finance sector, the report does not recommend including the family home.

There is NOT a shortage of money to fund these reforms.


At present there is a Basic Daily Fee of 85 per cent of the single age pension, currently $61 a day. The other payment is the hotelling supplement, currently $11 per day, which government pays to providers for all residents, regardless of their means. A means-tested fee makes up 6 per cent of care contributions in residential care.

Providers claim they are losing an average of $4 a day per resident so the recommendation is for an increase in resident co-contributions to ensure sustainability, but “with a strong means tested safety net” for those who cannot pay a higher rate, such as full-rate pensioners with no other income or assets.” This would be in the form of a supplement.

This would perpetuate the current two-tier system where the wealthy are able to purchase luxury accommodation and superior care.

It looks like a step toward the British system where aged care residents must pay for everything until they have less than AU$45,000 left, including the family home.


Since the reforms introduced by the Howard government in 1997, the aged care system has been progressively privatised and deregulated with devastating consequences for those who use the system.

There is virtually no accountability as to how funding is used or whether it is syphoned off to other areas. Both private for-profit outfits such as BUPA and ‘non-profit’ church-run facilities are not required to provide such information.

The 2021 Royal Commission into Aged Care Quality and Safety report estimated one in three residents in aged care facilities had experienced substandard care. Almost half of all residents in aged care facilities had concerns about the number of staff, the quality of care, and the use of agency (outsourced) staff. (See Guardian #2021 and #2022)

“When you turn over an age care system to a market-orientated approach what you get is profit extraction out of the system and away from front line care,” Principal Analyst at the Centre for International Corporate Tax Accountability and Research, Jason Ward, said recently.

Ward said some investors extract 20 per cent returns each year on their investment in age care, a phenomenal rate of return for an industry that is highly dependent upon public funding.

There is big money to be made out of aged care. There is massive profit-extraction through real estate. The developers are making a killing. Profits disappear offshore through complex corporate structures. Even in the non-profit sector, there is no transparency as to where government funding is directed. There have been examples of money being syphoned off to churches and other causes. All of this while these same centres claim to make losses year in and year out.

Ward admits the system needs more money, but argues that we need to fix this problem first; “I think we need to fix the holes in the bucket before pouring more water into it as it were, because some people are extracting large profits out the sector and crying poor at the same time.”

The question of plugging the holes in the bucket is not seriously addressed by the Taskforce.

The government has implemented the Royal Commission’s recommendations for a registered nurse to be on duty 24/7 and a minimum 200 minutes a day of care time.

In Victoria, 10 per cent of beds are state run. In these facilities the quality of care is far superior, and when COVID hit, they did not experience the mass outbreaks and deaths that the privately-run operators did.

The first step in tackling funding should be nationalisation of residential and home care which would cut costs overnight and guarantee higher standards of care.

There is a shortage of facilities and carers. Hopefully, the pay decision will boost carer numbers. Governments need to urgently build more centres to meet growing demand.

The ageing population is not the problem, it is privatisation and deregulation. There is NOT a shortage of money. The present crisis is government-induced, and the solution lies in political will and putting human need ahead of corporate greed.

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