Federal Budget 2024-25: StewartBrown Benchmark’s response

The 2024-25 federal budget continued the government’s focus on enhancing the quality of aged care service delivery with several measures to improve aged care support programs.

The additional home care packages will be welcomed. However, there has been commentary that further additional packages may be required to be released in the coming fiscal period to meet demand.

The funding to improve the IT digital systems is essential as the sector moves to a new cohort of participants over the next decade, the “baby boomers”, the first change in a participant cohort in Australia’s aged care history.

Confirmation through the budget that future Fair Work award increases will be fully funded is important, and the other funding measures announced are measured and relevant.

The budget did not include any funding initiatives to improve the financial sustainability of the sector.

This exclusion appears to confirm the government’s commitment to fully or partially implement the Aged Care Taskforce recommendations to increase the funding envelope, particularly through increased consumer contributions for everyday living and accommodation services.

It needs to be fully understood that the changes to consumer contributions do not relate to direct care services, which are predominantly (96%) funded by a taxpayer subsidy (AN-ACC), and this will remain the case.

Minister Butler referred to the Taskforce Report in his budget media release as did Minister Wells in the webinar held on Wednesday 15 May 2024 (post-budget).

Of similar importance, the Department website provides some further clarity by stating “The new Aged Care Act will put older people at the centre of aged care”. It will also support the government’s response to the Aged Care Taskforce.

These reforms are crucial to create a sustainable sector that delivers high-quality care.

The timing of the funding reforms is also critical and some can be implemented well before the new Aged Care Act comes into force (extended to 1 July 2025) as they may not require significant legislative amendments.

It is important to appreciate that the recommended funding reforms for consumer contributions only affect intending home care and residential aged care participants as current participants would be grandparented.

In this regard, there has been little or no negative consumer reaction in the past to increases in the Maximum Permitted Interest Rate (from 4.01% to 8.34% over three years) which directly affects the Daily Accommodation Payment, nor increases in RAD accommodation pricing as both only relate to new incoming residents and represent the pricing structure at their time of entry into residential aged care.

The Taskforce recommendations have been well received by the majority of stakeholders, particularly after the explanation that they are not a form of wealth tax, will maintain a strong safety net for financially disadvantaged persons, appropriate consumer protection will be enshrined and they are more equitable than the current funding arrangements.

Delayed implementation of the essential Taskforce recommendations will further increase Providers’ financial sustainability pressures, delay essential new and varied building investments, and impact care service delivery.

After five years of substantial aggregate operating deficits for the sector with over 50% of aged care homes operating in deficit (and likely to increase in number) it is essential for bipartisan support to be reached to enable the funding reforms to be progressively implemented.

Aged care is a community social responsibility, and, in this regard, it should be remembered that the Royal Commission into Aged Care Quality and Safety was established by the former government whose response was to Accept or Accept in principle over 90% of the recommendations, and they had commenced the implementation process for a number of the recommendations.

The current government has continued this important process with a clear charter to ensure that the aged care sector meets current and future care delivery for elderly persons in a progressive, innovative, sustainable and equitable manner.

For this reason, a bipartisan approach, including all members of parliament and sector stakeholders should be the the primary aim and mutually achieved with utmost urgency.

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