Opinion: A cautious view of the budget for aged care

Sonya Smart, Chief Executive Officer, VMCH

In this guest post, VMCH CEO Sonya Smart shares her views on the Federal Budget and provides a unique perspective on how providers are navigating the current environment, and transforming their businesses to meet future demand for services.

It’s been refreshing to see some genuine and proactive conversation around the future sustainability of the aged care sector following the release of the Albanese government’s Federal Budget last week. 

Allocations were largely positive, following years of underfunding that have left many aged care providers struggling to keep their heads above water, particularly after the onslaught of COVID-19. 

It appears the government has its finger on the pulse of what is actually happening across the sector and is giving providers more targeted support to do what we do best; deliver high-quality care to our deserving older Australians. 

The biggest win from my perspective was the 15 per cent pay rise on Award rates. Aside from the obvious financial gain, this historic boost from the government is a much-needed morale boost, reflecting the hard work, dedication and compassion shown by aged care staff. We look forward to passing on this well-deserved boost to our staff and are hopeful the rise will help us attract more workers to the sector. 

Workforce numbers look set to remain an ongoing and critical issue for providers and for other industries in the foreseeable future, but as an industry, we have always been innovative in our plans to attract and retain staff.   

The government has set the deadline for providers to have a nurse on duty 24/7 in all aged care homes by 1 July. And while we are thankfully among the roughly 80% of providers already meeting the goal, we still need to boost aged care staff numbers, in particular quality nurses to meet the mandated hours for clinical care (an interesting conundrum when residential aged care is not an acute setting or funded to deliver acute care).

With this in mind, we welcome the working hour restriction exemption for international students working in aged care, which means they can work unlimited hours until 31 December 2023.  However, they are an unskilled workforce and this is a short-term solution. It’s not necessarily the best option for providers.

One of the biggest, though not entirely surprising, moves from the government was the redirection of funding for aged care places over three years, expected to decrease payments by $2.2 billion. This highlights the shift for more people wanting to age in place at home, rather than in aged care.

Across Australia, residential aged care occupancy sits around a record low of 86.2%, while the number of people receiving Commonwealth-funded home care packages nearly quadrupled from 2012 to 2022 to 55,000 to 216,000 respectively. 

This reflects what we are seeing on the ground. 

Interest in our HCPs is growing, with enquiries increasing by 600 from 2021 to 2022. So, we welcome the funding of an additional 9,500 Home Care Packages (HCPs) (costing $166.8 million). 

We’re also investing in the built environments of our affordable homes and retirement living residents, so they are accessible and geared towards supporting people to age comfortably at home. 

However, we still need a clear pathway to reinvestment to make in-home care a real option, not just a stopgap while waiting for residential aged care. People should be able to age well at home, not ‘make do’. It is not realistic to believe that people will age as well at home with complex health conditions, social isolation and a workforce under pressure. 

The funding ‘cut’ for residential aged care places isn’t without its concerns.  

We have an exodus of providers, as well as the changing of business owners, as working within the sector becomes increasingly complex. We still need to ensure we can care for those in particular who require specialised dementia and palliative care support; this is where the future of residential aged care is heading. We are also an ageing population so the need for quality residential aged care is a real requirement for Australia.

Perhaps the key to keeping residential aged care financially sustainable lies in the much talked about ‘user pays’ system, which the government will consider as part of its soon-to-be-established Aged Care Taskforce. 

Daily fees should be uncapped for wealthier residents because they currently don’t take into account a resident’s wealth or retirement status and are unlinked from the actual cost of providing a service. 

It costs around $35k to refurbish a residential aged care bedroom and bathroom now, which we simply don’t have the money to do. It scares me when I hear providers still talk about three and four people sharing one room; that is totally unacceptable.

Providers should be able to charge appropriately for maintaining the fabric of the residences older people call home. 

As an organisation, VMCH is hopeful that these budget announcements will translate into sustainable sector reforms, but we are also used to ongoing cuts that have destroyed the sustainability of such a vital sector for society. This budget also does not address the hidden costs of the requirements to manage increased regulation and reporting, which is a concern to all providers.


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