A recent Green Paper from the Institute of Actuaries should be obligatory holiday reading for both Treasurer Josh Frydenberg and Shadow Treasurer Jim Chalmers.
It predicts spending on aged care will double by the end of the decade. And that's just the beginning. Costs will go up by an average of 7 per cent a year for the next 20 years.
Treasury's 2021 Intergenerational Report only predicted costs would rise by around 4 per cent per year to 2040.
The Morrison government in budget 2021 committed $17.7 billion to fund the Royal Commission into Aged Care Quality and Safety reforms over what is now four years. But no detailed plan was provided on how to pay for this.
We're overdue for a clear financial plan to deal with this, otherwise the aged care royal commission will go down in history as a waste of time and money.
More significantly the aged care horrors exposed by the royal commission will continue to alarm everyone and haunt us as we all head to old age.
We're now in election mode so it's time both political parties faced up to the reality of long-term funding for the royal commission vision of quality aged care. It must be done with sufficient financing for those receiving care now and the baby boom generation that's soon to be needing it.
This is by far Australia's dominant social issue for the next 20 years after which the baby boom bulge flattens. There are almost 6 million baby boomers. The oldest are now in their mid-70s, so we're looking at millions needing care in the decades to come.
We will need a workforce of close to a million by 2050. That's more than double the workers we have today.
We should note these actuarial costings do not include the significant contributions of family and friends who supply care. Increasingly older people are opting to stay in their own home, and this is being encouraged by policy makers as a lower cost choice.
Since the 1970s, in my working career, it's been political poison to cut funds to older people and to put the care costs back onto them. So how do we meet the costs of care? The latest National Seniors Social Survey of 5430 people 50+ found a majority supported the idea of a levy, however the Prime Minister and Opposition Leader have both spoken out against this idea.
There's a political dilemma. Voters don't like talk of taxes at election time. But we need to be reassured it's in the line of sight of all parties and we aren't looking into a black hole.
In the lead up to the last budget, we argued for robust independent analysis to decide the most efficient and fairest way to fund the royal commission reforms. It may be a levy, a small rise in GST, increased user pays, or it may be a combination of all these options.
We have a bi-partisan approach to funding disability. We need the same for aged care. We suggest all parties announce, as part of their election platforms, an agreement to investigate the most efficient, the fairest and sustainable way to fund the future of aged care.
Then accept what is proposed - regardless of which party wins. If we don't, the black hole will grow, and it will kill off any chance of real reform.
Professor John McCallum, National Seniors Australia CEO
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