Federal Budget 2023-24
No news is good news. For clients accessing aged care, that might be the view of this year’s Federal Budget.
Clients accessing aged care services have avoided an increase in aged care fees, despite the government needing to find an additional $11.3 billion over the next four years to fund the 15% increase in award wages for 250,000 aged care workers. However, the Budget commentary did signal a potential for client contributions to be reviewed and adjusted when the new Aged Care Act is introduced on 1 July 2024.
Other measures announced in the Budget continued to show the Government’s commitment to ongoing aged care reform, in line with the Royal Commission findings and commenced in 2021 by the previous Federal Government.
Pay increases for aged care workers
The Government has committed to funding the 15% award wage increase decided by the Fair Work Commission. The increase will apply from 1 July 2023 for registered nurses, enrolled nurses, assistants in nursing, personal care workers, head chefs and cooks, recreational activities officers (lifestyle workers) and home care workers.
Increases to wages will be funded through Government subsidies, including:
An increase in the AN-ACC funding for residential care
A new $10.80 ‘hotelling’ supplement to cover chef and cook wages as well as catering, cleaning and gardening services
An increase in the Home Care Package budgets, and
Additional grants for Commonwealth Home Support Programme.
Care providers will be monitored to ensure the additional revenue is passed onto aged care workers.
Review of funding arrangements – new taskforce
A new Aged Care Act is planned to be introduced from 1 July 2024, so decisions on any changes to client contributions for care services appear to have been deferred and may potentially coincide with commencement of the new Act.
A new Aged Care Taskforce has been established to review funding arrangements for aged care and provide suggestions on options that are fair and equitable for all Australians. This will take into consideration the Royal Commission into Aged Care Quality and Safety recommendations, and focus on:
Client contributions to ensure a sustainable aged care system
Equity for older people who need aged care now and into the future, and for all those contributing to funding through taxes
Innovation and enhancing elements of the system that Australians value.
The Government recently paid $396,000 to Kantar Public Australia (political consultants) to look into client contributions towards the cost of aged care and client knowledge of the relevant policies. The findings are still being reviewed by Government and may impact future decisions.
Reduced residential care ratios
Government funding in residential aged care is regulated by imposing a national target provision ratio of subsidised residential care places.
To create a savings of $2.2 billion, the Government will temporarily reduce the ratio from 78.0 places per 1,000 people over age 70 to 60.1 places, over 3 years from 2024-2025. As shown in the graph below, the ratio has been reducing over time and reflects the increasing preference of older people to remain at home.
From 1 July 2024, residential aged care places will no longer be allocated to aged care providers through the bed licensing system. Instead, older people will be directly allocated a residential aged care place, so they can receive care from their chosen provider. This aims to increase competition and development in aged care services.
More Home Care Packages
The number of Home Care Packages will continue to increase, with a further 9,500 packages becoming available in 2023-24. This increases the number of Home Care Packages to 285,100 by June 2024.
Successive increases in the number of packages over recent years has reduced waiting times to an average of 1-3 months. However, delays are still being experienced with accessing care due to capacity problems faced by providers resulting from workforce shortages.
Simplifying home care & assessments
Combining the Commonwealth Home Support Program (CHSP) and Home Care Packages (HCP) into a new Support at Home program has been deferred a further year until 1 July 2025. This allows further time for consultation and program design.
The new single assessment system (to replace the Regional Assessment Service (RAS) and Aged Care Assessment Teams (ACAT)) is still planned to commence from 1 July 2024.
A new Aged Care Act
The Government is continuing to design a new regulatory framework for aged care, which is expected to roll out from 1 July 2024 and be reflected in the new Aged Care Act.
Reforms will focus on:
Improving food, nutrition and the dining experience in residential care
Requiring residential care providers to give residents Monthly Care Statements outlining care provided
Improving and enhancing Star Ratings (now published on MyAgedCare)
Expanding staffing quality indicators.
The new Aged Care Act will take a person-centred and rights-based approach, with a focus on aged care recipients rather than service providers. It will set out the obligations of care providers and legislate requirements that protect an older person’s rights to safe, quality care, with a statement of rights.
What financial advisers can do
Advisers need to start the hard conversations with their clients. Aged care is no longer an issue that can be ignored when providing retirement advice to clients and their families – it is now a core issue that needs to be considered.
If clients are not prepared for their frailty years you may be leaving them exposed for around 15-25% of their retirement years. This is a major gap. Clients need to start planning for how to contribute towards their cost of care. Even today, with money and financial resources, the range of choices are wider and may provide better quality of life.
The Financial Planners and Advisers Code of Ethics (developed by FASEA) and the Retirement Income Covenant are two pieces of legislative reform in recent years that have explicitly stated the need to include aged care considerations into client conversations and planning decisions.