Lateline's report this week on the aged care crisis has sparked an understandably emotional debate about the quality of care in Australia's nursing homes.
The maltreatment of vulnerable residents detailed in the story was horrific, and should rightly prompt scrutiny of the sector, even if these kinds of cases are as rare and isolated as industry representatives claim.
Predictably, however, the scandal has led to renewed expectations that the federal government do 'something' to fix the problems by increasing funding and/or regulation.
But in aged care, government is the problem not the solution.
The aged care sector is already heavily regulated and providers are largely reliant on government funding for their income.
Despite periodic increases, aged care fees fail to cover the real and ever-rising cost of care, and the shortfall inevitably impacts on staffing levels and standards.
The current funding arrangements are not sustainable. Unprecedented numbers of Australians are going to live to very old ages in coming decades, and the federal government simply will not be able to afford to fund the much higher capital and recurrent cost of aged care.
This is why major reports into the future of the sector – starting with the 2004 Hogan Review and including the 2011 Productivity Commission inquiry – have recommended that aged care providers be allowed to charge residents an accommodation bond.
Bonds would usually be financed by the sale of the resident's home. Bonds are held in trust, are returned to the resident's estate upon death, and are used to fund the construction of additional capacity and contribute to the recurrent cost of care.
Greater self-funding and cost sharing via the use of bonds is the fair and sustainable way to improve the quality of aged care.
However, successive federal governments – starting with the Howard Government in the late 1990s – have baulked at this policy change. Instead of explaining the problems and the rationale for levying bonds, politicians have been spooked by irresponsible and dishonest scare campaigns of the 'Canberra to rob the old of their homes' variety.
Let's hope the latest crisis to hit aged care finally leads to some sensible policy, if not in an election year, then soon after a new federal government is elected.
Dr Jeremy Sammut is a Research Fellow at The Centre for Independent Studies.
Home > Commentary > Opinion > Government is the cause of the aged care crisis
Government is the cause of the aged care crisis
The maltreatment of vulnerable residents detailed in the story was horrific, and should rightly prompt scrutiny of the sector, even if these kinds of cases are as rare and isolated as industry representatives claim.
Predictably, however, the scandal has led to renewed expectations that the federal government do 'something' to fix the problems by increasing funding and/or regulation.
But in aged care, government is the problem not the solution.
The aged care sector is already heavily regulated and providers are largely reliant on government funding for their income.
Despite periodic increases, aged care fees fail to cover the real and ever-rising cost of care, and the shortfall inevitably impacts on staffing levels and standards.
The current funding arrangements are not sustainable. Unprecedented numbers of Australians are going to live to very old ages in coming decades, and the federal government simply will not be able to afford to fund the much higher capital and recurrent cost of aged care.
This is why major reports into the future of the sector – starting with the 2004 Hogan Review and including the 2011 Productivity Commission inquiry – have recommended that aged care providers be allowed to charge residents an accommodation bond.
Bonds would usually be financed by the sale of the resident's home. Bonds are held in trust, are returned to the resident's estate upon death, and are used to fund the construction of additional capacity and contribute to the recurrent cost of care.
Greater self-funding and cost sharing via the use of bonds is the fair and sustainable way to improve the quality of aged care.
However, successive federal governments – starting with the Howard Government in the late 1990s – have baulked at this policy change. Instead of explaining the problems and the rationale for levying bonds, politicians have been spooked by irresponsible and dishonest scare campaigns of the 'Canberra to rob the old of their homes' variety.
Let's hope the latest crisis to hit aged care finally leads to some sensible policy, if not in an election year, then soon after a new federal government is elected.
Dr Jeremy Sammut is a Research Fellow at The Centre for Independent Studies.
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