The government is preparing to squeeze older Australians on aged care costs — and the opposition is keeping unusually quiet

Two unusual things happened this week.

Firstly, the government flagged higher out-of-pocket costs for potentially millions of Australians. This is something it typically avoids like the plague, in an era of trying to ensure everyone’s a winner and limiting complaints.

Secondly, the opposition didn’t rush into cost-of-living-crisis, great-big-new-tax mode. It parked the politics and kept an open mind.

Perhaps these unusual occurrences were due to the fact we’re talking about aged care, where the case for serious reform is now overwhelming. Perhaps it’s also because most younger Australians aren’t too fussed about the prospect of paying more, because they prefer not to think about the prospect of ending up in aged care at all.

Whatever the reason, it’s now clear more aged care user-pays are on the way. The Albanese government’s broad direction has been laid out — if not the detail of how far it’s willing to go.

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The unanswered questions

How many older Australians is it willing to squeeze to help fund a bigger and better aged care sector? And how hard is it willing to squeeze them?

These decisions haven’t been taken yet, although various options are being prepared for cabinet’s Expenditure Review Committee to consider.

The budget razor gang will judge what’s required to fix the problems in aged care, what’s equitable when it comes to more user-pays, and what sort of political fight to expect.

So far, the signs are there may not be much resistance to worry about.

It’s now clear more aged care user-pays are on the way.(ABC News: Luke Bowden)

The final report of the government’s Aged Care Taskforce, released this week, was an exercise in educating the public about the funding dilemma facing the sector and narrowing down options for the government to consider.

There will be no aged care levy as recommended by the royal commission. There will be no change to the existing light-touch means test of the family home. Other assets including superannuation, however, should be assessed when determining how much older Australians should pay.

Beyond that, it’s been left to the government to work out the details. It must decide not only who pays and how much, but importantly where the money will go. What will it fund? High-quality aged care for the wealthy? A better standard across the board? Or both? Will it aim to encourage more profit-making in the sector to attract more private investment?

Older Australians, for their part, will no doubt expect better care and services for themselves if they’re required to personally pay more. The reality, however, is those additional funds will also be required to cross-subsidise improvement across the sector for everyone.

Support for ‘sensible changes’

The idea of the wealthy subsidising the poor has already sparked some talkback radio grumbles, but the opposition isn’t jumping on that bandwagon. At least not at this stage.

Shadow aged care minister Anne Ruston has raised legitimate questions about the detail of who will pay and how much. The Coalition needs to know what it’s being asked to sign up to, but Ruston has pledged to support “sensible changes”.

So has Peter Dutton. He might rail against higher electricity costs, a proposed “ute tax”, and even the government’s tax changes for big superannuation accounts, but when it comes to aged care, the opposition leader has also made clear he’ll support “sensible reforms”.

It’s a far cry from the way Tony Abbott as opposition leader initially responded when Labor last had a crack at aged care reform.

Twelve years ago, Julia Gillard announced plans for limited means testing to “introduce fairness” into aged care. The then-prime minister argued “pensioners often pay more than people with hundreds of thousands of dollars in assets and a private income. As a result, pensioners are subsidising the accommodation and care costs of millionaires.”

Gillard’s changes involved strict caps on out-of-pocket care expenses and specifically rejected a Productivity Commission recommendation to include the value of the family home in the assessment.

Nonetheless, Abbott’s instinctive response was to warn “lots of Australians are going to pay more”.

Incidentally, his shadow aged care minister at the time, Concetta Fierravanti-Wells, was sharply critical years later of the Abbott government’s inaction in reforming the sector. In a submission to the Aged Care Royal Commission in 2020, Fierravanti-Wells said, “the failure of the Abbott government to act at that critical time sowed the seeds of the predicament that the aged care sector is facing today”.

Aged care not on the hit list

That predicament is now well known, thanks to the findings of the royal commission. There’s no dispute over the need for billions of dollars more to be spent each year to fix problems in the system, improve standards and cater for the influx of ageing baby boomers.

The Dutton opposition understands this reality. Hence its more open-minded response to the idea of slugging older Australians more. Aged care is not being added to the opposition’s cost-of-living hit list.

Ruston was joined by shadow treasurer Angus Taylor for a briefing by aged care minister Anika Wells before the release of the taskforce report.

There is still the prospect of a partisan split depending on where the government lands, but both sides have an interest in finding agreement on how to handle a budget time bomb over the medium to long term.

Indeed, for the Coalition, it might be politically easier to let Labor take on wealthy retirees and wear any blowback while it’s in office. This is, after all, the Liberal Party’s base.

And if the opposition were to reject this approach of greater means testing, the only alternative would be more government spending, given both sides have ruled out any sort of general taxpayer levy (for fear of unfairly punishing younger workers).

The Albanese government hopes to land the details and legislate the changes by July. It’s a highly ambitious timeframe.

The initial reaction to the direction laid out in this week’s taskforce report has given it hope.

David Speers is National Political Lead and host of Insiders, which airs on ABC TV at 9am on Sunday or on iview.

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Posted 7h ago7 hours agoWed 13 Mar 2024 at 6:00pm, updated 2h ago2 hours agoWed 13 Mar 2024 at 11:28pm

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