Why the sector needs Plan B: UTS research on aged care sustainability highlights system at breaking point

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If the aged care industry and Government needed any more proof that the current system is on financial shaky ground – risking the quality of care for older Australians and their families – a new paper has laid bare the reality.

The University of Technology Sydney’s Ageing Research Collaborative (UARC) last week published a new 84-page Sustainability of the Aged Care Sector: Discussion Paper commissioned by the Australian Aged Care Collaboration (AACC), warning that the cost of funding aged care to taxpayers could double in the next 40 years.

You can read the paper here.

As we outline here, aged care is already one of Australia’s largest budget burdens – around $27 billion a year or 1.2% of GDP – but this is expected to rise to 2.1% over the next four decades.

Add in demands for wage rises for aged care workers and the picture is one of a sector at breaking point.

The report concludes that the Federal Government will need to chip in more funding to prevent the system from going under.

But it also points to the need for Plan B.

“Options include requiring consumers who have the capacity to pay to make fair contributions to the cost of their services, while ensuring the services are affordable to all in need by maintaining appropriate safety nets,” it states.

The paper also explores other possible funding and financial options such as levies and personal insurance – but overall, the message is clear.

We need to have a national debate about the sustainability of the current Government-funded aged care system.

The fact is that Australia’s taxpayer base is rapidly dwindling – at the same time as the ageing population is exploding.

As outlined last week, the Government has only two ways to increase funding: taking from other sectors that are also in need or raising taxes.

Without change, both consumers and providers face a bleak future.

As the paper concludes:

“The consequences of having an unsustainable system are significant, particularly for senior Australians and their families. Future scenarios could see a loss of the recent improvements made or announced for implementation. An unsustainable system could also lead to a decline in the number of viable providers who deliver services to the elderly, and pose challenging consequences for current and future taxpayers.”