Government provides just $87 million to tackle ‘bureaucratic spaghetti’ in MYEFO – what will be the impact on ‘care’?

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The Government has ignored the sector’s pleas for emergency funding (highlighted in my 7 December, 213th edition) issue to stay afloat in 2020, with Treasurer Josh Frydenberg (pictured left, with Finance Minister Mathias Cormann) announcing just $87.3 million in ‘new’ funding in the Mid-Year Economic and Fiscal Outlook (MYEFO) to respond to the Royal Commission’s Interim Report – including $13.6 million to help its own Department meet the costs of the Royal Commission.

While the Treasurer has flagged the sector’s ongoing reforms as a major budget issue, the fine print reveals the Government will provide just $623.9 million (pictured below) over four years from 2019-20 – with most of the funding already revealed in its 25 November 2019 announcement including:

  • $496.3 million for the release of an additional 10,000 home care packages;
  • $25.5 million to improve medication management and reduce the use of chemical restraint;
  • $10 million for additional dementia training and support for aged care workers and providers; and
  • $4.7 million for a survey of younger people in aged care to support new targets to reduce their numbers.

The extra $87.3 million funding will mostly go towards Government red tape, including:

  • $31.5 million over three years from 2019-20 to support transition arrangements for the implementation of the new aged care national assessment framework and workforce;
  • $21.9 million in 2019-20 to support the operating costs of the My Aged Care system;
  • $13.6 million over two years from 2019-20 to support the Department of Health and the Aged Care Quality and Safety Commission to respond to requests from the Royal Commission into Aged Care Quality and Safety;
  • $11.4 million in 2019-20 to increase the capability of the Department of Health and the Aged Care Quality and Safety Commission to effectively monitor, identify and respond to failures in care and financial risks in aged care (a post-Earle Haven initiative?);
  • $5.9 million in 2019-20 to develop a second-pass business case for the development of an external assessment tool as an alternative to the existing Aged Care Funding Instrument;
  • $1.9 million in 2019-20 to strengthen prudential and financial risk management of aged care providers (another response to Earle Haven); and
  • $1.1 million in forgone non-tax revenue in 2019-20 from deferring the implementation of a mandatory levy on residential care providers where the Accommodation Payment Guarantee Scheme is triggered.

Consider what this means – the Government is using taxpayers’ money to meet its own costs of responding to the Royal Commission.

The report also notes most of these costs will be met from within the existing resources of the Department of Health – so this is not even new money.

In my 13 September 2019, 152nd edition, I calculated that the current costs of the Royal Commission to providers were around $60 million – and this would grow to over $100 million if the Commission was extended (which has taken place).

That is $100 million that could have gone to provide ‘care’.

Instead, we have providers barely breaking even or making a loss across the country. The larger private operators face losing the profits that drive their shareholders to invest.

The Government continually touts its record spending on aged care ($21.4 billion in 2019-20) – but it doesn’t change the fact the sector is in dire financial straits with costs continuing to track above revenues.

In response to Mr Frydenberg’s announcement, a group of industry peaks and major providers issued a further statement warning the alarm bells are ringing for residential care in 2020.

“Some smaller residential care providers are facing particularly steep funding challenges and cannot carry further deficits, in the hope that financial conditions will improve,” they state.

“The fact is that without more assistance in the short term, some residential providers will find it almost impossible to continue delivering quality care in their communities.”

The reality is workforce accounts for 70% of aged care providers’ budgets.

Providers in strife face two options: close their doors – or cut staff.

How will this impact on the quality of ‘care’? How will families react when they learn their loved one’s home is looking to slash staff?

As previously discussed in The Daily COMMISSION, a stop-gap measure until the Royal Commission makes its final recommendations could be a commitment from the Government to boost wages of aged care workers by 15%.

This would go a long way towards helping providers keep the lights on – and provide certainty to residents and families.

The Royal Commission has already shown that workforce is critical to providing ‘safety’ and ‘quality’ of care – why can’t our Government take the same view?