Morrison Govt unveils $17.7B aged care package – and five-year plan for reform – in Federal Budget response to Royal Commission

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Two-and-a-half years after Prime Minister Scott Morrison announced a Royal Commission into Aged Care Quality and Safety, the Government has responded with a $17.7 billion aged care package over the next four years to deliver a ‘once in a generation change’ to Australia’s aged care system.

The Government has committed to take up in full or in part 126 of the Commissioners’ 148 recommendations – with another 12 to be further considered and six not accepted.

Critically, the Government has outlined a five-year plan to transform the sector addressing five key pillars:

  • $7.5 billion for home care,
  • $7.8 billion for residential aged care services and sustainability,
  • $942 million for residential aged care quality and safety,
  • $652.1 million for workforce; and
  • $698.3 million for governance

The package marks the biggest single Government investment in aged care – and the largest response to a Royal Commission in Australian history.

Aged care expenditure will reach around $25 billion – up from $20 billion – in five years.

The funding will begin to flow from 2021-22 with $2.1 billion earmarked for the sector, followed by $4.4 billion in 2022-23 and $5.5 billion in the following two years.

Big-ticket items include:

  • $6.5 billion for an additional 80,000 Home Care Packages – 40,000 released in 2021–22 and 40,000 in 2022–23, for a total of 275,598 packages in the system by June 2023
  • $10.8 million to design and plan a new support in-home care program
  • $272.5 million for a system of aged care ‘navigators’ to provide more support and face-to-face services to older Australians accessing the system
  • $3.9 billion to increase the amount of frontline care (care minutes) delivered to aged care residents to a mandatory 200 minutes per day, including 40 minutes with a registered nurse
  • $3.2 billion to increase the Basic Daily Fee Supplement by $10 per resident per day to improve services including food
  • $102.1 million to remove the Aged Care Approvals Round (ACAR) and assign residential aged care places directly to older Australians
  • $49.1 million to expand the Independent Hospital Pricing Authority to link the cost of aged care services to the care provided
  • $189.3 million for the new Australian National Aged Care Classification (AN-ACC) funding model
  • $365.7 million to improve access to primary care
  • $262.5 million to enhance the Aged Care Quality and Safety Commission (ACQSC)
  • $200.1 million to introduce a new star rating system
  • Upskilling the existing workforce and providing training for new aged care workers, including 33,800 subsidised Vocational Education and Training places through JobTrainer
  • $228.2 million to create a single assessment workforce
  • $135.6 million to provide eligible Registered Nurses with financial incentives –$3,700 for full time workers, and $2,700 for part time workers
  • $9.8 million to extend the national recruitment campaign for aged care workers
  • $21.1 million to establish new governance and advisory structures, including a National Aged Care Advisory Council, and a Council of Elders, and an office of the Inspector-General of Aged Care
  • The drafting of a new Aged Care Act to enshrine the Government’s reforms in legislation by mid-2023.

The first phase this year will see the release of the first 40,000 home Care Packages plus the Basic Daily Care Fee and Viability Supplement measures, improved quality standards and financial oversight and workforce training.

Phase Two from 2022–2023 will see a further 40,000 Home Care Packages, transition to the AN-ACC funding model, reporting of staff hours, star ratings, single assessments, and new training places for aged care workers.

2023 will put the network of 500 local Care Finders and the single in-home care program in place as well as new data collection requirements and the new Aged Care Act.

Phase Three (2024–2025) will be the final stage with major reforms completed including the new support at home program and the end of the Aged Care Approvals round (ACAR) in 2024 and younger people out of residential care and stronger governance standards by 2025.

So, what will the reforms – and the money – mean for the sector?

These numbers are still below the $7 billion a year that the Grattan Institute and the Australian Aged Care Collaboration (AACC) had argued was needed to build a quality aged care system.

But the reforms should increase competition and revenue for operators.

When you look at the individual reforms – moving to a new funding system from October 2022, scrapping the Aged Care Approvals Rounds from July 2024 and a new independent pricing authority – there is a clear pathway for operators to improve their revenue – and invest in their expansion and new innovation.

This should in turn lead to greater competition and improved financial viability and sustainability.

These measures do come with provisos – mandated staff time, a statutory duty of care, star ratings, more governance and regulation among them.

Workforce, accessibility and financing will also continue to be major issues.

Despite measures to attract and retain staff, the fact is there are no new workers and unlikely to be until borders and immigration open up again.

While the Government has accepted that people want to be cared for at home and moved to reduce the home care wait list, they have only partly taken up recommendation 25 for a single aged care program with care services continuing to be rationed.

Finally, for all its big spending, there is no mention of ‘user pays’ in the response.

With the Government officially scrapping the idea of an aged care levy however, there will need to be a future discussion about who pays for this new system.

Is this a conversation that the politicians are prepared to have with the community?

We suspect it will have to happen – but the sector may be left waiting until after the next election.