Royal Commission says 1% lift in income tax required to deliver ‘four-star’ aged care – but PM rules out aged care levy

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A 1.01% tax increase – or a 0.89% hike in the Medicare levy – would fit within the amount that Australians have said they are willing to pay for high-quality care – according to the Royal Commission into Aged Care Quality and Safety’s 11th research paper by economic advisory firm Deloitte Access Economics.

The 45-page report – released yesterday – concludes that this would be feasible given that 10,000 people surveyed for the Commission’s sixth research paper by Flinders University said they would be willing to contribute 3.1% income tax for better-quality care.

The report says the funding would go towards a wide range of reforms including:

  • mandatory four-star staffing levels in aged care homes
  • mandatory Certificate III training for personal care workers and a national personal care worker register
  • uncapping the number of Home Care Packages
  • improved access to GPs, psychologists, dentists, and rehabilitation

However, the new system would require 30,000 new full-time equivalent jobs to be filled – or higher given many workers are part-time or casual – plus another 50,000 workers just to meet growing demand.

The number of FTE Registered Nurses in the system would need to be doubled – from 22,000 in 2020 to almost 41,000 in 2030 and over 58,000 by 2050.

To attract staff, the paper recommends raising pay rates to be the equivalent of hospitals with a 5.5% a year increase – more than double the economy-wide average – for nurses and other skilled jobs in aged care.

The skilled migration program for workers with aged care skills would also be significantly expanded.

Prime Minister Scott Morrison has ruled out increasing taxes – including the Medicare levy – to pay for aged care because of COVID however.

“The one (plan) where you build your economy back is you don’t hit it with high taxes,” he said yesterday in response to the paper. “And that is not our plan, it has never been our plan, our plan to grow our economy has always been about having people’s backs.”

The PM said he would respond to the Royal Commission’s Final Report when it is released on 26 February next year.

The Royal Commission will be examining the funding, financing and prudential regulation of aged care next week with seven days of hearings from 14-22 September.