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Budget ‘leaks’ point to finance reform

Speculation is mounting that aged care reform will feature in the upcoming federal budget following a series of reports in the mainstream media, which some stakeholders view as evidence of budget leaks. By Natasha Egan

Older people might have to sell their home to pay for aged care services; the government is set to endorse most of the Productivity Commission’s recommendations but reject a government-backed reverse mortgage scheme; nursing homes may lose $2 billion in government subsidies.

These are some of the proposed budget forecasts reported in recent weeks attributed to anonymous inside sources.

INsite understands the government will announce reform measures ahead of the budget, perhaps this week.

Chief executive of Aged and Community Services NSW/ ACT Illana Halliday said her instinct was that the government was picking various concepts to gauge public interest. “I think that these leaks are in a run up pattern to budget coming out May 8 and they’re testing the level of the response to them,” Halliday told INsite.

“They’ve done the family home and there haven’t been giant screams. They’re now [saying] they might not own the reverse mortgage package,” she said.

Halliday, a former senior finance officer at Queensland Treasury, said a newspaper report on April 10 contained phrases that read like “a treasury statement”.

The Australian reported that it understood the government would reject the proposed government-backed reverse mortgage scheme in favour of working with the private sector. “The scheme would make the government the nation’s biggest bank, and leave it in control of almost half the nation’s household wealth,” it said.

Coming out and rejecting something like that reads like a leak, Halliday said.

“To comment on the size of the capital that they would be managing, that it would make them the largest banker in Australia, I thought that was a fairly interesting statistic to be called out. That read like a treasury statement – that we don’t want to be in that space.”

Aged Care Association Australia CEO Rod Young said he was not surprised the government might be looking at other alternatives to funding reverse mortgages but was not convinced the information was the result of a budget leak.

“I do know there has been some anxiety at government levels whether they are the appropriate entity to run the scheme or … whether it would be more appropriate that those with the financial expertise run that,” Young told INsite.

Council on the Ageing (COTA) chief executive Ian Yates agreed there had been a lot of noise lately about the potential for aged care reform in the budget, although he said he wasn’t assuming it would feature.

“There will be kite flying from people who do know what’s under consideration and there’ll be kite flying from people who have no idea but thought they’d fly a kite,” Yates said.

Likewise, Catholic Health Australia CEO Martin Laverty said no one should be surprised government was testing ideas with the community and preparing the industry for decisions that are being made. However, he said that more than talk was needed.

“It’s of course fine to test ideas but it’s got to land on some decisions that are going to give older Australians the access they need to services that are sustainable.”

Coupled with the media reports, the Easter release of the summary reports of COTA’s conversations and Alzheimer’s Australia meetings, combined with the public acknowledgements from Minster for Ageing Mark Butler and Prime Minister Julia Gillard of the problems in the aged care system caused much speculation.

Halliday said she was optimistic. “Whilst they’re all saying they’re not talking about the next budget, that level of activity is a typical pre-budget leak pattern and so I’m taking it to positively mean there will be things in the budget for the aged care sector.”

Laverty said he didn’t mind when or how government went about preparing the electorate, but he lamented the number of days the Productivity Commission’s report had been sitting on the government’s desk.

The softening of the ground and the number of days that have passed mean that if the government doesn’t embrace the entirety of the PC’s recommendations then providers, unions and consumers alike would question government on what they had been putting their energy into, he said.

“The expectations of the aged care sector and the expectations of consumers for real and genuine reform are high and that increases every day that passes without a response to the Productivity Commission’s report,” Laverty said.

Yates said the government was publicly acknowledging the problem so when it formally responded, the public would understand clearly what it was about.

However, he said whether aged care reform made it into this budget was still an open question, but his sense was the conversation within cabinet was still happening.

“I think it’s equally possible that if it’s not going to be in this budget in any large financial proportion that they may in fact announce their response to the PC ahead of the budget.”

Young also said he wasn’t convinced the talk meant reform would feature in the budget. “This is not particularly clear at the moment but I think everybody is hoping all of this recent activity may indicate there may be some movement.”

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