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Fifield: consumers should drive market

Should government be a policeman or a banker when it comes to aged care? That’s the question the assistant minister for social services posed at a Committee for Economic Development of Australia (CEDA) event yesterday.

“What are the expectations we should place on aged-care providers? And what are the responsibilities of the individual?” senator Mitch Fifield said.

As an answer, Fifield said geography and the distribution of older Australians in the coming decades were key issues. He also said there was a question mark surrounding whether aged-care infrastructure would be mismatched with the location of older Australians.

“Governments can continue to try to second guess what older Australians want, ration their beds and hand them out like taxi licences, or we can get out of the way, let the consumers decide what they want and allow the market to supply what is needed,” he said.

Fifield pointed to economist Ian Harper’s comments in his Competition Review paper where he says success in the market should be driven by consumer interests and not the special interests of suppliers and providers. “Dollars should follow needs,” Fifield added. “Care should follow choice.”

He argued that more independence in the aged-care system was needed. “We need independent assessment of people’s needs,” he said. “Home care packages are progressively moving to consumer-directed delivery. The intent is to give consumers more control, through identifying how much money they are entitled to and how those dollars are spent.”

He added, however, that government funding still goes to the provider and that this should change. “Ultimately, public and private dollars need to follow the person rather than the provider. The easiest place to start this is in packaged care,” he said. “The next logical step is to give the consumer full control of their package and let them direct how and with whom it is spent to meet their assessed needs.”

Next, he said freeing up supply in residential care was necessary. He said it’s time to rethink the model of having a set number of places offered in defined geographic areas, due to the changing distribution of older people.

“Within the existing taxpayer envelope, we need to open up supply to allow residential providers to make business decisions, based on market intelligence, about where to build a residential care service,” Fifield said. “And then allow them to attract customers through price and service.”

He noted that not all areas of Australia can deliver this and that some would need to be managed differently. However, “where the market can work it should be allowed to,” he said.

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