Home | Industry+Policy | Opinion: ageing population will feel budget cuts

Opinion: ageing population will feel budget cuts

As the representative body for large private sector residential aged-care providers, The Aged Care Guild recently commissioned Deloitte Access Economics to review the impact of cuts to the Aged Care Funding Instrument (ACFI) outlined in the 2016–17 federal Budget.

The proposal in the most recent Budget involves greater restrictions on funding for the Complex Health Care domain of the Aged Care Funding Instrument (ACFI), which will reduce funding levels for services such as physiotherapy and pain management and halve the indexation increase in 2016–17.

The $1.2 billion cut to ACFI, on top of the $472 million in savings in December’s MYEFO, continue a pattern of cuts that included a freezing of indexation in 2012 and the removal of the Payroll Tax supplement in the 2014 federal Budget. The payroll tax measure alone cost guild members more than $100 million a year.

My members understand the need for budget responsibility but this should not be achieved at the cost of the industry’s capacity to meet the needs of an increasingly ageing population. The claimed 5.1 per cent funding increase for residential care did little other than cover new places coming online.

Guild members acknowledge the regulatory reforms of recent years by both sides of politics have been positive for the sector, enabling investment in care options for residents, but they are being undermined by successive budgetary changes. Our members are genuinely concerned the tightening in available care funding will affect their capacity to secure capital to invest in quality care and new beds for future residents.

A recent report on the residential aged-care sector by national accountancy firm RSM concluded there is little evidence that sufficient supply will be created to meet even the most conservative forecast of demand for places, and industry consultant Ansell Strategic has warned the latest cuts will discourage admission to aged-care facilities right across the sector.

In the current environment, the guild, whose members have been the biggest builders of new facilities in recent years, also thinks it unlikely the industry will meet the projected demand for 76,000 new beds that the federal government’s own body, the Aged Care Financing Authority (ACFA), says are needed by 2023–24.

The recently released Aged Care Roadmap provides a good directional statement in terms of transitioning to a consumer-driven care model but government needs to ensure the sector has the confidence to invest if there is to be real consumer choice.

Governments can adjust the Budget each year but the reality is they can reverse neither the need for the provision of more complex healthcare nor the increasing demand for residential care places. That is why the latest $1.2 billion savings in the federal Budget needs to be properly reviewed and reconsidered by whichever side of politics is successful at the July 2 election.

Cameron O’Reilly is chief executive of the Aged Care Guild, comprising Allity, Arcare, BlueCross, Bupa, Estia Health, Japara, McKenzie, Opal and Regis.

Do you have an idea for a story?
Email [email protected]

Get the news delivered straight to your inbox

Receive the top stories in our weekly newsletter Sign up now

One comment

  1. anton hutchinson

    Id like to thank Mr O,Rielly for his comments, what he didnt mention is that Blue Cross is one of the big reasons we lost the dementia supplement. I was told, but one of Bluecross Directors, that while operating hundredss of beds of every category with only a few specific dementia beds they were able to claim the High Care dementia supplement for over 50% of their residents, including villa and low care people. They netted 5 million from that practice I was told. We on the other hand being a high care dementia specific facility managed to qualify just 12 % of residents.

    This type of operator is crueling it for the conservative operator, just as importantly…where were all the Departments inspection teams? They too dropped the ball and we are now suffering for that.