2016 Budget: Aged Care Savings Must Not Erode Service Quality

Opinion piece by Nieves Murray, Chief Executive of IRT Group, one of Australia's largest community based providers of seniors' Lifestyle & Aged Care solutions.

Under the current funding model, the Government contributes to the cost of providing residential aged care services to older Australians through the Aged Care Funding Instrument (ACFI). Providers like IRT assess the type of care they are providing each resident against ACFI criteria to determine what government contributions they can claim for. One of the highest value claims providers can make is for Complex Health Care.

Complex Health Care ACFI claims are increasing beyond Government forecasts as the number of people with high care needs continue to grow. The 2015/16 Budget forecast expenditure under ACFI to continue to grow at about 3% per annum, however Mid-Year Economic Fiscal Outlook (MYEFO) data showed that expenditure in 2015/16 is actually increasing at 5%.

To help tackle this fiscal issue, in last night's Budget the Government announced changes to ACFI Complex Health Care claims that are expected to deliver $1.2 billion in savings in the 2016 Budget. These changes were first announced in the MYEFO and will essentially make it harder for providers to claim for Complex Health Care.

Aged care providers recognise that as Australia's population ages, the Government needs to ensure its aged care expenditure is sustainable over the long-term. However, in changing how it contributes to the cost of providing residential care, the Government should be careful not to erode the ability of providers to deliver high quality aged care to all those who need it.

The good news is that some of this $1.2 billion in savings will be reinvested:

• $102 million to help providers in rural and remote areas better manage cost pressures they face due to their isolation and small size
• $136 million on the My Aged Care contact centre to meet increasing demand from consumers trying to navigate the system
• $10 million for unannounced compliance site visits of aged care providers

The Government's aged care website and contact centre is crucial to the success of its reform agenda to empower customers to have greater choice and control over the care services they receive. Another way to help ensure that government spending on aged care is sustainable for the longterm is to support Australians to save enough super to fund a comfortable retirement.

In his Budget speech last night, the Treasurer said that "becoming financially independent in retirement is one of life's greatest challenges and achievements".

This aspiration is particularly challenging for low-income earners and people who take a break from paid work, like women and carers. In March, Monash University found that 1 in 3 older women are living in poverty in Australia and women who retire at 65 will generally have only a third of the super that men accrue.

That's why Scott Morrison's Budget measures to help low income earners boost their super contributions are so important. I hope this extra support will help address this significant inequity.

For more information on the 2016 Budget, go to www.budget.gov.au

Click here to find out more about IRT Group's aged care services.