Industry groups have slammed the federal government after it announced that care subsidies would increase by an average of just 1.7 per cent.

The government said in a statement that the funding boost would deliver $140 million to aged care organisations.

“The Rudd Government is committed to a sustainable aged care sector and to providing older Australians with access to high quality, accessible and affordable aged care,” the statement said. 

But the funding boost is down 0.02 per cent on last year’s indexation rate and industry groups say it will offer no relief to aged care providers who are already struggling to provide adequate care.

The CEO of Aged and Community Services Australia (ACSA), Greg Mundy said the funding increase was a blow to the sector, given that the cost of consumer goods and services rose by 2.9 per cent in the March quarter.

Mr Mundy added that the government’s decision means community care workers will have to cut the time they spend with clients while providers will find it even harder to pay competitive wages.

“Of course any additional funds help, but if the government is serious about its health reform agenda and providing older Australians with access to high quality accessible and affordable care, it will need to do better than this,” he said.

“The minister and the government might be committed to a sustainable aged care sector but there will be little left to sustain the longer the industry has to endure shortfalls in funding.”

The CEO of Aged Care Association (ACAA), Rod Young described the government’s announcement was an “absolutely appalling outcome”.

“The government has given an average of 5.7 per cent in increases for private health insurance and over 7 per cent for public hospitals,” he said. “But aged care just gets a 1.7 per cent increase.

“It just confirms that this industry has to get out from total dependency on government subsidies.

“You can’t run an industry when there is no reflection of the real costs in the funding – somewhere along the line, this will have to impact on quality.”