Above: Ray Glickman, CEO of Amana Living and Chairman of ACSWA*

By Ray Glickman

This is an opinion written by Ray Glickman, CEO of Amana Living and Chairman of Aged and Community Services Western Australia* [ACSWA] and offered to Australian Ageing Agenda for publishing. While it is a longer article than our usual online news items, due to the unprecedented interest in Mr Glickman’s previous pieces and the timing of our magazine production, we felt the website was the best vehicle. The editor.

“If it is broke, then you need to fix it; not fiddle around the edges.” 

A lot of water has flowed under the aged care bridge since I wrote the article ‘Pulling the right levers for reform’ for AAA back in May 2012. Certainly, enough time has passed to allow a fair evaluation of the Gillard/Butler aged care reforms.

When I wrote the original article, it was still the honeymoon period for Mark Butler and Labour’s reforms. The sector was relieved that a Federal Government had at last announced a reform package and was happy to have an energetic, intelligent Minister at the helm.

In keeping with that feeling at the time, my article about the reform program was gentle and, I believe, analytical and fair.

My central thesis was that a reform process involves pulling a series of separate levers (parameters of reform) according to one’s priorities, opportunities and constraints; and that the overall placement of these levers dictates the precise total picture of the new world order you wish to create.

I identified that there were arguably four key levers of reform – managing government fiscal risk, consumer direction and protection, labour/workforce positioning, and provider sustainability.

I then analysed the Gillard/Butler reforms announced under the Living Longer, Living Better (LLLB) package, in accordance with how hard or soft the Government had chosen to pull the respective levers of reform in order to deliver their particular new world order.

I suggested that LLLB generated a framework for reform that reflected the values, or perhaps I should say ‘rhetoric’, of the Gillard government – fiscal responsibility, consumer protection and a union-friendly approach to fixing workforce problems. However, I expressed my serious reservations about whether this particular approach would actually ’fix’ the serious problems of under-funding and over-regulation that had dragged the sector into crisis and had been delivering sub-standard services and support for older Australians for far too long.

So that was then and this is now. The honeymoon is over, we now know a lot more about the shape and detail of the Gillard/Butler reforms and we are in a position to make some firmer judgments about whether LLLB will be a fix.

After the honeymoon

“It looks increasingly likely that LLLB’s main impact will be to advantage the larger, commercial providers who can cherry-pick the more lucrative parts of the customer base, at the expense of major segments of the NFP sector that must meet mission and regional, rural and remote (RRR) providers who are already at crisis point”. 

In my view, the honeymoon period well and truly ended when $500m of ACFI/COPO [Aged Care Funding Instrument/Commonwealth Own Purpose Outlays]  cuts jumped the sector two weeks before the end of the financial year – at a time when providers had completed their own forward estimates and set their budgets for 2012/13.  This was a wake-up call to many, blinded as they were by hope, to realise that the Government was even prepared to sacrifice the care of the vulnerable elderly on the altar of (what I correctly labelled at the time) a ‘fantasy’ budget surplus.

I wrote a satirical article for AAA [Butler’s stroke of ACFI genius] praising the Government for its ingenuity in improving care by cutting care subsidies. This article tapped into a sense of outrage at what was seen as an underhanded act and it spawned a massive number of hits on the AAA website as well as dozens of comments questioning the Government’s and the Minister’s credibility.

The key determinant of whether the needs of increasing numbers of older people with elevated care needs are to be met into the future, will be the long-term sustainability of providers across the board. This view was clearly shared by the Productivity Commission (PC), but apparently not by the Minister, who has seemed intent on painting providers as the bad guys in the system.

Regrettably, as I argued back then, LLLB has not pulled the provider sustainability lever anywhere near hard enough. LLLB provides some useful revenue-generating initiatives, such as the proposal to introduce bonds in high care, but does so while increasing the regulatory burden on the sector, introducing greater control over pricing and investment, and of course in the context of no meaningful improvement in government funding levels.

It looks increasingly likely that LLLB’s main impact will be to advantage the larger, commercial providers who can cherry-pick the more lucrative parts of the customer base, at the expense of major segments of the NFP sector that must meet mission and regional, rural and remote (RRR) providers who are already at crisis point. The cuts to ACFI and COPO exemplified this ‘negative redistribution’ impact. The hardest hit have been the stand-alone and RRR providers that lack the infrastructure to work the funding system and achieve economies of scale. It is not surprising that LLLB’s biggest (possibly only?) true believers are the multinationals and the other mega-providers.

An opportunity missed

“…the system deemed ‘broken’ in the plethora of reviews culminating in the PC report, remains essentially unchanged.” 

Compared to the vision for the future articulated in the PC report [Caring for Older Australians], LLLB can’t really be called sector reform. That’s not to say there are no positives.  The introduction of bonds into high care that I have mentioned and the establishment of a better continuum of home care are but two examples. However, the system deemed ‘broken’ in the plethora of reviews culminating in the PC report, remains essentially unchanged.

Aged and community care services will still be delivered within a system where supply and prices remain tightly regulated (arguably more tightly), where consumers have no significantly greater right and opportunity to determine how they receive their supports, and where there is no meaningful injection of additional funds by government or really by users.

If it is broke, then you need to fix it; not fiddle around the edges.

The PC was commissioned by the Rudd/Gillard government as ‘a root and branch’ review of aged and community care. The PC came up with an impressive analysis of the way the system works, what ails it and what needs to be done to fix it. They skilfully balanced consumer, government and provider interests along a difficult tightrope and they crafted a vision that truly deserves to be called ‘reform’.

In the PC view, consumers would enjoy an entitlement to care, to which providers would be free to respond in the best way they see fit. This supply and demand interface would invite innovation as providers interpret consumer demand in their own ways. This new world of service provision takes place in a significantly less regulated environment from both a market and quality assurance perspective. The outcome, according to the PC, would be revenue-neutral to government.

There was also a carefully crafted set of checks and balances. Block funding would apply in RRR areas and to any aspect of service delivery where an imperfect market might apply. Safety nets and stop losses would be in place for consumers. A significant user pays component would be underpinned by a Home Equity Release Scheme to protect the emblematic family home from sale while permitting consumers to release equity to pay for the standard, type and intensity of service they desire.

Of course, the PC report wasn’t perfect. NFP providers held concerns about the market-driven nature of the environment and the potential for a two-tier system to emerge for the haves and have-nots. Nevertheless, the PC vision was true reform. It was an imaginative and credible fix for something that was, and remains broken. The PC argued that many of its proposals cost government nothing. It was a vision that pulls the provider sustainability lever hard as one of the central mechanisms for guaranteeing supply into the future in the face of the ageing tsunami.

I acknowledge that some people are more positive about LLLB. However, I see little evidence of a renewed appetite for investment among the broad provider community and no evidence of organisations breaking down the Government’s door to get involved in the shiny world of residential care, particularly in WA. (There are no doors to be broken down in relation to community care in WA as it was allocated the princely sum of 80 packages out of the national total of over 5,600 in the recent ACAR (Aged Care Approval Round).

The three card trick 

So, I contend that LLLB is not really reform; it’s just more of the same. But how did we end up here after so much hope and so much effort?

Frankly, I think provider and consumer advocates fell for the three card trick. Or to use another metaphor, they were so desperate to believe in the Messiah that they proclaimed a false prophet. Those who should have had their eye firmly on the Queen of Spades to check that their card was real, found themselves looking here, there and everywhere, taking their eye off the reform card.

Most of this took place within the National Aged Care Alliance (NACA) process that turned into a hall of mirrors, distorting the view of those who should have been watching the cards. Thanks to this, the Minister has been able to keep providers occupied (when they weren’t distracting themselves with internecine struggles) and to seduce the consumer representatives into acting like agents of government.

How could all of those bodies representing the interests of providers and consumers go along with a supposed reform program that delivered no entitlement, actually reduced government funding in real terms relative to growing numbers and acuity, and took money from care recipients to hand back to selected groups of workers where a union deal could be done?

It’s the three card trick in the hall of mirrors again. Everyone in the tent was kept so busy responding to papers and analysing proposals with one week deadlines that they lost sight of the card and what they were actually there for. Or, as I described this process on Twitter, “The Minister keeps throwing out balls and the sector is silly enough to keep fetching them”.

It is said that those who fail to learn from history are doomed to repeat it. So we find ourselves, but more importantly, older Australians find themselves, looking at a grim service future.

Real reform

“In a Federal election year, there is an obvious and simple way forward. We must fight for the parties to adopt a ‘Back to the PC’ future”. 

I find that so many of my fellow sector leaders are prepared to ‘satisfice’ on reform.  They acknowledge that LLLB is a long way short of satisfactory reform but they are prepared to suffice with the broad context of fiscal constraints and lack of public interest in aged care, while grabbing the positive elements while they are on offer. I can see the logic in that and respect that position, but in the long-run, I think settling for second best sells short the very people we exist to serve.

From now on, I urge the sector to maintain the rage for real reform. Clearly it will require significantly greater government investment, and this will be at a time when government has little money or has just wasted all its money, depending on who you believe. If a reform proposal doesn’t provide for that, whether this Government’s or a future approach from the Coalition, they are kidding themselves so don’t back it as reform.

Real reform involves freeing up the system so that consumers can have real choice and providers can operate without being bound and gagged by controls and red tape. If a reform proposal doesn’t deliver choice or remove red tape, don’t buy it.

Real reform involves older people with assets making a decent contribution to their own accommodation and care, however electorally unpopular the political parties might still consider that to be. The fact is that government will not be able to carry the huge cost burden of care and accommodation for the ageing population alone.  If a reform proposal doesn’t bite the bullet on this and provide meaningful approaches to unlocking this private asset base, it isn’t going to work.

As providers and provider representatives, we have to be much more vision-driven in future. We have to continuously articulate the principles upon which we believe a sustainable sector needs to be built and not be seduced or compromised. We must insist that our society delivers to older people, particularly the frail and vulnerable, the quality of service and level of dignity a civilised and wealthy country must embrace.

In a Federal election year, there is an obvious and simple way forward. We must fight for the parties to adopt a ‘Back to the PC’ future. Its key elements can’t be delivered in a day or a year or maybe even five, but we must fight for a serious commitment to structural change and not ‘satisfice’ ourselves with an approach that pays lip service to key building blocks and places them in the distant out-years when the Government of the day will be long forgotten

A song by The Who comes to mind: ‘Won’t be fooled again!’ I’d like to think so, but given our past record, I wouldn’t bet on it.


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