CAP review is a missed opportunity

The government has called for submissions to its CAP review but the industry says its terms of reference are too narrow.

The Rudd Government is seeking submissions from residential aged care operators for its review of the Conditional Adjustment Payment (CAP).

But the CEO of Aged Care Association Australia (ACAA), Rod Young said the government had missed an opportunity to address the underlying aged care funding inadequacies.

“Our preference would have been for the Minister [Justine Elliot] to accept the industry’s suggestion for a more thorough and expansive review looking at an appropriate ongoing indexation for aged care,” he said.

Mr Young said that even with the CAP, the industry’s subsidy increases are lagging behind inflation.

At the same time, nurse wages in the acute sector are consistently higher than CPI, leaving providers in a bind.

“We have already sliced, diced and dashed as much of our service regime as we possibly can,” said Mr Young.

“If we continue to be expected by Government to operate with subsidy increases at rates below inflation, the quality of care simply has to suffer,” he said.

Federal Treasurer Wayne Swan announced the review when he handed down this year’s budget.

The CAP, which had seemed destined for the scrap-heap, was a last-minute budget inclusion following intense industry lobbying.

At the time, aged care operators warned that they would be placed under extreme pressure if the CAP was discontinued.

And with no sign of a change to the Commonwealth Own Purpose Outlays (COPO) indexation formula, that message remains.

“If the CAP does not get up, the industry will be in absolutely dire straits,” Mr Young said.

A report conducted by auditing firm, Grant Thornton found that 40 per cent of providers are currently operating at a loss but Mr Young warned that figure could jump to 60 per cent without the CAP.

The CAP was introduced by the Howard Government four years ago to provide additional medium-term financial assistance to providers and encourage greater improved management practices.

But the Minister for Ageing, Justine Elliot said the review would consider the eligibility criteria for the payment.

“The Australian Government will be interested to hear ideas from the aged care sector and the community on what nursing home and hostel operators should be asked to do in order to receive CAP funding,” she said.

It is understood that ACAA and Aged and Community Services Australia will be making a joint submission to the review under the auspices of the Aged Care Industry Council.

Submissions close on Friday, 24 October. Click here to find out more information about the review.

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