The Department of Health and Ageing acknowledged the need for significant aged care reform.
The department’s submission to the Productivity Commission’s aged care inquiry said the sector would not be able to respond to consumer needs without major changes.
“Although the aged care sector has proven to be robust in meeting the challenges it has faced in the past, it is increasingly clear that it is not well placed to address the challenges that are currently arising and that will arise over the coming decades,” the submission said.
The submission identified a number of inefficiencies in community and residential aged care, saying the industry “…does not make the most efficient use of scarce resources”.
The report said the current system for rationing aged care places limited consumer choice.
“Fundamentally, the planning ratios help manage the Commonwealth’s fiscal risk,” the report said.
“However, they create an artificial scarcity that limits the scope of competition, blunts pressure for efficiency and innovation deprives consumers of choice.”
The department also warned that aged care organisations would struggle to find enough trained staff in coming decades, particularly in community care.
“Given that demand for community care is likely to increase strongly, reduced supply of informal carers could impose substantial costs on the community care sector,” the submission said.
“The resulting difficulties will be made all the more acute by the fact that the supply of the formal aged care workforce will also face considerable pressure as the share of the population requiring care increase.”