Agreement reached for new Act
A new aged care act introduced into Parliament on Thursday promises reduced wait times for consumers and higher fees to support provider viability and system sustainability.
“We will introduce a new Aged Care Act to Parliament today,” Minister for Aged Care Anika Wells told a press conference on Thursday afternoon.
“Today, we announce a need-based arrangement that makes financial sense, a system that helps more homes have more services for older Australians. Our reforms will create better and safer care,” she said.
The $5.6 billion package includes $4.3 billion for the new Support at Home program. Coming into effect on 1 July 2025, the program features eight funding levels, and will aim to reduce wait times to three months from assessment by July 2027.
In residential aged care, the maximum room price will rise to $750,000 and providers will be able to keep 2 per cent from the lump sum accommodation deposit.
The changes are expected to cost $930 million over four years but save $12.6 billion over the next 10 years, Treasurer Jim Chalmers said.
The news comes after days of speculation a deal might not be reached this sitting period. It has been universally welcomed by stakeholders.
“Today is an historic moment for aged care, for older Australians and those of us who love them,” said Ms Wells – who thanked Shadow Minister for Aged Care Senator Anne Ruston for her bipartisan support.
Principals underpinning reforms
As recommended by the Aged Care Taskforce, the government will continue to pay the majority of aged care costs with care recipients to contribute financial according to their means. A no-worse-off principle means existing recipients will not pay more under the new system.
“The government will pay 100 per cent of clinical care costs with individuals contributing to the kinds of costs they would typically pay throughout their lives,” Ms Wells said.
The breakdown includes government paying $3.30 for every $1 paid by aged care residents and $7.80 for every $1 paid by home care recipients.
The family home will continue to be treated as it is now under the new system.
Treasurer Jim Chalmers called the package a step change in care and meaningful, structural reform in the budget.
“It’s a combination of new investments and contributions but with generous transitional arrangements,” he told the press conference.
“Aged care spending will continue to grow but at an average of 5.2 per cent not 5.7 per cent over the next decade and that means that there’s a share of GDP over the next decade will moderate from 1.5 per cent of the economy to 1.4 per cent even with more people in the system and higher standard of care at the same time.”
Support at Home
The Support at Home package includes:
- support for 300,000 more participants in the next 10 years
- shorter average wait times from assessment to receive support
- more tailored support with eight ongoing classifications up to almost $78,000 a year
- three categories of support – clinical care, independence and everyday living
- support for home modifications with up to $15,000 to make a home safer
- faster access to assistive technology like walkers or wheelchairs
- means-tested fees with self-funded retirees paying 80 per cent of everyday living costs and 50 per cent of independence costs.
On 1 July 2025 people with a home care package or on the national priority system will move to the new home program and maintain their level of funding and any unspent funds.
New in residential care
Changes in residential aged care include:
- new means-tested contributions for new entrants indexed twice a year in line with inflation
- a higher maximum room price (increasing from $550,000 to $750,000) and indexed over time
- the retention of a small portion of refundable accommodation deposits by providers – 2 per cent of each new residential accommodation deposit – RAD – from each year for up to five years.
“The government will review the accommodation supplement settings over the next two years and consider phasing out RADS from 2035 subject to an independent review,” Ms Wells said.
Ms Wells said these reforms modernise the aged care system to be future facing.
“The 1997 Aged Care Act was put in place for the primary focus of how to fund aged care providers, but our new Act was going to put the people at the heart of care. The aged care bill implements a number of election commitments such as mandatory aged care food standards, statutory duty of care for registered providers of aged care, worker screening and stronger investigative powers for the regulator.”
Ms Wells said the first step was introducing this plan to the House of Representatives today, after which it will go through the Senate inquiry process.
“It’s a parliamentary process,” she said.
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Great but please tell me where the extra 150,000 staff will come from to provide these services… Always the same, throw money at a problem but never solve the real issue.