The Australian Government is considering increasing consumer contributions to aged care in a bid to bring much-needed funding to the struggling sector. This is not the first time the issue has been raised and sceptics could be forgiven for doubting whether it will translate into genuine reform.

But a new report by CompliSpace reveals that Australians are more ready than ever to accept an increase in aged care fees for those who are wealthy enough to afford it. The report – Towards the Tipping Point in Aged Care Funding – shows that almost three-quarters (73%) of Australians are willing to forego an inheritance so that their older family members can have the retirement they deserve.

Today we summarise the key findings in the report and what they mean for aged care providers.

About the Report

The report – Towards the Tipping Point in Aged Care Funding – is based on the results of a survey issued by an independent research house on behalf of CompliSpace and involved 1,000 nationally representative respondents, made up of Australians across all states and territories. The survey asked respondents for their views on inheritance and aged care funding.

Context: The Problem with Aged Care Funding and the Possible Solution

The current aged care system in Australia is unsustainable. The Federal Government subsidises almost 75% of all aged care costs, drawing that money mostly from the taxpaying public. This puts a heavy burden on taxpayers at a time when cost of living is going up and demand for aged care is increasing with our ageing population.

Meanwhile, inheritances are getting bigger. Older Australians draw down the minimum on their superannuation and, most commonly, devote their wealth not to their own care but via inheritance to their children or other family members. Those who receive these inheritances are often people in their mid-50s who are financially secure and own their property outright.

Many Australians could afford to pay for their own aged care without disadvantaging themselves or their children. If they did, the benefits could be significant. According to a report by the Federal Government’s Aged Care Financing Authority (ACFA), co-contributions from older Australians could decrease pressure on government spending, improve the financial position of aged care providers, focus funding on servicing the Australians who need subsidised care, and empower older Australians to have a say in securing the best retirement and aged care that meets their needs.

So why hasn’t it happened? Why has there not been a major push to increase consumer co-contributions to aged care? One of the reasons was political feasibility. It was thought that the public would be unwilling to accept such an increase. The CompliSpace report shows that this perception is wrong.

Key Findings From the Report

• Almost three-quarters (73%) of Australians are willing to forego an inheritance so that their older family members can have the retirement they deserve.
  
  
• More than half of respondents say that older people themselves should be responsible for funding aged care (55%), followed by taxpayers (24%) and families (22%). Combined, this is 77% of respondents who believe that Australians and their families have a duty to pay for aged care.
  
  
• While most Australians are happy to see inheritances diverted to aged care, only around a third of us (38%) go so far as to say that older people should sell their home if needed to fund their aged care.

Government Response

According to The Weekly Source, the Government has recently revealed that it commissioned political consultants Kantar Public Australia back in February to look into consumer co-contributions to the cost of aged care.

A spokesperson for the Department of Health and Aged Care said that the purpose of the research is to “understand current and future consumers’ knowledge of the policies relevant to the funding of aged care services.” The Department is currently reviewing the research.

What this Means for Aged Care Providers

The CompliSpace report shows that Australians understand that the aged care funding system is unsustainable and needs to be fixed. More specifically, most Australians agree that an increase in consumer co-contributions from those who can afford it is a workable way to bring more funding to the sector.

Reform is politically feasible. The Government knows this and is already taking action.

For aged care providers this means that more change is on the way. Change itself won’t be a shock, given the massive reforms that have been rolled out across the industry over the past few years. However, providers should still try to stay informed as more detail emerges, bearing in mind that while an increase in funding will always be welcome, it will come with increased bureaucracy and strings attached.

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Request Your Copy

CompliSpace’s Aged Care Funding Report, Towards the Tipping Point in Aged Care Funding, is now available for download. To see the Report’s full findings, visit complispace.com.au/funding-report-2023