Aged care subsidy indexation rates increase labelled ‘inadequate’

The rates, which were made public on 26 June, reveal an indexation rise of just 1.4 percent which have been labelled by both Leading Age Services Australia (LASA) and Aged and Community Services Australia (ACSA) as inadequate.

In their statements against the lower-than-hoped-for indexation increase, both peak bodies make note of the StewartBrown report findings which were also released this week, showing that 43 percent of residential aged care facilities experienced a financial loss in the last nine months.

LASA Chief Executive Officer (CEO) Sean Rooney says the 1.4 percent rise shows the Turnbull Government is “oblivious” to the true cost of providing care to older Australians.

He also took the opportunity to recommend an immediate 4 percent funding indexation increase, noting that the announced indexation rise is only a third of what is required for aged care providers to keep up with rising costs, let alone expand their services to meet rapidly growing demand.

“The majority of residential aged care facilities are experiencing significant and sustained financial stress due to funding cuts by successive Governments, combined with rising operating costs and growing acuity and complexity of residents’ needs,” he explains.

“This coming year’s aged care subsidies with an indexation rise of just 1.4 percent are totally inadequate.

“The rise does not even come close to the consumer price index for health, which has been estimated to be over 4 percent and comes on top of successive minimum wage rises of 3 percent and 3.5 percent in July 2017 and July 2018.”

ACSA CEO Pat Sparrow says that while welcome, the indexation rates will do little to provide sustainability for significant numbers of aged care providers currently in financial stress.

“There has been a growing trend of residential aged care providers making a loss, particularly those in remote and rural areas,” Ms Sparrow says.

“There were a range of budget initiatives to provide financial support but overall they still don’t address the issue of deteriorating financial health of providers – attributed by StewartBrown to a combination of the Aged Care Funding Instrument (ACFI) freeze in 2017-18, amendments to ACFI which commenced in January 2017, and the increasing costs of direct care.

“StewartBrown data has found there has been an increase in care labour costs of 4 percent since June 2017 with over half of this attributed to additional costs and hours worked in both care management and allied health staffing.

“The StewartBrown data also shows there are declining results for Home Care Package providers making level 1 and 2 packages very marginal and [the] indexation announcement of 1.4 percent just does not keep up with increasing costs of care delivery.

“We need a serious overhaul of the financing approach to aged care so that the costs of care can be met.

“This can only be achieved through a combination of taxpayer funding and individual contributions from those who can afford it.”

Ms Sparrow adds that ACSA will continue strongly advocating for appropriate funding and an adequate mechanism for annual indexation.

Federal Minister for Aged Care Ken Wyatt commented on the release of the indexation rates, backing the Turnbull Government’s dedication.

“The Government is committed to, and has a strong record of, working with the sector to ensure Australia has a sustainable aged care system,” he says.

“There has been a $5 billion aged care Budget boost, along with significant announcements in residential care places allocations and capital grants for aged care facility construction in metropolitan and regional areas.”