$51 billion needed to meet aged care demand

The Aged Care Association Australia (ACAA) says demand for new beds will soon outstrip supply.

In a 30 July report on ABC radio, aged care providers warned that baby boomers could end up staying in hospitals or being put on long waiting lists for nursing homes unless there is more funding for new buildings and beds.

“Between now and 2030 we need to invest $51 billion just to keep up with demand,” ACAA chief executive, Rod Young, says.

“If we don’t, we are going to have a whole raft of children and grandchildren looking after their parents and grandparents who can’t get into care because there simply will not be enough places.

“If we don’t do that, those same people are going to be housed in hospitals.”

Cynthia Payne, head of the Summit group that runs nine aged care residences in Sydney and the Hunter Valley, says it has recently built a new facility and it is almost full.

“It is an amazing story. At 16 months and we are already at 98% occupancy, because it is new accommodation,” she said.

“That’s not necessarily the case where you have older building stock.

“There are still a number of aged care facilities that have four-bed rooms and everyone would be in agreement that the consumer of today and tomorrow, they don’t want that accommodation.”

Ms Payne says under the current funding arrangements aged care providers are struggling to afford upgrades to current nursing homes, let alone build new ones.

“You have a total cost of building, let’s say $20 million. If all you are getting is a daily fee at about $36 a day, you don’t have to be Einstein to work out that that is not going to recover the debt associated with a $20 million development,” she said.

ACAA wants a new approach to how the sector is funded. It has released a report calling for residents, who can afford it, to pay an accommodation bond to help fund investment.

The report’s author, Julie McStay, a partner at Hynes Lawyers in Brisbane, says 84% of aged care providers surveyed could not maintain existing facilities with the current accommodation charges and government subsidies.

“So an accommodation bond is in essence like a loan that is a capital amount paid by the resident to the approved provider when they come into care,” she said.

“The approved provider is able to use the income on that bond to assist them to build new facilities, and at the end of the time when the person leaves the facility, then they get back the major portion of that bond with some amounts taken out.”

The Federal Government last year asked the Productivity Commission to look at aged care and Prime Minister, Julia Gillard, says she is committed to reforming the sector.

A spokeswoman for Senator Concetta Fierravanti-Wells, the Opposition spokeswoman for ageing, says the issue is a high priority for the Coalition which will be releasing its aged care policy later in the election campaign.

While committing to $2 million for Meals on Wheels services while on the election campaign in Adelaide, Opposition leader, Tony Abbott, hinted that the Coalition’s policy would not contain any big spending announcements.