The Albanese government will spend an extra $4.8bn on aged care in next month’s budget to maintain funding commitments, but the sector has warned it will still not be enough to keep all residential care homes open amid staff shortages.
The cost of aged care is expected to rise by 23% next financial year to $29.6bn and become the fifth-largest area of government expenditure.
But even with the increase, industry groups say older Australians will increasingly be unable to get care when they need it.
Surging demand and an ageing population have driven the cost increase; the number of people in aged care has increased to about 1.5 million, growing by 3.5% in two years. That trend will continue, and will cost taxpayers nearly $36bn a year by 2026.
The treasurer, Jim Chalmers, and the aged care minister, Anika Wells, have accused the former Coalition government of “egregiously underfunding” the sector in its final budget, leaving a multibillion-dollar blackhole.
“The Liberals and the Nationals cruelly underfunded our aged care sector – this hurt Australian seniors the most, but it’s also put incredible pressure on the budget,” Chalmers said.
“We owe it to our senior citizens to deliver adequate funding for aged care in this country. It’s what Australians expect and what our seniors deserve.”
Growing demand has been exacerbated by a shortage of staff willing to work in a historically low-paid sector. Three facilities have announced they will close in recent weeks, citing financial pressure and difficulty meeting the government’s new 24-hour staffing mandate, which takes effect from July.
Tom Symondson, the chief executive of the industry peak body Aged and Community Care Providers Association, said the vast majority of facilities were losing an average of $28 for every resident every day.
“That is simply not sustainable,” Symondson said. “The aged care sector is facing enormous financial challenges and workforce shortages, at the same time that it is racing to implement the once-in-a-generation reforms emerging from the royal commission … final report two years ago.”
A report by the financial analysts StewartBrown found almost two-thirds of aged care providers were operating at a loss in the second half of last year. It called for the federal government to fund a greater share of costs for each aged care resident and to consider tax cuts for nurses that switch to aged care.
“To avoid closure of homes and reduced service delivery, especially in regional locations, an emergency funding package also needs to be considered in the short term to ensure current viability and allow for the necessary funding reforms to be properly implemented,” the report said.
The federal government has previously disagreed with StewartBrown’s assessments of the aged care industry, as has the the Australian Nursing and Midwifery Union , which believes the financial pressures may be overstated.
“We think those figures are not sufficiently transparent enough for us to really assess whether the sector is financially sustainable or not,” Annie Butler, ANMF national secretary, said.
“The [StewartBrown] report does not cover all providers and the ANMF’s previous investigations, over the last four to five years, have demonstrated to us there’s a lot of tax avoidance and a lot of structures that obscure what real situation is.”
Bupa, one of Australia’s largest aged care providers, said it welcomed the federal government’s commitment to boosting the workforce, but said it would take years to address the shortfall, despite significant investment.
“As a sector, we continue to experience severe workforce pressures, especially in regional Australia. Increasingly, this means many older Australians may not be able to access residential care when they need it,” a Bupa spokesperson said.
