Three years have elapsed since the Royal Commission into Aged Care Quality and Safety delivered its severe critique, highlighting decades of neglect, abuse, and suboptimal care in Australian nursing homes by successive governments, the regulatory body, and service providers.

The Commission’s conclusive report attributed these issues partly to inadequate funding and suggested a Medicare-like levy to secure stable and sufficient future financing.

In the previous year, the Albanese government established a task force comprising aged care providers, former public servants, economic experts, and advocates to evaluate funding alternatives.

This task force released its findings on Monday evening, opting against the proposed levy to avoid potential political backlash from introducing a new tax.

Instead, the task force advised implementing a complex arrangement of additional payments and fees for individuals with substantial assets, a reform long advocated by aged care CEOs.

Under this scheme, it is anticipated that affluent ageing baby boomers, who possess significant superannuation funds and valuable properties, would face higher charges for accommodation and daily living expenses to support the entire system. This strategy is expected to enhance care quality and stimulate further investment in anticipation of an ageing population.

Nurse helping resident in nursing home.

Since the royal commission, federal government funding for aged care has risen to approximately $27 billion annually, complemented by $5 billion in means-tested fees paid by Australians. However, the industry contends this is insufficient, noting that nearly 70% of facilities are operating at a loss, contrasting sharply with the robust profits seen by publicly listed aged care companies over the past year, alongside significant market consolidation.

If the government implements the task force’s recommendations to increase charges, it would represent the most significant overhaul since John Howard’s 1997 reforms, which included the introduction of accommodation bonds and the removal of mandatory registered nurse presence.

Currently, Refundable Accommodation Deposits (RADs) are returned to families posthumously, serving as interest-free loans that enable providers to invest and expand. The proposed change would allow providers to retain 3% of these deposits annually for up to five years as an additional accommodation fee.

This could mean an additional $70,000 in accommodation fees on an average RAD of $500,000, and up to $140,000 more for families in major cities where RADs can reach $1 million.

The task force also suggested providers could levy charges for “everyday living costs” and “extra services,” which are already commonplace among for-profit providers, adding significantly to the financial burden on residents.

These recommendations come at a time when the new Aged Care Act is pending, expected to pass by July 1. This act must address these financial adjustments adequately to ensure improved care quality in nursing homes, amid strong criticism from advocates, lawyers, and health groups regarding the draft’s provisions that seem to favour providers over the elderly.

As the government deliberates on these contentious reforms, which could significantly impact the finances of many elderly Australians, the need for transparent and effective improvements to aged care remains a pressing issue.