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Major Overhaul Proposed for Aged Care

Friday, 21st January 2011 at 9:20 am
Staff Reporter
Australia’s aged care system needs a major overhaul to meet the challenge of an aging population, according to a draft report released by the Productivity Commission.

Friday, 21st January 2011
at 9:20 am
Staff Reporter



Major Overhaul Proposed for Aged Care
Friday, 21st January 2011 at 9:20 am

Australia’s aged care system needs a major overhaul to meet the challenge of an aging population including a proposal for co-contributions towards the cost of care according to a draft report released by the Productivity Commission.

Flickr image: Some rights reserved by Ashley Dinges 

The draft report – Caring for Older Australians – identifies a number of weaknesses in the aged care system and proposes that older Australians contribute, in part, to the cost of their care with a maximum lifetime limit.

The report says the current system is difficult to navigate, there are gaps in service coverage, user charges are inconsistent and inequitable and the workforce is under pressure.

The Commission proposes a wide-ranging package of reforms including a single gate-way into aged care for information, assessment of care needs and financial capacity, entitlements and care co-ordination.

The report recommends removing limits on care packages and residential bed numbers as well as the distinctions between low, high and extra service residential care.

More controversially, the report recommends providers would be operating in a competitive market, under the reforms, having to offer an accommodation charge that reflected costs and limit bond values to the equivalent of that charge.

The Commission proposes that residential care providers be required to offer a periodic accommodation charge or an accommodation bond of equal value and for both to be published.

The report says older people would contribute to the cost of their care according to their financial capacity to do so and be protected by a lifetime limit on care co-contributions with safety nets for those on limited means.

It proposes access to a government sponsored equity release scheme to pay for their care and accommodation charges if they have assets but have limited annual incomes.

It recommends a scheme where older Australians can retain their Age Pension when selling their home to pay for care by purchasing an Australian Pensioners Bond. It says that a person’s capacity to pay for aged care would be based both on their income and their assets and that the assessment be undertaken by Centrelink.

The draft report recommends a new independent regulatory commission to recommend to Government the price for care services, be responsible for quality accreditation and address complaints.

It canvasses a number of other reforms aimed at assisting older people with special needs as well as the families and other carers of older people. It says improved working environments and more competitive wages would help ensure that there are sufficient well trained nurses and carers for the increasing numbers of older Australians.

The Commission is also seeking comments on the merit of introducing a compulsory insurance scheme to broaden the current funding base for aged care.

Deputy Chairman, Mike Woods, who is presiding over the inquiry says with an aging population and the proposed reforms, the system is expected to provide care for over 3.6 million older Australians by 2050.

Wood says it is inevitable that government expenditure will rise and the challenge is to reform the system while keeping the expenditure within sustainable limits.

The Productivity Commission says interested parties and individuals are encouraged to provide feedback on the draft proposals either by submission or by attending public hearings in March/April.

The final report will be delivered to the Federal Government in June 2011.

Download the Draft Report from the Commission website at


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