The Government has the economic power to reform the aged care sector, according to a new report released today – but does it have the political will and community support?
The 78-page report – titled ‘Funding High-Quality Aged Care Services – was completed by researchers at the Centre for Future Work at the Australia Institute, an independent Canberra-based policy thinktank.
The research centre examined Australia’s fiscal capacity to fund aged care as well as a number of financing options that could be utilised to foot the bill.
$10 billion a year a “modest” amount
The report concludes that implementing the recommendations of the Royal Commission into Aged Care Quality and Safety will require additional Commonwealth funding of at least $10 billion per year.
However, they argue that this is a “modest” amount compared to the fiscal and economic capacity of Australian Governments.
Another thinktank, the Grattan Institute also made the same forecast recently, revising its original prediction of $7 billion a year to $10 billion annually.
Five financial options
The Centre for Future Work researchers also put forward several revenue tools which the Government could use to raise this funding, including:
- Increase the Medicare levy by 1%
- A progressive aged care levy
- Retaining the 37% personal income tax bracket
- Reforming taxation of investment and capital income
- Reforming company taxes
Commissioners Lynelle Briggs AO and Tony Pagone QC already proposed two of these measures (the 1% Medicare levy increase and the changes in personal income tax rates respectively).
Tax cuts cancelled for wealthy Australians?
The other measures would essentially use other levers in the tax system to mobilise more resources, including cancelling legislated tax cuts for high-income Australians, reforming lucrative tax preferences on investment and capital income, and reforming loopholes in the company tax system.
“In sum, there can be no argument that Australia – one of the richest countries in the world – cannot ‘afford’ to provide top-quality, respectful care to the elders who helped build our economy and our society,” the Centre for Future Work report finds.
“There is in fact a panoply of revenue options readily available to the Commonwealth government to support the ambitious and quick implementation of the Royal Commission’s recommendations. That effort must start with the 2021-22 Commonwealth Budget.”
The Government is expected to deliver a significant funding boost in the Budget to address the Royal Commission recommendations – but will it match the report’s recommendations?
Government and community must back any financing measures
The fact is that all of these measures will have a financial impact on voters – so the Morrison Government will require the political will to push through any of the options.
There is also the question of whether the community is willing to – in effect – pay more for a quality aged care system.
Previous estimates have put the cost of a 1% Medicare levy at around $610 per person a year.
Is the Government – and the community – prepared to back a future aged care system that will deliver the high-quality care all Australians deserve?
