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Gillard's $3.7 billion aged-care reform

Australia's aged population will be able to stay in their homes for longer under a $3.7 billion overhaul to the aged care system announced today by the Gillard government.

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They will be grandfathered: Gillard

Prime Minister Julia Gillard has announced sweeping changes to the aged care system including means testing on home and residential care packages.

But the changes also mean a larger shift to a system of user pays, with means testing introduced on home and residential care packages.

The Prime Minister, Julia Gillard, said today said the government was motivated by the fact that Australians were now living decades longer than before.

She also said that baby boomers were moving into retirement and would want more options and choice around their aged care.

The proposed changes, which will form a centrepiece of the May 8 budget, will require self-funded retirees to pay for a greater slice of their care.


However, care costs will be capped at $25,000 per year and no more than $60,000 over a lifetime for those in residential care and nursing homes.

For those receiving home care, the costs are capped at $5000 per year for pensioners and $10,000 – worked out on a sliding scale – for those with an income of more than $43,000.

The cap also extends to a $60,000 lifetime limit.

The 10-year plan was announced by Ms Gillard and the Minister for Mental Health and Ageing, Mark Butler, and will receive $577 million of new government funding, with the remainder of the $3.7 billion total to be drawn from redirected funds and means testing.

But Ms Gillard stressed that the million people already in the aged-care system would not pay more than they currently do as a result of the reforms.

"They will be grandfathered," she said.

The government will increase the number of tailored home care packages by 40,000 to 100,000 over the next three years, with the number to double to 80,000 by 2022.

Additionally, 40,000 new residential care places will be created, as well as the establishment of a single "gateway" to streamline aged-care services for better access by consumers.

The package includes a funding of $270 million cash injection for dementia care and diagnosis, which falls well short of the plea from Alzheimer's Australia for $500 million.

This includes $164.3 million to be paid as supplements to sufferers in aged-care facilities and at home.

Carers will also receive $54.8 million in funding for support services.

Mr Butler said that along with Health Minister Tanya Plibersek, he would push to have dementia added to the list of national health priorities - which already includes conditions such as heart disease.

The government's plan to shift the focus from aged homes to in-home care is designed to reduce pressure on the elderly to sell their homes.

To enable this, the government will provide a choice of how to self-fund aged care.

Instead of the old system of securing a bond for accommodation in nursing homes and residential care facilities - which in some cases can cost up to $2.6 million - people will now be able to pay through a lump sum, a periodic payment or a combination of the two.

Families will be also given a cooling-off period to make a decision on how to fund the care.

The government will also establish an Aged Care Financing Authority, which is based on the Pharmaceutical Benefits Pricing Authority, that will approve accommodation charges.

An independent task force will be set up as well to tackle aged-care staff shortages and will examine pay raises, as well as ways to improve career, training and education opportunities for workers.

The sector currently has a 25 per cent rate of staff turnover and needs an additional 827,100 workers by 2050.

In 2010, there were 304,000 workers. The government rejected a key Productivity Commission recommendation that proposed allowing the use of reverse mortgage facilities to help fund care costs.

Mr Butler said there would be a new "My Aged Care" website to provide older Australians and their families with centralised information about aged care, including ratings for services.

The new measures requiring wealthy Australians to chip in more for the cost of their care is a proposal that has already come under fire by Opposition Leader Tony Abbott.

He said the government's proposed reforms to the sector amounted to little more than "big new additional charges" for people going into aged-care facilities.

Speaking after the announcement this morning, Mr Abbott said that he would not be commenting in detail about the reforms until the Coalition had a chance to study the package.

He said that the Coalition supported a reform process for aged care but cautioned that Gillard government announcements were not always "what they seem".

Ms Gillard said that she was expecting "shrill negativity" from Mr Abbott, but that once the reform bills came to the parliament, the Opposition Leader should honour his previous commitment to aged-care stakeholders.

The Opposition finance spokesman, Andrew Robb, said the Coalition was "committed" to working with the government in a bipartisan fashion.

He said the Coalition had welcomed the Productivity Commission's recommendations released last year but added it was too early to comment in detail.

The breakdown of funding includes:

  • $1.9 billion for "better access" to aged care services
  • $1.2 billion to address shortages in the aged care workforce
  • $80.2 million to improve communication and the delivery of services between aged care and the health system
  •  $54.8 million to support carers
  •  $268.4 million to address dementia
  • $192 million to support the "diverse care" of ageing Australians