Australia can transform the quality of its aged care system in just four years, by lifting the Medicare Levy from 2 per cent to 2.65 per cent and channelling the proceeds into creating an extra 59,000 skilled jobs for the sector, according to economic modelling commissioned by the Health Services Union for the Royal Commission into Aged Care Quality and Safety.This would create a “five star” system based on international standards where residents received an extra 89 minutes of attention from carers, allied health therapists and registered nurses, each day.

Delivering Decent Residential Aged Care by Equity Economists was commissioned by the Health Services Union and forms the centrepiece of a final submission to the Aged Care Royal Commission ahead of its September hearings into financing aged care.

The report finds that based on current staff ratios, only 42.5 per cent of Australian aged care homes would be considered satisfactory under the star rating system used in the United States, which rates facilities based on a suite of quality indicators.

Based on comparable jurisdictions, Australian aged care residents receive fewer total hours of care than international counterparts. This shortfall will worsen as our population ages and the number of people relying on residential aged care increases. The report projects that the ageing of the population alone will require a doubling of the aged care workforce to 200,000 employees over the next two decades.

However, new modelling completed for the report shows the additional cost of delivering high quality, decent care to older Australians in residential aged care is affordable, costing an upper limit of $20 billion over four years.

This sum would be sufficient to lift wages above the minimum and attract and retain a skilled caring workforce. Personal care workers in aged care are currently paid just $22.87 per hour. By contrast, a sales assistant earns $25.58 per hour and a petrol station attendant earns $22.97 an hour.

The report finds fully staffed, quality aged care could be funded by lifting the Medicare Levy from its current level of 2 per cent to 2.65 per cent and reserving the funds for aged care.  This would generate up to 59 ,100 additional jobs in the aged care sector.

“Australians have a clear choice,” said Gerard Hayes, HSU National President. “We can provide dignity and decency to the generation that built this nation. And we can do it for a reasonably modest outlay.

“This year we have seen COVID rip through aged care homes like wildfire. Hundreds of families are grieving the premature death of grandparents and parents they often had no chance to farewell.

"But we knew our aged care homes were running on the smell of an oily rag well before COVID. As the Royal Commission revealed, food budgets in aged care facilities were as low as $6 a day per resident, while sanitary pads were being rationed. Carers rarely had time for basic activities such as taking residents to a local park, while functions such as catering and cleaning were outsourced, leading to horrendous wage theft.

“We must now build the aged care system our elderly deserve. Care homes desperately need more staff with greater training and higher pay. For too long the system has relied on the goodwill of a highly casualised and underpaid female workforce that often retired into poverty.

“Over the past decade I have not met a full-time aged care worker, which is absolutely disgraceful. Investing for a fully staffed, highly trained aged care workforce now is also a smart economic measure. As we emerge from a crisis that has melted away millions of jobs, we know demand for aged care is going to surge. Now is the time to create the funding mechanisms that make this possible."


Key facts:

·      Over 188,000 Australians currently live in residential aged care facilities, because they are unable to be cared for at home. Due to an ageing population the number of Australians living in residential aged care is projected to increase to around 350,000 by 2040.

·      The number of Australians with dementia is expected to continue to grow, from around 459,000 in 2019 up to 800,000 by 2040.

·      Only 42.5% of Australian Aged Care Homes are considered satisfactory under the star rating system used in the United States.

·      To match comparable OECD countries, and lift the quality of aged care, Equity Economics estimates that Australia needs to spend an additional 0.5% of GDP annually, equivalent to an additional $9.7 billion per year on long term aged care services.

·      Equity Economics estimates residential aged care will require an additional 100,000 workers over the next twenty years due to an ageing population, taking the total caring workforce to 200,000.

·      Due to population ageing, Equity Economics projections find that the amount the Government spends on residential aged care will increase over the next 20 years from around $13 billion in 2020 to almost $40 billion in 2040.

However, as a percentage of GDP this is only an increase from around 0.9 per cent of GDP in 2020 to 1.1 per cent of GDP in 2040. A greater investment is needed if we are to provide older Australians with dignity in residential aged care. At the same time, the sector is estimated to need to double and attract an additional 100,000 workers over the next 20 years.

·      By lifting the Medicare Levy from 2 per cent to 2.65 per cent and channelling the proceeds into aged care we can create an extra 59,000 skilled jobs for the sector.

·      This would create a “five star” system based on international standards where residents received an extra 89 minutes of attention from carers, allied health therapists and registered nurses, each day.