Superannuation, and not increased taxes, should be used to fund retirees’ aged care, a review has found.
The federal government established a taskforce last year to consider the options for funding the ballooning aged care sector, following a range of recommendations made by the Royal Commission into Aged Care Quality and Safety in 2021.
Its report, titled Neglect, revealed extensive nationwide failures to care for elderly people.
The government currently funds 75 percent of residential aged care, and 95 percent of home care, a level that the taskforce describes as “not an optimal or fair mix.”
If You Have the Means, You Should Pay More: Report
Despite suggestions from both aged care royal commissioners that the government should impose a 1 percent aged care levy on taxable income, the taskforce report instead recommended superannuation (retirement funds) be used to cover health and aged care costs.It also ruled out an increase to the Goods and Services Tax.
“While the taskforce supports government maintaining its central role in funding aged care, it does not support a specific increase to tax rates to fund future rises to aged care funding,” the report said.
It also said there was a strong case to increase how much people paid for care, provided they had the means to do so, but it did not specify how that should be measured, or when such changes should be introduced.
Opposition Against Levy
The federal opposition is also against a levy.The government said it would consider all the taskforce report recommendations.
Mr. Albanese said the taskforce had made it clear that the aged care sector was not “currently in a financial position … to invest in the future that aged care needs.”
“This isn’t about any negative aspect, this is about making sure we have a system that’s sustainable into the future,” he said.
Future of Retirement Looks Grim
The taskforce also found that people have high expectations for quality aged care, and demographic changes will mean more demand for those services.However, with the shrinking tax base due to the slow birth rates, the government faces a challenge with finding additional funding to meet future demand.
As a result, the proportion of people over 65 accessing the aged pension or other income support is expected to decline by 15 percentage points by the early 2060s, and fewer people will receive the full pension rate due to have more superannuation stored away, as well as assets.
“Over the next 20 years, the number of people with superannuation balances at age 85 will grow considerably, with a greater proportion of people having significant funds available,” the report said.
Former NSW Premier Mike Baird, who sat on the task force, said a dwindling tax base and increased costs, as the number of people aged over 80 triples in the next four decades, meant reforms were needed.
“It’s not reasonable to think that government can do all of that, there are constraints and demands across all parts of [the] budget,” he said. “So asking those who have the means to contribute more is a logical step and having a safety net for those that don’t have the resources also provides some protection, so I think it’s a good balance.”
