Pension reform: impact on aged care and public housing

The Australian Government is taking steps to provide certainty to pensioners who live in aged care facilities and public housing who are concerned about the impact of the pension rise on their rent.

The Government will share the base pension rise between aged care providers and pensioners.

This ensures that pensioners in aged care homes are able to benefit from the pension increase, while at the same time recognising that care providers also need additional funding to contribute to the costs of services such as nursing care, food and cleaning.

Full pensioners in aged care will receive an additional $10.09 per week in their pockets.

The Government will amend the Aged Care Act 1997 to reset the basic daily fee from 85 per cent to 84 per cent of the single age pension base rate.

Australia’s 2,830 aged care homes will be able to improve the quality of care provided to residents as they receive additional revenue of $195 million per year once this measure is fully implemented.

Special arrangements will be put in place for part pensioners and self-funded retirees currently in aged care who do not benefit from the full pension rise to protect them from any increase in the basic daily fee. These residents will not face any fee increase while in care.

New entrants from 20 September 2009 who also do not benefit from the full pension increase will have special transitional arrangements for a period of four years.

These new residents will initially pay the same level of fees as is currently paid by existing residents. Over the next four years their fees will gradually increase until they are paying 84 per cent of the base pension.

During this transitional period aged care providers will be compensated by Government for any difference between the actual fee paid by new part pensioners and self-funded retirees, and the daily fee paid by maximum rate pensioners. The Government is providing $25.2 million over four years to provide this support.

In light of the Australian Government’s record $6.4 billion investment in new social and community housing to build 20,000 new homes and undertake significant repairs and maintenance, the Prime Minister has written to all Premiers and Chief Ministers stating his expectation that State and Territory public housing authorities will adjust their rent arrangements to make sure that the entire pension increase flows to pensioners.