Sky News PM Agenda Panel Discussion on Aged Care
SPEERS:
Major changes to Australia’s aged care system came into effect yesterday. They haven’t received a lot of attention but they should, given most of us have a direct involvement with aged care, or one day will. The changes actually date back to the Gillard Government’s “Living Better, Living Longer” reforms of 2012. Now, among the key reforms, what residents pay will now be based on their assets as well as their income, until now, assets have been excluded from the test. High care residents will have the same payment options as low care residents which means they can pay either a lump sum or a daily equivalent, and there will be a maximum accommodation price of $550,000. To discuss these change, what they mean for you, what impact they will have on the sector, we’ve pulled together the Assistant Minister for Social Services, Mitch Fifield. John Kelly, head of the Aged and Community Services, Ian Yates, head of the Council on the Ageing, and Stephen Judd, head of one of the largest providers, aged care providers, Hammond Care. Welcome to you all.
Mitch Fifield, let’s start with you though. To get an overview I suppose of what the most significant changes here are.
FIFIELD:
Sure, David. I think that the first and most important point is that the changes from 1 July will only apply to people coming into aged care – residential or home care – from that date.
SPEERS:
So, not affecting those in the system already?
FIFIELD:
That’s right. And there are a few significant structural changes. The first is, as you mentioned, eliminating the distinction between high care and low care. What that means is greater choice for consumers as to how they can pay for their accommodation. So people will now have the option of paying a lump sum, paying a daily fee or a combination of the two. Previously, you couldn’t pay a lump sum for high care. So that’s greater choice for individuals. And also, there will be a new means test. Previously, on the accommodation side of things, there was only an assets test and on the care side of things, there was only an income test. So there will now be a combined income and assets test, a new means test, which should lead to fairer outcomes. Before, you could have a situation where someone of high means, of high assets, was paying very little for their care and you could have someone of high income who was paying very little for their accommodation.
SPEERS:
So, someone in that situation with a family home that’s say, worth a million or close to a million, what will this change and effect mean for them?
FIFIELD:
Sure, well I’ll just briefly go through three categories, if you like. There’s people of low means, so that’s people below $45,000 assets and with income less than around $23,000. Those people will pay a basic care fee, which will be 85 per cent of the age pension. They won’t pay a means tested care fee and they will pay nothing for their accommodation. So the Government will pay for them.
For those people of moderate means, that’s people with assets above $45,000 and income above about $23,000, they will pay the basic care fee, which everyone pays, of 85 per cent of the age pension. Also, they won’t pay a means tested care fee, but they will pay something towards their accommodation. But the tax payer will still make a significant contribution to their accommodation.
The third category are people of high means, so that’s people with assets above $154,000, people with incomes above $62,000. They will pay that basic care fee. They will also pay a means tested care fee and they will also have to pay all of their accommodation costs. So different arrangements for people of low, medium and higher means.
SPEERS:
So those of the higher means, essentially will pay a greater share of the costs of their aged care, whether it’s low care or high care?
FIFIELD:
That’s right, but it’s also important to note that for care, there are caps. So, there’s an annual cap of $25,000. There’s also a lifetime cap of $60,000 that you can be required to pay for your care. But it’s also important to recognise that there is a special treatment for the family home. If it’s occupied by what’s called a protected person, which is usually a spouse, then it’s not included in the means test, but if someone doesn’t have a protected person, then the value of the family home is capped at $154,000.
SPEERS:
So even if it’s a million dollar house, the value is only capped at $150,000?
FIFIELD:
That’s right, which is essentially continuing the special historic treatment of the family home when it comes to aged care. That was essentially the level that there was under the previous arrangements and that’s been continued.
SPEERS:
Ian Yates, let me bring you in, for your thoughts. The Council on the Ageing, do you think these, let me just ask you essentially what you see as the big changes here, we’ve just discussed with Senator Fifield. What will be the big changes for senior Australians?
YATES:
Well, there’s a raft of changes, obviously, as the Minister has just been discussing, both in residential care and indeed in community or home care. People with means will make a larger contribution to the cost of care than they have. We’ve, we’d be pleased if we had, you know, an aged care system that was free for everybody, but we don’t see a Government of any persuasion, coming down the road, giving us that, so we think that it’s reasonable to have higher fees for people that can afford it, so the system as a whole can be maintained and is sustainable.
There are a number of other aspects to it, of course though, as the Minister has mentioned, people get greater choice as to how they pay, they get time to make up their mind as to how they pay, and also, they now know, publicly, providers have to put on their websites, put on their brochures, what you are expected to pay for your accommodation. That has not always been the case. It means that consumers can shop around. These are part of a whole raft of changes, some of which started a year ago, some of which started yesterday and more of which will start next year, that are making the system more responsive to consumers over time, making it fairer for everybody around the country, because the system has had a lot of unevenness, and we believe, will make it more sustainable.
SPEERS:
John Kelly, let me bring you in, from Aged and Community Services Australia. Do you believe it’s a fairer system under these changes. And, can I ask, does it also presents some, more options and more difficult questions for senior Australians to consider?
KELLY:
Good evening David. Yes, look these are the biggest reforms in the last fifteen years and certainly there are a lot of challenges for providers and consumers to absorb and we’re certainly going to need a period of stability over the next twelve months David, for the sector to absorb and assimilate these changes. They’re huge. But certainly, providers are very positive, both in terms of the opportunities that they have to provide community service to residents and I think for consumers, as Mr Yates said, there’s greater choice and transparency from providers in that process.
SPEERS:
Well, let me ask one of the providers, Stephen Judd from Hammond Care. Of course, we often hear about providers really struggling to make ends meets, deliver the services that everybody wants. From your perspective, what are these changes going to mean?
JUDD:
Oh, good evening David. Look, I think they’re very good changes. I think that the industry and consumers should embrace these changes. It means that there is more flexibility, it means that there’s more transparency as Ian Yates has said, so that’s a good thing. And it is more equitable, there are still a few wrinkles to iron out, but we should welcome these changes. It does mean that we’ll actually have an affordable system of aged care going forward. I mean everyone wants good aged care and I actually think we have a very good aged care system. Everyone wants someone else to pay for it. Well, the reality is, this system allows people who don’t have means to continue to get excellent support in their older age and it also means that if you do have funds to pay and contribute towards your aged care, you’ll be asked to contribute, so we’re very positive about it. As I say, there are still some wrinkles to iron out.
SPEERS:
What are those wrinkles, in particular, from your perspective?
JUDD:
Well, when you, you mentioned to the Minister before that if you’ve got a million dollar home, you’ll only be capped at $155,000. And I’m always intrigued by the term ‘the family home’. I mean the family probably hasn’t lived there for a long time. It’s no longer a sacred site as far as the kids are concerned and the average length of stay in aged care is actually about three years, so it is your principle place of residence and I think there is an inequity at the moment about only counting the family home to $155,000 as opposed to the refundable deposit which is completely counted in the means test.
SPEERS:
Yeah, well just on that Minister, and what happens if you rent out that home – the income stream from that rental, of your million dollar house, that’s not counted is it?
FIFIELD:
Well, there’s a range of different treatments, David. But going to what Stephen said, it is important to recognise the historical context, how the family home has been treated. And, look, I don’t suggest for a second that we have reached aged care nirvana in terms of the relativities between people of different circumstances and the contributions they make, but we definitely have improved the fairness through this arrangement. But, this isn’t the end point. These reforms aren’t set in stone. And I’m going to be very careful in monitoring the real world outworking of these changes. Because, as you pointed out, they were drafted and legislated by the previous government. And it’s important to look at both the provider and consumer perspective as these reforms play out. Because things designed by public servants and government, they don’t always play out exactly as people anticipate.
SPEERS:
Well, one thing we do know is that the population is ageing, there is going to be a greater burden on aged care. We’re going to take a quick break. We’ll continue this discussion though, and look at perhaps what further changes to deliver that equity and indeed the resources the sector needs down the track.
[break]
We’re going to return now to our discussion on the aged care reforms, significant changes that came into effect as of yesterday. We’re talking to the Assistant Minister for Social Services, Mitch Fifield, here with me in Canberra. John Kelly, the head of Aged and Community Services Australia, Ian Yates, the head of the Council on the Ageing and Stephen Judd, head of one of the largest aged care providers, Hammond Care. And Stephen Judd, I might just pick up with you, we were discussing prior to the break, the family home and yes, these changes do mean to a greater extent the family home will be assessed as part of what people should pay when they’re moving into aged care. What would be the ultimate from your perspective? That the entire value of the family home, no matter what that is, that that should be part of the asset test?
JUDD:
Well, I think it should be a level playing field. I think if you keep your home, that should be the same as whether or not you decide to sell your home and when you move into aged care, have a refundable deposit because that becomes your principal place of residence. My old man used to say, where there’s a will, there’s a relative, and that’s why I think we keep on referring to it as the family home. I think we need a level playing field so that whether you actually have your living and choose having a refundable deposit, or actually paying a daily fee, it’s the same and it’s counted the same.
SPEERS:
Yeah, John Kelly, do you agree with that?
KELLY:
David, yes, I agree with Stephen’s analysis. Look the financial stability of this sector is really important. There’s 12,000 providers operating 2,700 facilities, David, across the country and they’re spread across remote, rural, regional Australia as well as urban Australia and just on figures released in March this year, through Stuart Brown, half of those facilities are losing $2,000 every year on every bed they keep open, so it’s a sector that requires a very stable funding base in order to provide these community services.
SPEERS:
Yeah, that sounds like a lot of money for some providers to lose. Ian Yates, let me ask you though, if you did move further downt his path of testing asset testing the family home or, you know, the home. Would that encourage seniors to shift their assets, to restructure their finances to try and avoid having to pay more?
YATES:
Well, I suppose that’s always an option and we’re seeing it happen at the moment with financial advisers advising people on what’s the best way to structure their assets to cope with these changes. I think we need to remind ourselves David that these changes actually flowed out of a major Productivity Commission review. The Productivity Commission recommended that all assets should be treated the same, but there are some other quid pro quos. The Minister said, let’s get these bedded down and let’s keep moving. What the Productivity Commission recommended and we strongly supported is that firstly, everybody should be, who is assessed as in need of aged care, should get it. We shouldn’t have a cap. We shouldn’t have a ratio, and secondly, that the resources should go to the consumer so that it’s a genuine choice market, so if you get an aged care package, a home care package, you get the package, not the provider. You work out where you want it spent and if you like, put it in these terms, you get the bed licence. You know, to live in residential care and you can put that around, so we think that would have a significant impact over time on quality and real choice, so we’re keen to see that these other changes move in tandem.
SPEERS:
Are you, Senator Fifield, let me ask you about some of those ideas. Are you attracted to those?
FIFIELD:
Well the Holy Grail in aged care is a system that isn’t rationed, where you’ve got the consumer at the centre and in charge. Where they have a combination of their own contribution and government support, if they are of low means, and that they could then direct that to the service provider of their choice, I mean that’s the Holy Grail. We’ve made some small steps in that direction, in relation to home care. All home care packages from now on will be on the basis of consumer directed care. So that’s an important change. Having the NDIS in the same portfolio as aged care, I think is going to mean that the pressure to have a system with the individual at the centre and in control is only going to increase. That’s the whole essence of the NDIS. The question is, how do we move from where we are now, to something that more closely resembles that system. And that’s why we’ve appointed the aged care sector committee, chaired by Peter Shergold, to give advice to government as to what the next stages of reform should be.
SPEERS:
Well, when we look at the figures here about the ageing population which we hear so much about, it is quite staggering. Those over the age of 85 are going to increase by twice the rate of those over the age of 65, so by 500 per cent, to nearly 2 million people by 2024. This is what we’re talking about and I just want to finish with a question to each of you about what older Australians or those who do want to get ahead of the curve here and start planning, which we all should, for the final stages of our life, what we should be doing to make sure that we get the service that we want. Stephen Judd, let me start with you because I’m sure you see so many older Australians who haven’t done that preparation. What’s the best thing they can do?
JUDD:
Well, David, first of all I’d say that the increase in the ageing population is a triumph of public health. All of those public school sort of playgrounds of the 50s and 60s, we weren’t saying that that was a problem, now, all of those people have got older, so it’s actually a triumph of public health. The second thing to say is that two out of three people over the age of 70 never need aged care, even for a day. They’re pretty good odds. And so I don’t think we should think that aged care is an inevitable part of growing old. It’s not. It’s a small component of growing old. Of course, we should try and actually look after ourselves and keep as fit as possible, and so, they would be my take out messages for today, except to say, in Australia, as long as you’re, if you’re as poor as a church mouse or as rich as Croesus, our aged care services actually support you and that’s actually pretty rare in the world.
SPEERS:
And, Ian Yates, your thoughts, finally then, on that question. What should those of us who aren’t aged yet be doing to get ready.
YATES:
Well firstly we should throw away all the bits and stereotypes about what getting older means and keep on living our lives. It’s not about putting your feet up, it’s not about smelling roses, it is about, perhaps, having a bit more time to do things you didn’t have a chance to do when you were in full time employment, but a lot of that, that whole retirement stuff is going to change, so people need to keep active, contributory lives and the way the care and support system will change is to enable you to keep doing that. But the second is to say yes, you do need to plan, not shie away from the fact that it may be that there are reasons, physical or to do with other issues that arise, if you’d like, that you’re going to need support. Plan for it as you plan for other things, as you plan for education, as you plan for your job requirements, as you plan for your house. Plan for that to happen because that will give you more control over it. And then, as I said, I’ve outlined what I think we need the system to do so that people have more control, whether they’ve got the means or not got the means.
SPEERS:
Alright and John Kelly, your final thoughts then on, well, these changes, what they are going to mean for those who do want to start thinking about their shift, or their parents’ shift into aged care?
KELLY:
David, I think it’s a great opportunity for older Australians to begin a more proactive discussion and debate with their families about how they want to be looked after as they get older. As Ian said, I think there needs to be a greater emphasis on focussing on healthy ageing, they need to understand that they’re very fortunate. They’re in a country where we have a first class community and residential aged care provider sector, but at the same time, we’ve spoken about those stresses that need to be monitored over the next one to three years to look at the financial stability of the sector.
SPEERS:
And Mitch Fifield, finally, we should also point out, a website that is now available to help with what is obviously and often, such a confusing area.
FIFIELD:
That’s right, there’s the myagedcare website. Myagedcare.gov.au. There’s also a help line 1800 200 422, so you can actually talk to a real human being. That’s important. The my aged care website, it’s a great reference service. It provides a comparison of different providers, their product offering, where to get an aged care assessment. So it’s a good resource. And people need to start planning early. Much better to start having conversations with the family when it’s not urgent, when it’s not critical, when you’ve got time to carefully think and plan.
SPEERS:
Mitch Fifield, the Assistant Social Services Minister, thank you. Thanks also to John Kelly, head of the Aged and Community Services Australia organisation, Ian Yates from Council on the Ageing and Stephen Judd from Hammond Care. Great to talk to all of you and work through some of these changes, we appreciate it.