A “Boomer Budget”? Not so fast

May 17, 2018


The 2018 federal budget included some welcome initiatives for older Australians such as $105m in increased funding for aged care for indigenous peoples in remote areas, $33m extra for nursing home palliative care and a $23 million fund to support the development of physical activity programs for over 65s. This year’s Budget was said to have specifically targeted the older voter with its ‘more choices in later life’ package, but now the dust has settled, did it really warrant the ‘boomer budget’ label that pundits gave it?

The first big win for older people in the budget is the expansion of the little-utilised Pensions Loan Scheme. The scheme works as a sort of reverse mortgage, enabling homeowners to receive a fortnightly payment through a loan from the government against the equity in their home. Currently available only to part-pensioners and self-funded retirees, the expanded scheme increases the amount available through the combined pension and loan to a maximum of 150% of the full rate of the age pension. This allows full rate pensioners to access the scheme, with a payment to top up their pension by up to 50%. The payments accumulate as a debt to be repaid when the house is sold or from their estate.

Older homeowners are often portrayed as ‘asset rich’ due to substantial increases in the value of property. But many pensioners, and part-pensioners in particular, live in housing well below accepted standards of decent accommodation. Living on a fixed income means they cannot afford proper home insulation, or property adaptations which will support continued independence and mobility. An expanded Pensions Loan Scheme is a welcome initiative that will provide much needed income for this group.

However, this budget item will also effectively widen the already substantial financial gap between homeowners and older people struggling in private rental accommodation. We know from our own research that pensioners who rent often just get by in sub-standard properties, subsisting while at increased risk of homelessness due to rising rent costs. Pensioners in rental accommodation — especially single, older women — are a particularly vulnerable group. An increase in Commonwealth Rent Assistance is not only critical to supporting this group, it is one of the most cost-effective of ways to improve their financial wellbeing.

Another mechanism to support older people without diminishing the value of personal assets would be funding to retrofit properties and robust support for home modifications and adaptations, including to rented properties. This would take pressure off older people struggling with rising energy costs and support their mobility and continued social inclusion.

Other positive news in Budget 2018 is the increase to the earnings’ threshold for age pensioners. Many older people need to continue in paid employment to meet essential living costs. Others choose to work so they can remain connected to workplace culture.

Being able to continue to participate while in receipt of the pension not only benefits individuals, but also Australia’s broader economy. But there are many mature (50+) jobseekers not yet eligible to access the Age Pension. Instead these citizens struggle to survive on Newstart and other welfare payments, while facing significant barriers to paid work because of mismatched skills, large scale layoffs in manufacturing and age discrimination.

In recognition of this, the 2018 Budget extends the $10,000 Restart initiative, despite its limited take-up and a lack of evidence that the scheme has had much impact on mature age unemployment. Arguably, Restart just subsidises employment that would have happened anyway; at worst, it reinforces ageist stereotypes by implying a subsidy is needed to make older people employable.

A much better initiative in this year’s Budget is the $2000 reskilling package for older workers, something advocates for the aged have long been calling for. This puts choice in the hands of older workers, many of whom are desperate to adapt their skills to maintain their employability. Yet the emphasis on helping individuals ignores the broader issues affecting mature-age unemployment, which contain intersecting discriminations. Many older workers are well qualified and experienced, but still struggle to find jobs.

The big announcement of the federal budget was undoubtedly ‘more choices in later life’, a focus on older Australians that is both welcome and well overdue. Government announced 14,000 additional medium-high aged care packages across the coming four years (adding to 6,000 announced last December) to address critical gaps in the home care packages for the over 65s. Home care is the preferred, and most cost-effective model of supporting the health of older people. But with an estimated 100,000 people on the waiting list to receive the level of care package they need — or a package at all — the funding injection unfortunately falls well short of matching demand. That there is a minimum six-month waitlist for any package shows that a much greater emphasis on long-term planning for our ageing population is vital.

If we are to take the concept of positive ageing seriously, there must be a clear government commitment to providing adequate home care to all of those who qualify for it. While this may cost up to $1.5 billion per year, there are few government programs with such obvious social benefit as assisting people to live healthy lives while remaining within their community.

Responses to ‘more choices’ from sector advocates was varied: COTA Australia welcomed the announcement combining home care funding with the residential aged care funding pool, but Leading Aged Services Australia described it as ‘piecemeal’ and ‘inadequate’. The Opposition expressed concern that the ‘new’ aged care packages came not from additional funds, but at a cost of 21,000 places in nursing homes.

In fact, that, while it was heralded as a $1.6 billion dollar initiative, the entire spend on residential and home aged care remains unchanged, with total additional expenditure on the entire “boomer package” being only $258 million over four years.

Despite these criticisms, the merging of the funding pools should drive a more holistic approach to aged care in future, which is critical if the system is to meet the demographic surge of the ageing baby boomers adequately. The removal of residential packages from the hands of providers into those of consumers is also a good move, one which will drive greater consumer empowerment. Up until now, older people transitioning into residential aged care have needed to take whatever bed is available at the time of entry, meaning many have to move away from their known community.

Giving consumers the ability to themselves allocate their residential bed package should mean the sector will have to respond effectively to consumer choice — as markets are meant to do. This is an important measure for improving greater choice and control for older people needing to access residential services.

Another key improvement to residential aged care is the announcement of significant investment in the mental health of residents. Aged advocates have been calling for better mental health services in aged care since a 2013 report revealed more than 50% of residents experience depression; many as they enter a care facility at a time of poor health and bereavement. That this depression largely goes untreated, or is only responded to pharmaceutically, has been a significant failing of both state and federal governments.

2017 Monash study into preventable deaths in aged care found evidence of suicide, murder and self-harm — a shocking indictment for a sector with a duty of care for society’s most vulnerable. In the aftermath of the Oakden scandal, the 2018 Budget allocates $253.8 million to set up the new Aged Care Quality and Safety Commission. The new agency, along with much-needed mental health support to individuals, will undoubtedly improve standards and quality of life for residents, although it remains to be seen how much.

Our Residential Aged Care system remains underfunded and critically understaffed. The Australian Midwifery and Nursing Federation regularly calls for staffing quotas to be introduced, yet is consistently ignored by government and a ‘big nursing home’ industry known to aggressively minimise its tax while keeping staff and pay at a minimum. The Monash study found falls and choking to be fairly common occurrences. That residents, fed in staffed, communal areas, frequently die from choking exposes systemic flaws beyond inadequate staffing. There is a clear imperative for genuine, consumer-led innovation in Australia’s aged care sector.

Australia has drifted into a free market model of care. Our residential aged care industry operates largely in an outdated, clinical model: exclusionary and medicalised in nature, it effectively separates older people from the broader community. The government, and the sector may use the language of consumer-direction, yet the Aged Care Funding Instrument offers perverse funding incentives to providers to maintain a ‘high care need’ population. Residential aged care ignores the reablement ethos which underpins aged care in the home and community. Sadly, it takes significant ‘up-front’ time and staff training to support older people to regain independence and mobility and we simply do not invest enough in our aged care workforce.

Australia needs to engage in meaningful community debate around our preferred vision for aged care. Governments at all tiers need to fund social innovation and change in the system; we need to test new processes and practices which have a focus on social, rather than business outcomes. The Aged Care industry should look at social innovation in other sectors such as education, where the integration of health services with school communities has delivered substantial social and financial benefits in communities such as Doveton.

We need reformed funding structures in the for-profit age care sector, in which the highest profits would go to providers who deliver the best outcomes for residents. We need funding for research that empowers residents — and future residents — to engage in the co-design of residential aged care models which address our cultural tendency to disregard and exclude the ‘frail aged’. There are many exciting, innovative approaches to residential aged care coming from OECD countries; Australia, with our ‘it won’t happen to me’ mentality, lags well behind.

So, is 2018 the ‘boomer budget’ pundits suggest? The answer isn’t clear-cut. If you’re retired and own your own home, or are high on the waiting list for a home care package, then it’s good news. But for pensioners renting, and the older unemployed living below the poverty line on Newstart, you’ll have to wait and see what 2019 brings.

Myfan Jordan is Director of Social Innovation at Per Capita’s Centre for Applied Policy in Positive Ageing. Warwick Smith is Per Capita’s Senior Economist and tweets at @RecoEco.