Evidence of an Aged Care Levy on Australian Taxpayers Mounts

Will the Aged Care Taskforce, formed this month by the Minister for Aged Care, introduce an aged care levy to cover the cost of aged care reform?

© Danielle Robertson Consulting Pty Ltd t/as DR Care Solutions

A levy is likely

It seems highly likely that the Aged Care Taskforce will recommend the introduction of an aged care levy on Australian taxpayers.

Why is it likely?

The introduction of a levy to pay for aged care quality and safety reform was recommended by the two Commissioners – Commissioner Pagone and Commission Briggs – who ran the Royal Commission in Aged Care Quality and Safety and authored its final report.

Both agreed that a levy was needed as the existing funding was insufficient, insecure, and subject to the fiscal policies of the government of the day. The problem was that the Commissioners could not agree as to what form the levy would take^[1].

Commissioners agreed on levy, but not on its form.

Commissioner Pagone recommended a hypothecated levy through the taxation system and suggested that this recommendation be referred to the Productivity Commission for further investigation (Recommendation 138)^[2].

While Commissioner Briggs recommended an aged care improvement levy of a flat rate of 1% of taxable personal income, introduced through legislation, commencing the financial year of 1 July 2023 (Recommendation 144)^[3].

At the time the final report was released in February 2021, aged care service providers expressed their frustration that the Commissioners had not agreed on this fundamental issue on how to fund high quality aged care^[4].

Resolving the issue of funding

There were 148 recommendations published in the Royal Commission’s Final Report and the Australian Government in the past two years has addressed 69 recommendations^[5].

This progress is commendable; however, it comes at a cost. In 2018-2019 the annual Federal Budget spend was $19.98B^[6]. For 2023-2024, it is $34B^[7].

The Minister for Aged Care, the Hon Anika Wells MP, seeks “to face the future of aged care in Australia with ambition”^[8], however, she has made it clear that the Australian Government cannot keep funding the ambition.

It seems clear that Ms Wells has set up an Aged Care Taskforce^[9] to resolve this disagreement between the Commissioners on the type of levy.

The Aged Care Taskforce

There are 14 taskforce members with the Minister as Chair. Some are experienced bureaucrats and economists, and its membership includes an Indigenous leader, a former politician, an aged care sector leader, and a union representative.

It has six months to come up with a recommendation to the Australian Government on the sources of future aged care reform funding. It must deliver an interim recommendation in three months (September 2023) and a final recommendation in December 2023.

Timing on the answer to funding

The interim recommendation in September 2023 will be a “temperature check” on public reaction and will help prepare Australians for the final decision in December 2023.

We’ll wait and see.

Need help caring for a loved one? Please feel free to call me, Danielle Robertson, at any time for an initial discussion on how to set up the right care, support and assistance at the right time and in the right place.

Resources

^[1] Aged Care Royal Commission Final Report: Summary [page 157]

^[2] Aged Care Royal Commission Final Report: Recommendations [page 301]

^[3] Aged Care Royal Commission Final Report: Recommendations [page 3.9]

^[4] One analysis of the Final Report found that the Commissions disagreed on 30% of the final list of recommendations. Financial Review: Inquiry's Gaps Frustrate Aged Care Sector

^[5] National Press Club address of Minister for Aged Care, The Hon Anika Wells MP, on 7 June 2023: Ambition for Aged Care

^[6] Aged Care Royal Commission Final Report: Summary [page 63] 

^[7] Op. cit., National Press Club address of the Minister, 7 June 2023

^[8] Ibid.

^[9] Aged Care Taskforce: Terms of Reference