On September 14, Paul Keating appeared at the Royal Commission into Aged Care Quality and Safety. He was there to offer his suggestions as to how aged care should be funded, his main argument being that there was a need to cut federal funded Home Care Package waiting list.
Keating was the treasurer in the Bob Hawke Labor government from 1983–1991 and Prime Minister from 1991–1996.
In the 1991 budget, Keating and then treasurer John Kerin introduced the compulsory Superannuation Guarantee, which guaranteed retirement savings with contributions paid by the employer throughout the worker’s life. Their argument was that it was necessary because it took the pressure off the aged pension cohort in the budget well into the future.
So, Keating’s appearance might have been seen as a ray of hope in the otherwise murky private equity pool aged care has become. Maybe he would come up with something both economically viable and progressive?
But no. He told the commission that the government should consider funding aged care through a Higher Education Contribution Scheme-style (HECS) scheme.
HECS was first introduced in 1989, ostensibly to help low-income students enter university. However, subsequent changes by consecutive governments means it is no longer as affordable as it was. You can now accrue a debt up to $150,000 (the government's cap on HECS loans) with the income threshold at which you have to start paying it back as low as $44,999.
Given people with actual HECS study debts incurred now could conceivably die of old age before they pay them off, Keating’s statement took some digesting.
How, in the case of a similar scheme in aged care, is the debt to the government recouped exactly — if at all?
Between the 30% tax payable on superannuation withdrawals, paying off a crippling mortgage all their life and aged care facilities quarantining the majority of their pension from the moment they check in, it is hard to see how the average elderly person will have enough left for an occasional meal out, let alone pay back the cost of care.
The commission asked that question, and that’s when Keating suggested it could be paid from people’s estate after they had passed away.
He was advocating this for a people who have already paid more income tax, GST, super tax, fuel excise (including for roads that now also attract private tolls) and property-related taxes to the government than the best 24/7 care could possibly cost.
It would require their families sell the family home to pay for their care posthumously. It would also entail paying private operators exorbitant fees for care the commission is hearing that they are clearly not providing.
Remember what AMP fessed up at the banking royal commission? It continued to knowingly charge life insurance premiums to deceased clients. As Wil Anderson put it on The Gruen Transfer at the time: “New slogan – ‘We fee dead people!’”
Apart from the ethics, the whole HECS-style economic argument felt about 20 years out of date.
The Australian Institute of Family Studies reports increasing numbers of adult children now live in the family home due to increasing housing and education costs and insecure employment.
Longer-term projections suggest many of them may still be living in that family home and still paying off a HECS debt when their aged care indebted parent or parents pass on.
Casualisation
The other major change in the economy since the HECS heyday is the casualisation of the workforce.
People forced into long-term casual and part time arrangements are repeatedly denied access to the property market (both rentals and mortgaged) and private health insurance. On almost every front, they are priced out of the market, unable to access prudent credit.
Casuals and a good portion of part timers can’t even get a car loan to get to work at an increasing number of different locations for ever decreasing hours. Under employment is rampant.
Employers don’t want to pay penalty rates, don’t want to pay the already mandated increases in super and the gig economy has taken out significant chunks of the remaining job market.
What will happen to these people — the working poor — who will likely have no estate to pay the back bill? Will they be denied care altogether which, let’s face it is the preference of a user-pays government? Is it another private hospital style “can’t pay, can’t stay” policy?
When questioned on this, Keating stated that was not the intention and if there was no asset belonging to the departed from which to recoup the debt, then the federal government would pay. Presumably, this is the same government that pays now, and which has led to a two- to three-year wait for funding of an approved Level 4 Home Care Package — the very scenario the commission is seeking to solve.
Here's the thing: given all that has come out of the royal commission so far, where the money comes from is proving less problematic than what is not being done with it.
There is significant expert agreement that the core issues relate to four key omissions inherent in all privatised policy frameworks:
• There is no ceiling on what providers can charge;
• There is no floor on how little of it they must use to provide quality accredited care;
• There is either no or insufficient financial transparency, reporting requirements or regulatory oversight; and
• There are still no mandated patient-to-nurse or resident-to-carer ratios.
Until these basic flaws in the aged care system are fully addressed, it doesn't matter how you fund it. It will still be throwing good money after bad. The result? The people who built this country, those who are trying to put it back together now, and those who will live with it in the future, will continue to receive sub- standard care — way below what they deserve at a cost way higher than it should be.
And that is just too high a price to pay.
[Suzanne James is a freelance writer with a policy and risk management background.]