‘Worse than we thought’: Labor says urgent reform needed to fix aged care crisis

by Sarah Martin
Anika Wells says government has inherited ‘an absolute mess’ and will need to manage sector’s short-term pressures and long-term financial viability

Aged care in Australia needs “urgent reform as quickly as possible” alongside an overhaul of the funding model to ensure the sector remains financially viable, the new minister for aged care, Anika Wells, says.

Describing the current situation for the sector as a “crisis”, Wells said the federal government was already supporting a number of providers to remain open given the current pressures on the system, where the majority of providers are operating at a loss.

“It is worse than we thought. Every rock I turn over, it is worse than we thought and I think that is the experience across the board,” Wells told Guardian Australia.

“The sector is in crisis. It is an absolute mess that we have inherited. It was in crisis before Covid hit, and Covid has exacerbated all of those conditions, particularly workforce.

“The sector has drifted for nine years under the previous government – their reform was sluggish and opaque, and clearly the prime minister, Scott Morrison, chose not to act and risk upsetting anyone when leadership was needed.”

Wells, who has taken on the portfolio at a time when providers are warning of unprecedented pressure in the system compounded by the Covid-19 pandemic, is clear-eyed about the challenges ahead for the sector, acknowledging there is a debate to be had about how it is funded over the long term.

While indicating the government would not budge on lifting the indexation rate for aged care provider payments, which is set well below inflation at 1.7% for 2022-23, Wells said legislation for a new pricing model would be introduced as soon as possible for the new system to come into effect from October.

She also said that she had begun looking at the forecast funding shortfall for aged care as the population ages, with the royal commission into aged care finding that government spending on aged care will increase by 4% a year over the next decade.

“I have had meetings with my colleagues already about how we are going to do this, because the long-term sustainability of the sector is at stake here,” Wells said.

“And in just the month I have had the job, it has become very apparent to me that my greatest task is going to be managing the immediate short-term risks, and assistance with Covid, and keeping the election commitments that we made to the Australian people … against some very broad existential questions,” she said.

“Questions like how the boomers are going to age, and if the boomers are going to age at home, how are we going to reform support at home to make sure it is financially sustainable?

“We know that we have got three or four years before the boomers need to access aged care, so we have only got a short amount of time to do this properly.

“It is a great example of the dilemma we have, which is urgent reform as quickly as possible, against the backdrop of the very sustainability of the sector.”

While Wells would not be drawn on the possibility of the government considering a new aged care levy – a key recommendation of the royal commission – it is understood the government is considering changes to the co-payment system for aged care which is means-tested to determine contributions.

She said that she had been struck by an observation in the royal commission’s report that “over the last several decades, successive Australian governments have brought a level of ambivalence, timidity and detachment to their approach to aged care”.

“I am many things, but I am not detached,” Wells said.

And timid?

“I’m a Queenslander. Let’s not shy away from this, this is a big piece of work, it is not a one-term project, it has drifted for decades and it is going to take more than one term [of government] because these are big existential questions.

“In order to make sure the sector is financially sustainable, in order to deliver the reforms the royal commission recommended … I am open to all options.”

Before the election, Labor committed to a five-point plan for aged care that included registered nurses on site 24/7 by July next year, more carers, better pay for workers, greater financial transparency and instituting new nutrition standards.

Wells said that she was confident that the commitment for having more nurses on site could be met by next July, but said increasing the care workforce remained a challenge.

“Everyone wants to talk to me about workforce … the fact the borders closed, we didn’t have people coming in from overseas, a lot of people returned to their home country and a lot of these people were the aged care workforce, and a lot of aged care workers are burnt out.”

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She said she was in talks with the immigration minister, Andrew Giles, about how changes to the visa system could help bring in the workers Australia needed, but said it was only “one piece of the puzzle”.

“We have to get people back into the workforce who have left the workforce; we have nurses working part-time hours who would gladly take on more hours if the money was there to make it justifiable.”

She also confirmed that the government would be supporting a pay rise for aged care workers in a case brought to the Fair Work Commission by the Health Services Union for a 25% increase, but would not be specifying a figure.

“We are supportive of a pay rise, but traditionally the government does not put a number on its submission, and we won’t be putting a number on this submission.”

Wells said that the government had agreed to fund the outcome of the FWC ruling, which is estimated to cost about $4bn annually if the 25% claim is successful.