Budget Resources
Rebecca Storen
The 2023–24 Budget contains several aged care reform
measures as the Government continues to implement its response to the 2021
final report of the Royal
Commission into Aged Care Quality and Safety (Royal Commission). In addition,
the Budget provides funding for the COVID-19 Aged Care Response.
In the lead-up to the Budget, the Government
announced that it would provide $11.3 billion over 4 years to fund the
interim outcome of the Fair Work Commission’s Work
value case – Aged care industry; a 15% increase to the minimum wage
under 3 Awards. However, in terms of program expenses, the growth for aged care
over the forward estimates may be more modest than anticipated when compared
with the 2022–23 October Budget. For example, expenditure
on ‘aged care services’ for 2023–24 was estimated at $29.7 billion in
October 2022, and is estimated at $32.7 billion this Budget, a change of less
than $3 billion (Budget
strategy and outlook: budget paper no. 1: October 2022–23, p. 190; Budget
strategy and outlook: budget paper no. 1: 2023–24 (BP1), p. 214). Payments
for aged care services are expected to increase by $13.4 billion over the
forward estimates, largely due to the wage increase, but this has been
partially offset by other measures (BP1,
p. 104).
Savings and offset measures
Most of the aged care measures are at least partially offset
through redirection of funds or met through existing resources. The most
significant savings measure identified is the Improving the investment in
aged care measure at an estimated $2.2 billion over 3 years from 2024–25 (Budget
measures: budget paper no. 2: 2023–24 (BP2), p. 136). This saving will
be achieved by decreasing the provision ratio for residential aged care
temporarily from 78.0 places to 60.1 places per 1,000 people aged 70 years and
over. The provision ratio is used by the Government as part of its way of
regulating supply of aged care. Since home care was added to the ratio in the
early 1990s, there has been a steady shift to increase its proportion of the
overall target to reflect people’s preference to stay in their home rather than
move into residential aged care, with a resulting decline in the proportion for
residential care (Aged
Care Financing Authority, p. 29).
The Reinvesting in health and aged care programs
measure identifies $1.7 billion of funding over 4 years from 2023–24 that will
be reinvested within the portfolio (BP2,
p. 146). According to information in the Health
Portfolio Budget Statement (PBS), a significant
proportion of this amount is made up from Outcome 3 (ageing and aged care) at
approximately $835.2 million (p. 33) (this measure is discussed further in the
‘Health overview’ article elsewhere in this Budget review).
The increases in funding for aged care services have been
partially offset by reduced utilisation of home care package program funds and
funding that was provisioned in the contingency reserve in the last Budget (BP1,
p. 104). The amount of unspent funds in the home care package program has been significant
for some time, estimated
at $2.4 billion as of September 2022.
Key regulatory reforms
The Budget confirms that a new Aged Care Act is anticipated
to commence from 1 July 2024 (BP2,
p. 125). Budget measures to support this and the new regulatory framework are:
- $81.9
million over 3 years from 2023–24 to support the development and implementation
of the new Act along with funding for the discovery and design phases of
necessary ICT system changes (p. 134)
- $72.3
million in 2023–24 for continued work on the development and implementation of
a new aged care regulatory framework that will support the new Act (p. 125).
However, the new community based program—the Support at Home
program that will replace the home care packages program and Commonwealth home
support programme (CHSP) among others—has again been pushed back and is not
expected to commence until 1 July 2025 (BP2,
p. 133). This announcement has been met with disappointment from
the Council on the Ageing (COTA) and the Older
Persons Advocacy Network, while the Aged
& Community Care Providers Association has stated they would prefer to
get it right rather than rush to implement the new program in 2024.
The Budget confirms that the anticipated national worker
screening and registration scheme should be in place from 1 July 2024, with
$59.5 million provided over 5 years to support the ICT infrastructure to support
the scheme (BP2,
p. 125). Services
Australia will be responsible for expanding the current National Disability
Insurance Scheme (NDIS) worker screening model to enable the aged care worker
checks, and for improvements to information-sharing between the regulator and
aged care providers. Following the lapse of the Aged
Care and Other Legislation Amendment (Royal Commission Response No. 2)
Bill 2021, new legislation will need to be introduced (potentially as part
of or alongside the new Act) to enable this screening scheme to be implemented.
The Budget also provides $41.3 million over 4 years from
2023–24 to build a new residential aged care place assignment system (BP2,
p. 134), a change that was flagged in the Government’s
response to the Royal Commission in 2021. This
change will mean that, from 1 July 2024, the residential aged care place
(sometimes known as a bed licence) will be assigned to the individual person
rather than the aged care provider. Initial
consultation indicated that people are broadly supportive of this approach but
flagged that support would be needed to transition to these arrangements and
the Government will need to play an active role in locations were there may be
insufficient or very limited services (pp. 8, 11).
Funding a pay increase
The Budget provides $515 million over 5 years from 2022–23
for the Funding pay increases for aged care workers measure in response
to the Work Value Case, which is partially offset by the Improving the
investment in aged care measure. In addition, $10.9 billion over 5 years
($29.2 billion over 10 years) will be delivered through program indexation (BP2,
pp. 131–132).
The $515 million measure is made up of several grant
programs and targeted indexation boosts to some of the smaller aged care
programs, including:
- $311.2
million for a grant program for CHSP providers to cover the cost of the award
wage increase
- $58.9
million for indexation boosts to funding for the Indigenous Employment Initiative,
Multi‑Purpose Service Program, National Aboriginal and Torres Strait
Islander Flexible Aged Care Program and the Trusted Indigenous Facilitators
program
- $98.7
million for a grant program to fund historic leave provisions (BP2,
p. 131).
The Budget also includes from 1 July 2023:
- $8.5
billion for residential aged care
- $2.2
billion for the home care packages program (BP1,
p. 105).
The Budget provides $37.4 million for implementation costs
for the Department of Health and Aged Care and Services Australia (BP2,
p. 132). Services
Australia is to determine the 24/7 registered nurse supplement rate that
will be paid to providers using bed occupancy data.
Independent Health and Aged Care
Pricing Authority (IHACPA)
Similar to the public hospital system, a common activity
unit is set to enable a comparison and value to be set for each service for a
resident’s care classification and facility category. A price is then assigned
to the common unit. The Australian National Aged Care Classification (AN-ACC)
price was set at $216.80 when the AN-ACC
model was first implemented in 2022. The AN-ACC
price has been set at $243.10 for the 2023–24 financial year (p. 10).
Following advice from the IHACPA, the Budget includes
$2.7 billion over 4 years in additional indexation for residential aged care (BP1,
p. 105). The Basic Daily Fee of $10.00, which had been included in the AN‑ACC
price since it was implemented in October 2022, will be provided as a separate
hoteling supplement of $10.80 from 1 July 2023 (BP2,
p. 134). The
Budget provides $116.3 million over 4 years for this new supplement.
The IHACPA has also been funded $71.5 million over 4 years
to undertake work to develop annual efficiency unit prices for the Support at
Home program (BP2,
p. 133).
Transitioning to a new system
The Budget has several measures to support the sector as it
moves towards a new Act and new programs and expand on some of the changes that
have already been implemented, including:
- $139.9
million to improve the star
rating system
- $12.9
million to develop, monitor and enforce new food and nutritional standards (BP2,
p. 125)
- the Royal
Commission identified food and nutrition as one of 4 areas for immediate
attention, alongside dementia care, restrictive practice use and palliative
care (p. 92)
- following
the Royal Commission’s final report, work to review
the aged care standards has been underway, with the possibility of harmonising
regulation across aged care, disability and veterans’ care, and revised aged
care standards potentially more aligned with the NDIS Practice Standards.
- $166.8
million in 2023–24 for 9,500 additional home care packages
- the
previous
Government’s response to the Royal Commission flagged that the home care
package program would be replaced by 1 July 2023 and provided additional
packages for the 2 financial years prior to that anticipated change with a new
program set to be in place thereafter.
- as
of 31
December 2022, there were approximately 30,200 people who were waiting on a
package and had not been offered an interim one and another 7,700 people who
had been offered an interim package while waiting for one at their approved
level (p. 9).
- $73.1
million in 2023–24 for ICT changes needed to enable the Support at Home program
- $15.7
million to establish the long anticipated single aged care assessment system
- $0.7
million in 2023–24 to establish the Aged Care Sustainability Taskforce, which
will provide advice to Government on the creation and maintenance of a high
quality and sustainable aged care system
- $0.1
million for an Independent Implementation Readiness Assessment of the aged care
reforms (BP2,
p. 133).
- $98.7
million for a new Market Adjustment Program to provide business advice in an
effort to improve the viability of residential aged care sector (BP2,
p. 134)
- $1.7
million for 2023–24 to appoint an interim First Nations Aged Care Commissioner
(BP2,
p. 135)
- $12.9
million for the enhanced functions of the Aged Care Quality and Safety
Commission in its new role as the independent financial and prudential
regulator (PBS,
p. 142).
COVID-19 response
The Budget provides $591.3 million for 2 years from 2022–23 for
the COVID-19 aged care response measure, which will be partially met
through existing resources. This measure includes $536.6 million for cost
reimbursement for outbreaks and in-reach PCR testing in residential aged care
homes up until 31 December 2023 (BP2,
p. 126).
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