Senior woman in aged care

Financing aged care: A black hole?

Published: 10 December 2021
  • national
  • 10 December 2021
  • National Seniors Australia

In the next twenty years aged care is likely to be the fastest growing budget item. How we pay for it should be a feature of the upcoming election writes National Seniors Australia CEO, John McCallum.

Astrophysicists around the world have been looking for black holes since Einstein predicted their existence. A new Green Paper from the Institute of Actuaries has shone light on our very own version of a black hole, which is emerging in aged care funding.

The report should be obligatory reading for both Treasurer, Josh Frydenberg and Shadow Treasurer, Jim Chalmers.

It predicts spending on aged care will double by the end of the decade – and that’s just the beginning. Costs will go up by an average of 7% a year for the next 20 years. Treasury’s 2021 Intergenerational Report only predicted costs would rise by around 4% per year to 2040.

The Morrison government in Budget 2021 committed $17.7 billion to fund the Royal Commission into Aged Care Quality and Safety reforms over what is now four years – but no detailed plan was provided on how to pay for this.

In the next twenty years, aged care is likely to be the fastest growing budget item. We’re overdue for a clear financial plan to deal with this, otherwise the aged care Royal Commission will go down in history as a waste of time and money. More significantly, the aged care horrors exposed by the Royal Commission will continue to alarm everyone and haunt us as we all get older.