Introduction

• Published date: 01 June 2021
• Author: Barbara Broadway
• Date: 01 June 2021
• DOI: http://doi.org/10.1111/1467-8462.12423

The Australian Economic Review, vol. 54, no. 2, pp. 255–256 DOI: 10.1111/1467-8462.12423

Policy Forum: Aged Care Reform

Introduction

Barbara Broadway*

On 26 February 2021, the Royal Commission

into Aged Care Quality and Safety (the

Commission) released its final report: Care,

Dignity and Respect. Over 2 years, the

Commission considered evidence from more

than 600 witnesses and over 10,000 submissions.

The Commission's report paints a picture of a

system in crisis. From a consumer perspective,

access to care and quality of care are

problematic: with caps on subsidised aged care

in place, waiting times for approved care are

long; those who receive aged care do not

consistently receive the health care they need

or cannot access disability services; and reports

of substandard care and abuse are widespread

(Royal Commission into Aged Care Quality and

Safety, 2021a, pp. 66, 67, 72). At the same time,

government spending is high, amounting to over

$21 billion in 2019–20 (Royal Commission into

Aged Care Quality and Safety, 2021b, p. 33),

and demographic ageing is bound to drive

expenses up further in the future

(Commonwealth of Australia, 2015).

What is there to do? The Commission made

148 specific recommendations for reform,

starting with a new Aged Care Act that articulates

the purpose and principles of aged care, and

creates a universal entitlement to aged care,

similar to the Medicare system. Building on this,

the Commission proposes a new governing

structure, funding system, quality standards,

mandated staffing levels, evaluation guidelines

and more. However, a significant challenge for

policymakers will arise from the fact that the

Commissioners are divided on many of the

details of the proposed new system, recom-

mending different solutions to many of the

problems faced by the sector. As a result, there

is no unambiguous agenda for government

reform, and debates over the best approach to

fix aged care in Australia will likely continue for

many years to come.

The Australian Economic Review dedicates

the current issue's Policy Forum to this debate:

what are the reforms that Australia's aged care

sector needs most urgently? Can the broken

system be fixed and how? Four excellent

contributions approach this question from

different angles.

Stephen Duckett and Anika Stobart adopt the

consumer perspective and present the case—as

did the Commission—for an aged care sector

centred around the human rights of older people

receiving care, and for creating a universal

entitlement to aged care, fully funded by the

government according to an independently

assessed, personal need.

While a consumer‐centred approach appears

to be relatively widely accepted, funding is a

more contested issue, and two further contribu-

tions examine alternatives to a system fully

funded by government spending. Michael Woods

and Grant Corderoy examine the financial

sustainability of a sector where the average

provider is running at an operating loss, despite

high government subsidies—and while homes

with low occupancy rates continue to stay in the

market. They argue for a system in which

providers compete for eligible consumers (in-

stead of the current model in which a capped

number of beds is allocated to providers), and

make the case for a rebalancing between public

and consumer contributions that better takes into

account older people's wealth.

This latter point is explored in depth by

Michael Sherris, who outlines the potential

role of insurance and private equity release

products in enabling consumers to finance co‐

* Melbourne Institute of Applied Economic and Social

Research, University of Melbourne, Victoria 3010,

Australia; email <b.broadway@unimelb.edu.au>.

© 2021 The University of Melbourne, Melbourne Institute: Applied Economic & Social Research,

Faculty of Business and Economics

Published by John Wiley & Sons Australia, Ltd