Aged Care Budget 2014 wrap up.

On Tuesday, 13 May the Coalition Government handed down their first budget since being elected. It was sold as the tough budget we need to have, where we were told we will all have to play our part to return the budget to surplus.

Let’s take a look at the key points for aged care and what it will mean for providers moving forward.

Aged pension

While there were no immediate changes to the aged pension announced in this years budget, there were measures introduced that will affect the aged pension following the Coalition’s first term of government. It was announced that from July 2025, the qualifying age to receive the age pension will gradually increase every two years until it reaches 70 years, in 2035.

From July 2017, the rates of Age Pension, Carer Payment, Disability Support Payment, other pension payments, and equivalent Veterans’ Affairs payments, will be indexed according to the Consumer Price Index only. The measure removes bench-marking to Male Total Average Weekly Earnings and indexation to the Pensioner and Beneficiary Living Cost Index for pensioners.

Aged Care reforms

The Coalition Government has stated they are committed to continuing the implementation of the aged care reforms (formally known as Living Longer Living Better). They have established the Aged Care Sector Committee, comprising aged care stakeholders who will be responsible for developing the Aged Care Sector Statement of Principles and a Red Tape Reduction Action Plan. These documents are designed to guide current and future reforms.

The next round of significant changes will commence from 1 July 2014, which the government says aim to improve access and choice for consumers, and strengthen system sustainability.

Preparation will continue in 2014-2015 for the next stage of reforms. The Government stated they will be closely monitoring the real world effects on providers and consumers to understand the impact of the changes with a full system review to be completed in 2016–17.

The government also announced they are bringing forward the timetable for the increased allocation of Home Care Packages.

Workforce Supplement

In an election commitment the Coalition stated they would abolish the workforce supplement, and until now there had been no word on where this money would be redirected to. This money will now be directed into the general aged care funding pool through increases to subsidies and funding arrangements from 1 July 2014. which will see an increase of 2.4 per cent in the basic subsidy for both residential and community care providers.

Home Support Program

The reduction in real annual growth in the Home Support Program to 3.5 per cent from a level of 6 per cent from 1 July 2018. The government says the reduction would bring annual growth in the program in line with annual growth in the population of over-65s. The feeling from the sector is that this will see increased rationing of these services which support older people to remain independent.

Aged care payroll tax supplement

The Aged care payroll tax supplement paid to some providers will be discontinued from January 2015. The Government has said that the $1.5 billion being directed into the general funding pool, red tape reduction plan and reforms to the aged care system (from the axed workforce supplement) will deliver benefits that will help providers run their businesses more efficiently and make the most of their funding.

These are just some of the changes that will have an impact on the aged care sector. To what extent their impact will be felt as move towards more consumer choice and the need to fund the sector in a sustainable manner is yet to be seen. But it’s a discussion we need to have.

Talk to us about the stakeholder communications implications of the 2014 budget on aged care.