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Monday, 21 May 2012
Page: 4961


Mr TUDGE (Aston) (20:06): I rise also to speak on the member for Shortland's motion, which concerns the aged-care package. This motion concerns an important but challenging policy area—that of aged care. It is important because already one million people use or receive aged-care services, and this will grow to about 3.5 million people by 2050. It is important because it already costs about 0.8 per cent of GDP and this is forecast to grow to 1.8 per cent of GDP by 2050. It is also important because it concerns elderly, vulnerable Australians, Australians who have built this nation and who deserve dignity in their final years.

As the Productivity Commission report identifies, the current system suffers from many weaknesses. The PC report points out that it is difficult to navigate; services are limited as is consumer choice; quality is variable; the coverage of needs, pricing, subsidies and user co-contributions are inconsistent or inequitable; and there are workforce shortages. So the government's aged-care package must be viewed in the context of these weaknesses which have been identified by the Productivity Commission report.

It is difficult for us on this side of chamber to fully assess the full impact of the reforms at this stage and, with the relatively limited amount of documentation, how the reforms will operate. Let me say some of the positive elements which I think are contained within the package: first of all, the number of home-care packages will increase from 60,000 to 100,000—I think that is a positive move. Secondly, it makes dementia a national priority once again. Thirdly, it appears to give some more flexibility regarding how people will pay for aged-care services. Finally, overall it puts some additional funds into the system.

I think all four of those things identified are positive steps, but there are also some serious downsides which we believe are inherent in this package, and I would like to identify some of those in the time I have available. To start with, there is considerable smoke and mirrors in relation to the funding of this package. I know we hear a lot about it being a $3.7 billion package but that is the gross size over five years. Underneath that figure, there are significant offsets in terms of redirecting funding and means testing. Over five years, the net cost of the package to the government is only $580 million, and over the forward estimates is only $285 million. There is very little new spending over the next two financial years, which is probably what is most important for most people in the sector.

My second concern is that considerable means testing has been introduced through this package. The implication of the means testing is that the government believes that some aged-care providers are already receiving too much funding. I am concerned that, if we means test and they receive less funding, there will be less incentive for those providers, particularly the private providers, to reinvest. I also have a concern about the means testing creating a disincentive for people to save and to think about caring for themselves in their old age. There is now such a strong incentive to be on the aged-care pension, because you are the only ones who will receive aged care for free. Thirdly, there is not enough to reduce red tape in this reform package. This was a big area identified in the Productivity Commission report and, far from reducing red tape, this package actually creates three new agencies to oversee the aged-care sector.

Finally, my concern is that the package starts too late. It does not start until 1 July 2014. That is over two years away and after the next federal election. If it is that urgent, it should be starting immediately.

To summarise, let me quote the economist and academic Judith Sloan. She says:

There is little new money, with significant clawbacks in terms of means testing and reduced payments to providers. Greater consumer choice will be achieved only if providers are given appropriate incentives to invest and innovate. The package fails to achieve this balance—the pieces will be left for the next government to pick up.