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Economic report card on aged care sector: building approvals at record levels - 20.8 per cent increase.

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Minister for Ageing MEDIA RELEASE

September 3, 2008

Economic report card on aged care sector: Building approvals at record levels - 20.8 per cent increase

The Minister for Ageing, Mrs Justine Elliot today in Federal Parliament presented an economic report card on the aged care sector in Australia showing a positive outlook.

Building approvals in aged care for the last quarter reached record levels with more than $302 million in projects - an increase of 20.8 per cent over the same period - a year ago.

For the June 2008 quarter, there were $302 million in projects compared to $250 million in construction for the June 2007 quarter.

“This is great news and shows a real confidence in the future of aged care,” Minister for Ageing, Mrs Justine Elliot said.

Mrs Elliot cited the Australian Bureau of Statistics data on building approvals in the aged care sector. (The analysis was from the Department of Health and Ageing’s Policy and Evaluation Branch within the Ageing and Aged Care Division.)

Mrs Elliot also referred to recently released independent Bentleys MRI/James Underwood Aged Care Survey for the financial year 2006-07.

It found the EBIDTA - (earning before tax, interest, depreciation and amortisation) -- has increased in all three areas of residential services -- high care, low care and merged services.

The average EBITDA increased from 2005-06 to 2006-07 by:

$2.15 per resident a day to $10.60 in high care homes; 31 cents increase to $12.84 in low care homes; and 24 cents increase to $10.25 in merged services.

The Bentleys MRI / James Underwood & Associates survey showed that the operating results of the most efficient providers are positive -- regardless of their resident mix or the type of service.

The survey indicated that the top quartile of high care services show more than three and half times the average EBITDA of high care services generally.

Similarly, the top quartile of low care and merged services achieved returns almost two and a half times the average.

The construction data builds on the strong financial support from the Federal Government - which is responding to the challenges of Australia’s ageing population.

In addition, Mrs Elliot updated the Federal Parliament on the Aged Care Funding Instrument (the ACFI).

Mrs Elliot said Access Economics was analysing the first 33,000 claims.

Their initial analysis found that - on average - the subsidy rates were higher than they would have had under the previous one.

In fact, the ACFI returns were on average 2.9 per cent higher than the previous Resident Classification Scale.

She also reiterated an earlier commitment to review the ACFI after 18 months of its introduction.

“Australians now have the second longest life expectancy in the world after the Japanese; that is why we are working together to prepare for the challenges of our ageing population,” Mrs Elliot said.

Over the next four years, the Australian Government would provide more than $40 billion to aged and community care - $28.6 billion of that on nursing homes alone. In 2008-2009, $2.2 billion of that will be spent on community care.

In 2008-2009, spending on residential aged care will increase to $6.8 billion - which means that the subsidy funding for each day a resident spends in a nursing home will be more than eight per cent higher than it was in 2007-2008.

“No Australian Government has invested more in aged and community care,” Mrs Elliot said.

Mrs Elliot pledged to continue to work in partnership with older Australians, aged care providers, unions and consumer groups to improve quality in residential aged care.

“The overwhelming majority of aged care providers in Australia are providing top quality care for our nation’s elderly.

“In every State and Territory, I have seen world class facilities, but I have also seen areas where improvement is needed.

“They are backed by hard-working dedicated staff,” Mrs Elliot said.

“This Australian Government is committed to tackling the challenges of the 21st century; one of those greatest challenges is our ageing population,” Mrs Elliot said.

For more information, contact Mrs Elliot's office on (02) 6277 7280.