Dennis Jensen (Tangney, Liberal Party) Share this | Hansard source

No. No. According to reports, in one case they actually referred the matter to the ACCC. So an organisation which declined to take up a flawed offer of federal funding—because to do so would have been economically unviable—is being investigated for possible trade breaches. What a joke. Presumably the minister thinks that private sector interests should be run at a loss to satisfy the government’s political whims.

Earlier this month, consultants Grant Thornton reported that the average return on investment in a single bed aged-care room was equivalent to just 1.1 per cent per annum. Average earnings before interest, taxation, depreciation and amortisation in 2008 were only $2,934 per bed, down from $3,211 a year earlier. The average cost to providers for the establishment of each bed, excluding land, has soared from between $74,000 and $85,000 in 2003 to $176,000 today. With figures like these it is easy to see why there is a reluctance to invest in aged-care facilities. Why take any risk for such a trifling return when even a bank savings account will pay more?

Financial considerations also mean that aged-care facilities are not being maintained or redeveloped appropriately. The Grant Thornton report noted that 44 per cent of the facilities are more than 20 years old and another 30 per cent are between 10 and 20 years old. Some facilities were closed after providers became insolvent, causing immeasurable stress to residents and their families. Again Grant Thornton states:

These closures are likely to become more common unless the underlying problems with current pricing and regulatory arrangements are addressed.

Those are your problems. Similarly, there is evidence that some facilities have been forced to cut back recreation activities which do so much to contribute to the quality of life of residents.

There must be incentive for private sector activity if the burden of providing aged care is not to fall on the state, which is really in no position to cope with this alone. This is the problem with the bill before us today—it offers no substantive change at all. It tweaks the edges of the issue but addresses none of the major problems afflicting the aged-care system. It is all very well to make these minor changes, but it is ultimately pointless if there are no beds available.

There are 2.8 million Australians over the age of 65. It has been estimated that about half of them require regular help, mostly in their own homes. There are 150,000 in residential aged care, which they enter at the average age of 82, and more than 100,000 of them are receiving high-level care, which is the most demanding of resources. Today there are 400,000 Australians aged over 85 and that number will increase to 1.6 million by 2047. Today there have been only 2,860 people aged over 100. By 2055 there will be 78,000. At the same time, in 2007 there were five people of working age for every person over the age of 65, but by 2047 there will be only 2.4 people. It is a recipe for disaster unless the government comes to grips with the issues today.

Major changes are needed to ensure that our aged are properly cared for. News reports say that the government is planning to provide 37,000 extra beds over the next three years. But, at the same time, 10,000 existing places have not been taken up by the industry. They do not want beds, because it is simply no longer a viable proposition. The government urgently needs to sit down with industry and work out sensible pricing and funding so that it can meet the needs of both providers and those requiring care. While the Prime Minister and his family may be lucky enough never to need such care, and are certainly lucky enough that they could afford private arrangements if they were necessary, the reality for hundreds of thousands of Australians is completely different.

Surely the minister is aware of the Productivity Commission research paper released in September which calls for action to fix the aged-care system. Perhaps I can jog her memory. It said:

The ageing of Australia’s population will call for the provision of aged care services to much larger numbers of people over the next few decades. Services will also need to meet the challenges posed by the increasing diversity of older people in terms of their care needs, preferences and affluence.

It added:

… there are concerns that current institutional arrangements, which rely on a planning mechanism in concert with aged care assessments and controls over extra service provision and pricing of services, could involve significant avoidable cost. For example, these controls in their current form combine to limit the scope for competition between providers, distort investment decision-making, restrict consumer choice and weaken incentives for innovation.

The proportion of GDP required for government spending on aged care was 0.7 per cent in 2006-07 and will almost triple to 1.9 per cent in 2046-47. Given all this, it is disturbing that today we are looking at a bill which deals only with the trivial, a bill which is mere window-dressing.

Mankind has made massive strides in improving health over the last century, consequently increasing lifespan by many years. This change in longevity and the accompanying changes in disease patterns will require new planning for the provision of aged care. It also highlighted other aged-care issues which need to be addressed now if the system is to be effective in the future.

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