Howard's aged care policy: In debt for life

Bob Briton

By now the Federal Government should have its hands on a report 
on the aged-care sector conducted by Sydney economist Warren 
Hogan. The 18-month $7.2 million project is expected, among other 
things, to recommend that new residents entering high-care 
nursing homes be expected to produce $100,000 up front as a bond 
for their accommodation and services.

This amount would be raised from the sale of or borrowing against 
the family home, if needs be.

The bond has been described as a "loan" from the residents to the 
nursing home operators to help them expand bed numbers and to 
"wean" the aged-care industry off its dependence on Commonwealth 
subsidies. At least, that's how the big players in the field and 
the mainstream media are selling the concept.

In fact, the "lenders" in this case would get less back than they 
loaned in the first place and would most likely only "collect" 
when they die!

It is anticipated that the proposed scheme would parallel the one 
already in place for residents of low-care accommodation.

An amount of $3000 is drawn from the bond every year for the 
first five years and so nursing home residents get an $85,000 
return on their $100,000 "loan". No interest on the "loan", no 
allowance for inflation. Those who took out a mortgage on the 
family home to raise the $100,000 would also be paying out 
interest on that!

The Howard Government tried to impose the same policy in 1997 but 
backed off in the face of public outrage. The media still refers 
to this as a "scare campaign" based on the fear that the most 
vulnerable elderly people would be forced to sell the family home 
in order to get the care that they needed.

The problem for the government and its media spin-doctors is that 
the fear was based on cold hard fact.

No doubt the government at that time thought that the proposal 
had all the classic elements of the wedge politics they love. 
Nobody gets hurt — immediately, that is. And the perception that 
those people expected to cough up can afford it! The government 
would like us to equate owning the family home with being "asset-
rich". They also want us to think that the only ones to lose out 
would be the children of the deceased residents — greedy "baby-
boomers" just waiting to get their hands on the parents' 
property: such is the contempt of the government for ordinary 
working class people.

The Hogan report is also expected to recommend greater freedom 
for home operators to set their own prices and for the auctioning 
of the licences currently issued by the Commonwealth to run 
facilities. It would also allow different levels of care based on 
a resident's ability to pay. The whole thrust of the 
recommendations is reported to be for an extension of the 
deregulated, user-pays path we have been travelling along in aged 
care throughout the '90s.

Taking an each-way bet, Prime Minister Howard has, well, sort of 
ruled out the idea of a bond. "It's not part of our policy. I 
don't normally support things that aren't part of our policy", he 
told the Herald Sun last week.

The Labor leader also sounds less than emphatic. "We've opposed 
that policy in the past and — while you always have a process, 
you look at these reports", Mark Latham told ABC Premium News.

The reality is that the governments of countries such as 
Australia are being told by their controllers that spending $4.3 
billion a year on subsiding nursing homes is not on! Growing 
profits (from the aged care "industry" and taxation) and greater 
productivity are not going to be squandered on an ageing 
population while big capital is in the driver's seat.

And as the aged care final solution — corporate operators of 
nursing homes accessing the financial markets and selling their 
high-cost product on an open market — is being implemented, the 
existing arrangements are being run down.

Another cold hard fact: last year Commonwealth funding to nursing 
homes increased by just 2.2 per cent while the CPI is put 
conservatively at 3.3 per cent and the number of aged is on the 
rise.

Bed occupancy rates are at an extremely high 96 per cent — a 
situation that gives elderly people little choice of 
accommodation. Declining profitability under the current 
arrangements saw the Salvation Army close 15 of its 42 nursing 
homes earlier this month.

The government is due make its decisions on the report by the 
time of Budget in May. Get ready for a lot of tough talk about 
"intergenerational" and demographic issues in the coming months.