Federal spending on aged care will double by 2030 putting more pressure on the Budget, according to new research that warns older Australians may have to use savings to help them into their later years. Source: Sydney Morning Herald.
Work by the Actuaries Institute to be released today shows despite a sharp lift in Commonwealth funding to deal with issues across aged care, it will not be enough as demand grows and the population ages.
By the end of this decade, spending on aged care could reach $72 billion — more than what is spent on the age pension.
The Government is ramping up expenditure on aged care after the royal commission into the sector which, among its 148 recommendations, found the industry was “under-staffed and the workforce underpaid and under-trained”.
Last financial year, Canberra spent $22.5 billion on aged care services. By 2024-25, this is expected to reach a record $31.1 billion.
Of the Government’s main spending programs, the forecast 38 per cent increase in expenditure on aged care is the largest. Spending on the age pension, the Government's single largest expenditure, is tipped to reach almost $57 billion by 2024-25.
By 2040-41, without change there is likely to be a $9 billion-a-year shortfall in support for aged care services.
While the report notes the increased spending pressures around aged care, it says there are a range of options to cover the extra cost.
These include greater use of means testing, requiring older Australians to draw on their superannuation accounts or equity built up in their home or to increase taxes.
Aged care spending will need to increase even more: Actuaries warn (By Shane Wright, Sydney Morning Herald)