A costly decision: Aged Care Act delay to near $1 billion price tag

Wednesday’s decision to delay the new Aged Care Act and Support at Home program by four months – until 1 November – received mostly positive reactions from across the aged care sector.

Unfortunately, the delay is going to be a costly one. Treasurer Jim Chalmers conceded that aged care reform delays will cost the Australian Government almost $1 billion dollars, placing more pressure on the recently minted Department of Health, Disability and Ageing.

The Minister for Health and Ageing, Disability and the NDIS, Mark Butler, said the Aged Care Act’s delay ensures that all operational, digital and legislative pieces are in place before the rollout starts.

“This brief deferral allows providers to train their staff and have conversations with their clients, get their IT systems ready and prepare operations for an orderly transition,” he said.

The new Aged Care and Seniors Minister, Sam Rae, added that he recognised the sector needed more time to transition to the Act after listening to older people and the sector since his May appointment.

“The brief deferral will ensure older people accessing home care services continue to receive safe, quality care and have the time to understand the Support at Home changes,” he said.

“It will also allow for Parliament to consider an amendment Bill that will set up the final details of the Aged Care Rules and enable effective operation of the new Act.”

Yet after committing $2.6 billion to fund pay rises for aged care nurses, and almost $300 million to assist in implementing aged care reforms in the most recent federal budget, this ‘modest’ ‘brief deferral’ will be costly.

Mr Chalmers said it will likely cost an additional $900 million over the four-year forward estimates.

“We’ve done this in good faith, out of necessity. It wasn’t ready to go and so we have a responsible delay here,” he said.

There is still plenty of confidence it will save the sector money moving forward, especially once consumer co-contributions kick in, plus the opportunity for providers to retain up to 10% of a Refundable Accommodation Deposit (RAD) over a five-year period.

When unveiling the reforms last year, the government said they would save $12.6 billion over 11 years.

“These are really important reforms … for the budget … One of the reasons why public demand fell in the quarter is because of the progress we’re making on the NDIS, aged care as well,” Mr Chalmers added.

As for the cost to providers themselves, that remains unclear. Uniting Care Services has revealed it will cut around 120 jobs from its BlueCare community services division in Queensland because of the reforms.

Group Executive Maria McLaughlin-Rolfe said the cut are part of a strategy to position itself for operational sustainability.

“Regrettably, this change and the impact of reform mean some roles are no longer viable or required,” she said. No frontline care staff are expected to lose their jobs.

Support at Home will now commence from 1 November, alongside the new Act.