Aged Care Guild commissions Deloitte report into ACFI changes

May 18, 2016

The Aged Care Guild has said successive budgetary changes are undermining positive impacts of reform, and has commissioned Deloitte Access Economics to review the impact of changes to the Aged Care Funding Instrument (ACFI) announced in the 2016-17 budget.

In a statement released today, the Aged Care Guild, the peak body representing the sectors’ major private providers, said that the Federal Budget’s proposed changes to the ‘complex health care’ domain of the ACFI, designed to save $1.2 billion, as well as the cuts of $472 million announced in last December’s Mid-Year Economic and Fiscal Outlook, continue a pattern of cuts to the sector.

This included the freezing of indexation in 2012 and the removal of the payroll tax supplement in the 2014 budget, which the Guild said cost its members over $100 million per annum.

The Guild’s announcement follows the release of a budget analysis by Ansell Strategic commissioned by sector peak body Leading Age Services Australia (LASA), which found the proposed changes to ACFI would equate to savings of $350 million in excess of those forecast by Government in the budget and MYEFO.

The Deloitte analysis is expected to be completed after the July 2 election, the Guild told AAA.

Chief executive officer Cameron O’Reilly said while the Guild understood the need for budget responsibility, this should not be achieved at the cost of the industry’s capacity to meet the needs of an increasingly ageing population.

The 5.1 per cent overall funding increase for residential care announced in this year’s budget did little other than cover new places coming on-line, he said.

While the Guild acknowledged the recent regulatory reforms had been positive for the sector and enabled investment in care options for residents, Mr O’Reilly said these impacts were being undermined by successive budgetary changes.

“Our members are genuinely concerned the tightening in available care funding will impact their capacity to secure capital to invest in quality care and new beds for future residents,” he said.

Mr O’Reilly noted a recent report from accountancy firm RSM had concluded there was little evidence that sufficient supply will be created to meet even the most conservative forecast of demand for places, and the report by Ansell Strategic had warned the ACFI changes will discourage high care admissions across the sector.

He said in this environment, members thought it was unlikely the industry would meet the projected demand for 76,000 new beds that the Aged Care Financing Authority said were needed by 2023-24.

“The recently released Aged Care Roadmap provides a good directional statement in terms of transitioning to a consumer driven care model but government needs to ensure the sector has the confidence to invest if there is to be real consumer choice,” he said.

“Governments can adjust the budget each year but the reality is they can neither reverse the need for the provision of more complex healthcare nor the increasing demand for residential care places.

“That is why the latest $1.2 billion savings in the Federal Budget need to be properly reviewed and reconsidered by whichever side of politics is successful at the July election,” Mr. O’Reilly said.



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