Productivity Commission’s Caring For Older Australians: Aged Care Reform? - Or Economic Darwinism?

In its overview, The Productivity Commission states that its “overriding objective is to improve the wellbeing of the community as a whole” while recognising that “aged care is an integral part of the health system”.

But what does the Productivity Commission consider is the ‘community as a whole’ and why, in its next breath, does the Commission proceed to deconstruct (or, as it says, ‘unpackage’) – “an integral part of the health system” into various components (i.e. personal care, health care, accommodation and everyday living) to which it then attempts to justify attributing separate costs, and responsibility for meeting those costs.

Will the Productivity Commission’s next step be to ‘unpackage’ all parts of the health system into components, and can any hospitalised person consequently expect to (for example) provide for their own bedding, meals and toilet paper? Can we similarly expect maternity or IVF patients to be charged on the basis of the actual cost involved, as well as their individual capacity to pay? Would it not be fair for the government to similarly garnishee their homes? And if not, why is it seemingly acceptable to treat disabled older people more harshly than fit and able younger people? Are the proposed aged care reforms not elder abuse or, at best, ageism?

The Productivity Commission claims that aged care costs will increase from the current 0.8% of GDP to an (apparently unaffordable) estimated 1.8% of GDP by 2050, but the Productivity Commission acknowledges that it has relied on government modelling to justify such projections; modelling that has been shown to be notoriously unreliable – and which has contributed to fierce debate over many issues (not least of which is climate change). ‘The fact is’ that the much touted and scare mongered ‘tsunami of elderly’ is emanating from a self-serving private and not-for-profit aged care industry (much of which feeds off government funding). In reality the claimed ageing population is more akin to a temporary surge that will, if not return to normal after the baby boomer cohort passes through, end up lower than current levels. In other words, it is a temporary blip that, of itself, does not necessarily require drastic – or ongoing - action.

However, by pandering to the hysteria of profit obsessed aged care providers, the Commission has risked overreacting, and making what is a likely transient hike much worse, by throwing the baby out with the bathwater.

The Productivity Commission attempts to argue that taxpayers cannot afford to meet the future costs of aged care and that the aged must meet the costs themselves. Of course the Commission acknowledges that the overwhelmingly greatest proportion of aged care costs is linked to residential aged care facilities who cater for a mere fraction of disabled older Australians.

The fact is that, although our population is ageing, each older Australian is less of a drain on the health system than its ancestors - because people aren’t just living longer, they are living stronger. And they are at least capable of continuing to work (be that voluntarily or paid) for much longer than ever before. Even the Productivity Commission acknowledges that only a tiny fraction of people aged between 65 and 85 are sufficiently disabled as to need either high or low care, and of those who need the highest level of care – even those over 85 – more than 80% receive that care from informal carers while continuing to live in their own homes. Put simply, the overwhelming majority of disabled older Australians are not a burden on either health or aged care services. ‘In fact’ the overwhelming majority who do receive aged care are in their own homes - and far more of a ‘burden’ on their informal carers than on the taxpayer or the community as a whole.

However, if government tampers with the massive amount of ongoing care provided by informal carers, then it almost certainly risks placing a far greater economic burden on ‘the community as a whole’. And yet the Productivity Commission has failed to grasp that fact.

The Commission claims that “many older Australians have low incomes but have substantial wealth” and it attempts to use that premise to justify including the family home under a means test. However, that use of the word ‘wealth’ is misleading – if not a deliberately emotive attempt to justify the unjustifiable.

As would be expected, many older Australians do have more in the way of assets than younger Australians but, for most, the only asset is their modest three-bedroom, one bathroom, single garage home – which might be in a location that makes the underlying dirt worth a bob or two. However, due to having lived much longer than they anticipated, and/or having diminished or defunct superannuation (much of it lost through ill-conceived superannuation legislation), that home is not simply their only asset, it is often not unencumbered – i.e. many already have reverse mortgages over their homes (which they have been forced to take out to top up their pensions because of burgeoning living expenses and/or GFC losses).

The Productivity Commission’s proposal to impose an additional debt on that home – in order to pay for low or high aged care costs – will inevitably reduce the net asset value for any ‘would be’ beneficiaries. And therein lies the rub. It has, of course, been maliciously claimed that the only people opposed to such an idea are greedy children, or other beneficiaries, who (it has been flippantly suggested) are more concerned about money than care. In fact, many of the intended beneficiaries are not undeserving kids; they are the very same people who are the unsung and unremunerated informal carers - who save taxpayers squillions by taking on informal caring roles.

And that is the fundamental flaw in the aged care industry’s argument – which the Productivity Commission has blindly accepted. Many informal carers currently have what is termed a lifetime financial agreement or family agreement – whereby they may have foregone many years (if not decades) of paid employment in order to provide the love and companionship, as well as nursing and personal care (including toileting), to a disabled or dying partner, relative, neighbour or close friend. That informal agreement, more often than not, includes recognition - in the care recipient’s Will - of the sacrifices made by the informal caregiver. It also takes account of the fact that, at the end of their care giving stint, an informal carer will likely be destitute and unemployable.

Informal caregivers are not just in high demand, they are in short supply because they are forced to make huge personal financial sacrifices (by foregoing wages, and thereby their own superannuation contributions) but also foregoing their own social, educational and cultural needs – potentially for the term of their own natural life. And it is well worth remembering that the carer of someone with dementia has a reduced life expectancy of ten years – as well as a seven-fold increased chance of developing dementia themselves. Put bluntly, it is not a decision that anybody takes lightly – and anybody who takes on informal caring for personal gain will very quickly get a reality check (and especially the realisation that they are likely facing personal financial ruin).

However, the ‘concessions’ made in the Productivity Commission report don’t come close to recognising such an informal caregiver contribution and, should the Commission’s reform agenda be adopted by the government ‘in its entirety’ – as has been recommended by practically every government funded aged care provider (including those who purport to speak for the aged, carers and people with dementia) - it would almost certainly lead to informal carers ‘walking away’ from their care giving roles in order to save themselves.

It is not, as has been ignorantly claimed, ‘hysterical’ to reach such a conclusion and not least because the ‘protected persons’ - as referred to in the Productivity Commission report - only provides for an eligible live-in caregiver to lodge in that home; it does not exempt the home from the aged care assets test. Should a ‘protected person’ opt to relocate e.g. after the care recipient enters formal aged care or dies, then the government imposed debt would be deducted from the sale price (as well as any other encumbrances, such as reverse mortgages) and thereby render it highly unlikely that a ‘would-have-been beneficiary’ carer could afford to downsize or relocate.

Further, the Productivity Commission’s definition of ‘protected person’ only includes: a partner or dependant child living in the principal residence of the care recipient; a carer eligible for an income support payment who has lived in the resident’s former principal residence for at least two years, and; a close relative who is eligible for an income support payment and has been living in the resident’s former home for at least five years.

In other words, it only gives provisional lodging, and in that home, and only to selected individuals who lived with the person. The Commission’s report gives no definition of what it terms a ‘partner’, and it makes no allowance for friends or neighbours who have been providing substantial daily care (often for years on end) – and the Productivity Commission’s proposal is, of course, at odds with existing Centrelink legislation.

Centrelink currently acknowledges that it is reasonable for a care recipient to enter into a form of assets transfer or lifetime arrangement, and there is a scale of ‘age related factors’. Based on Centrelink’s age based factors, a 60 year old could transfer assets to the value of $823,000, and a 70 year old could transfer $466,000, while an 80 year old could transfer $276,000 to someone providing lifetime care – and that informal carer does not need to live with the care recipient.

Unfortunately, abuse of family agreements has already led to homelessness of some older people and, in order to counteract that possibility, it had become common practice for the care recipient to continue to be the sole registered titleholder, while bequeathing either the title - or a consideration - to the informal carer. Such an arrangement guaranteed security of lifetime ownership by the care recipient homeowner while, in return, the intended beneficiary provided lifetime care on the understanding that they would not be left destitute.

However, by effectively deeming that only ‘undefined’ partners, or live-in carers – and of two or five years or more - would be protected person’s, the Productivity Commission is crossing over boundaries concerning defacto relationships (including same sex) which, not only affects Centrelink and DVA pension entitlements, but also places the care recipient at risk in the Family Court should a live-in carer decide it is all too hard and opt to walk away.

Further, by failing to so much as consider a grandfather clause (that would enable existing informal agreements to be fulfilled), the Productivity Commission has effectively thrown all current agreements out with the bathwater – and thereby left current informal carers in limbo. The danger is that, not only will future informal carers be deterred from putting themselves at financial risk, so too will existing carers be revisiting their own - now perilous - situations.

The added downside is that, in an effort to circumvent a government garnisheeing the family home to pay for future aged care, older Australians who do not yet require aged care might be persuaded, by would-be beneficiaries, to transfer asset ownership before disablement intervenes – purportedly in return for lifetime occupancy (which a beneficiary could default on). As a consequence, the Productivity Commission’s aged care agenda has the potential to markedly increase the incidence of such Elder Abuse; not reduce it.

In the end the taxpayer would still need to provide for the aged care of all ‘asset stripped’ or ‘abandoned’ disabled elderly – and potentially to a much higher proportion of the population, as well as at a much higher level of care, than if they were to remain (as is their want) with informal carers in heir own (exempt) home.

And, of course, the truly wealthy older Australians (and no doubt based on legal and financial advice), will have carefully transferred their assets to the safe haven of a Family Trust or similar; thereby ensuring that their preferred beneficiaries will remain the actual recipients (and not some ill considered government loan scheme administered by an inept bureaucracy).

Not content with threatening less affluent informal carers with homelessness, the Productivity Commission further demonstrates its ruthless indifference by proposing to assess all informal carers (at the same time as assessing the care needs of disabled elderly) for their ‘suitability’ to operate as informal caregivers. Consequently, many older and marginally handicapped informal carers may feel compelled to enter into pacts with their not-yet-high-care disabled recipient(s); which would see them shunning help from anybody – including Home and Community Care (HACC) or Doctors - who might ‘dob them in’ (which, presumably, is not a desirable outcome).

Given that such scenarios have already been put to the (government funded) Council on the Ageing (COTA), it is incredulous that - on 8th August 2011, and in response to the PM’s release of the Productivity Commission’s ‘Caring for Older Australians’ report – COTA’s Chief Executive, Ian Yates, was unashamedly reported as having denounced “claims people would need to sell the family home to enter aged care” as “alarmist and misleading.” Surely it is Ian Yates who is deliberately misleading all older Australians (including his members), because, they might not have to immediately ‘sell the family home’ but, they would unequivocally be forced to forfeit much of it – which is hardly a concession for anybody whose future wellbeing depends upon it.

In conclusion, the Productivity Commission’s proposed aged care reform agenda – in its entirety – has a far greater potential to render many disabled older Australians and their informal carers destitute and homeless, and thereby place a far greater burden on the taxpayer. Given that all of the above has already been pointed out to the Productivity Commission (and COTA and Carers Australia and Alzheimer’s Australia et al) - and they have chosen to ignore it - the question must be asked: are government funded peak aged care bodies advocating aged care reform or economic Darwinism i.e. to dispossess not only weaker older Australians (and reallocate their assets), but to also dispense with purportedly ‘unfit’ informal carer advocates?

Instead of “improving the wellbeing of the community as a whole”, if government (Labor or Liberal) opts to implement the Productivity Commission’s proposed aged care reform package ‘in its entirety’, it could find it is of benefit to nobody but residential aged care providers – and least of all to taxpayers and the disabled elderly.

If PM Julia Gillard expects to convince older Australians that she is not lying again, then she needs to provide more than lip service to her quote on 8thAugust 2011 that “older Australians are rightly viewed as an asset to our nation.” Does the PM honestly view older Australians as ‘an asset of our nation’? Or does she view ‘the assets of older Australians’ as an asset of our nation?

And why was it that, the day after the release of the Productivity Commission’s report - when the PM and the Minister for Ageing claimed they were embarking on ‘A National Conversation on Healthy and Positive Ageing’ - debate was gagged in all media outlets about garnisheeing the family home to pay for aged care? Just who is paying the piper and calling the tune?

Written by: Angela Smith