Hewson's view: Exposing the neglect of our aged

Failing system: Many older Australians have been let down by an aged care system driven by profits. Picture: Shutterstock
Failing system: Many older Australians have been let down by an aged care system driven by profits. Picture: Shutterstock

As with the Hayne Banking Royal Commission, the Royal Commission into Aged Care Quality and Safety is exposing the excesses and abuses by operators in the sector thereby compromising the provision of affordable, adequate, and reliable aged care services to ageing Australians.

It is highlighting the very significant consequences of neglect, bad policy, and bad industry behaviour over recent decades. There have been some 20 reviews of the sector to governments over the last couple of decades, but governments have only adopted a few of their recommendations.

Many private sector operators of nursing home and assisted-living accommodation are mostly driven by the desire to maximise their profits and shareholder value, rather than making care a priority. Hence they have increasingly sought ways to contain costs, and minimise service and service quality.

Many church and charitable operators, and not-for profits, have also struggled with costs, and funding, as these "enterprises" have not been the generators of the net cash surpluses that they had hoped, often requiring "top ups" from elsewhere.

Naturally, given the focus of the commission's terms of reference, most of the findings to date, and therefore the focus of most of the public discussion, has been on the "inadequacies" of care, meals, and the like; on the excessive use of drugs as "restraints" (especially with those patients with dementia and other behavioural difficulties); the lack of nursing care (especially 24-hour care), with both the latter driven mostly to save on labour costs; and the lack of appropriate care for those with particular physical and mental disabilities.

There has also been recognition that there are some 120,000 older Australians on the waiting list for a "home care package", a backlog that would cost some $2.5-$3 billion to eliminate completely. The Morrison government is now under real pressure to address this, especially having spruiked their very strong preference to encourage older Australians to stay at home as long as possible, rather than be transferred to an aged care facility.

This attitude by the government is also driven by budget cost considerations, believing that such packages are cheaper than funding the aged into some residential aged care facility. However, there are also very real questions about the effectiveness of such packages - especially whether the aged are getting/taking their proper medication, and eating and exercising properly, as well as genuine concern about the extent to which such packages are "exploited" by the aged care providers, who come to see the system as a bit of a "gravy train".

Another very important issue, which may not be fully addressed by the commission, is affordability, the cost of access to, and living in certain aged care facilities. For example, the actual cost of moving into, and living in, a self-care unit in a retirement village, where the aged are "ripped off" in terms of the initial prices paid for units, the costs of their management and upkeep, the residual values returned to the families when they leave or die, the churning of residents, safety issues, and misleading marketing and advertising. Many of these points were made in a Four Corners investigation into the sector, with some particular focus on the practices of the Malaysian controlled AVEO.

Similarly, the actual costs of a bed in a nursing home, the excessive "accommodation bonds", usually of many hundreds of thousands of dollars, even millions in extreme high-income, "extra service" cases, to be paid to just get a bed, and then the "living costs" of being there. The bonds are "cheap money" to the operator, mounting collectively in some cases to more than the cost of building the nursing home, ultimately to be returned, usually on death, less a "management fee".

While proposals were put as far back as the Howard Government to "protect" these bond monies, to make sure that they can be readily refunded as required, either by way of a supporting bank guarantee, or for these monies to be centrally managed and controlled, this has never really happened.

Aged care is an important essential service, where operators enjoy a privileged "social licence" to provide that service, and therefore carry responsibilities in terms of the quality and affordability of that service. Certainly, our aged Australians deserve much better service than they are getting!

Aged care is an important essential service, where operators enjoy a privileged "social licence" to provide that service.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.