Back in black? Grattan recommends accessing equity in family home to pay for aged care

A new report from policy thinktank Grattan Institute says Australia is headed for persistent structural Budget deficits, meaning Budget repair is required – and expected strong growth in aged care costs must be mitigated. You can read the 58-page report here.

“There are no easy solutions,” say authors, Danielle Wood, Kate Griffiths, and Iris Chan. “Critically, the government will... need to make changes to ensure fast-growing programs such as the NDIS and aged care are sustainable,” they state.

If the Royal Commission’s recommendation for a rights-based aged care system are implemented, aged care expenditure is expected to grow from 1.2% of GDP in 2021 to 2.5% of GDP by 2061, the report states. The report recommends continued expansion of home care to meet the growing needs of the ageing population, but notes that there are still 50,000 Australians waiting for their correct level of Home Care Package. In terms of residential aged care, the report recommends a greater portion – or even all – of the family home should be included in the means tests for residential aged care. They propose that equity in the home could be accessed via the Home Equity Access Scheme and costs of care could be recouped from estates. The report also proposes counting more of the family home in the Age Pension asset test, raising the superannuation preservation age from 60 to 65, and making health spending more efficient.