The aged-care sector “must demonstrate full financial transparency” before raiding superannuation or new taxes are introduced, according to an advocate for elderly Australians.

Ian Henschke, chief advocate for National Seniors Australia, told The New Daily the way money is being spent in aged care should be scrutinised before new taxes or levies are introduced.

“Aged-care providers must demonstrate full financial transparency and we haven’t got that at the moment,” Mr Henschke said.

“We found out years ago that some multinational providers aren’t paying any tax here in Australia, even though they’re making profits because of elaborate structures.”

The Aged & Community Care Providers Association (ACCPA) released its Financial sustainability summit issues paper on Thursday, after 43 organisations representing consumers, providers, unions, experts and government met in early June to “discuss long-term policy solutions”.

The paper offers three solutions to long-term sustainability for the aged care sector:

• Higher taxation or a greater proportion of existing taxation
• Introduction of a superannuation levy
• Introduction of a new social insurance scheme similar to the National Disability Insurance Scheme.

ACCPA CEO Tom Symondson said after a discussion by a broad group of stakeholders, the paper identifies that those with the means should be asked to pay, including for accommodation and lifestyle expenses.

“The superannuation system is designed to provide an income during retirement, enabling people to remain financially independent as they age,” he said in a statement.

“We want to see a system that encourages use of superannuation as it was intended.”

Funding for aged care in the 2022-23 financial year reached $27.1 billion, including $3.9 billion to continue implementing recommendations from the Royal Commission into Aged Care.

The cost of aged care in Australia is expected to rise as the population ages. Photo: Getty

Ring-fencing funding

The paper suggests using the superannuation system “for funding of aged-care costs should be further explored, including a ring-fenced scheme,” where a portion of superannuation guarantee contributions would be compulsorily saved to pay for care costs later in life.

Industry Super Australia chief executive Bernie Dean said while there is an important conversation to be had about providing care to Australians in their later years, ring-fencing a portion of super is not the answer to funding problems.

“Commandeering a portion of super guarantee for aged care is unfair to those who won’t need it and diminishes the ability for many Australians to save for other things they need in retirement,” he said in a statement.

“It would leave retirees and the taxpayer worse off.”

Mr Henschke said another option is an insurance system introduced in Japan, where people start paying for their aged care after reaching a certain age.

“Rather than drawing it out of superannuation, it could be a form of national health insurance: The Japanese had to deal with this problem,” he said.

“We need public consultation and we need to actually look at a whole range of principles and put this above politics.”

Aged care and politics

Mr Henschke said one of the most important aspects of discussing aged care is ensuring you don’t end up with “politics ruling the system”.

“You can’t have a situation where you say we’re going to rule this out because it’s a new tax and therefore vote for us because we’re not going to bring in new taxes,” he said.

“You may well need to increase the funding for aged care because you’ve got more people requiring help, and therefore require more money for healthcare services.”

The National Seniors Australia chief advocate said that a survey of 10,000 of the organisation’s members found people are willing to pay more for better care, as long as they know they are paying for care and not for the profits of a company or an individual.

“If we bring these changes in incrementally and we ensure that there’s a safety net for everyone to get good-quality care, most people surveyed said they were willing to pay more as long as there is transparency in what they are paying for,” Mr Henschke said.

“This is not an insoluble problem, but it does require a multi-partisan approach.”