Sydney, Australia – A leading voice in the aged care sector is calling for a significant shift in how Australians view superannuation, arguing the nation’s $4 trillion retirement savings pool should be increasingly used to fund aged care costs rather than being left as inheritance. The proposal comes as the aged care system grapples with funding shortfalls and growing waitlists, and as Australia’s demographic profile rapidly changes.
Tracey Burton, the outgoing chief executive of Uniting NSW and ACT, will deliver the message at an industry event next week, advocating for a “culture change” in how Australians perceive the purpose of their superannuation. Burton contends that some wealthier individuals expect fully publicly funded aged care despite holding substantial superannuation balances intended for their heirs. This expectation, she argues, is unsustainable given the financial pressures facing the system.
“We have to shift that thinking that the system should pay for all of our care, because It’s going to be limited by the amount of money the government can afford to put into it,” Burton said, ahead of her final major speech. She acknowledged the importance of individuals carefully considering their hard-earned savings but emphasized the need for a national conversation about the appropriate apply of superannuation funds.
A Demographic Challenge and Funding Gap
The call for change comes after the federal government’s aged care taskforce in 2024 recommended that wealthier Australians contribute more towards their aged care costs. The taskforce’s findings highlighted a growing proportion of Australians aged 85 and over will have remaining savings in the coming decades, including those with “significant funds” available to cover care expenses.
Uniting, a non-profit organization providing a wide range of care services including 70 residential aged care homes and 90 retirement villages, is acutely aware of the pressures. Burton warned that the work initiated by the landmark royal commission into aged care remains incomplete. Currently, approximately 200,000 people are on waiting lists for in-home care and support services.
A key concern raised by Uniting is the affordability of even basic in-home care services for full pensioners. “Showering in home care is not considered part of care clinical care at the moment, which means that some people have to pay a co-contribution, and if they can’t afford that, they’ll miss out on the assistance. The consequences of that are significant,” Burton explained. Uniting is advocating for the automatic exemption of full pensioners from co-payment rules, a measure estimated to cost around $50 million annually.
Government Response and Recent Investments
The federal government has responded with increased investment in the aged care sector. New aged care laws came into effect in November, accompanied by a $4.3 billion investment in the Support at Home program, aiming to deliver 83,000 additional places by the complete of the financial year. This month, an additional $115 million was allocated through the Aged Care Capital Assistance Program to improve access to residential aged care in regions including Adelaide, the Illawarra, Perth, and the Hunter.
Burton acknowledged and praised the recent funding boosts, particularly those directed towards the aged care workforce and increasing the presence of nurses in residential settings. But, she underscored the long-term challenges posed by Australia’s changing demographics – a projected doubling of the population aged over 65 coupled with a declining percentage of the population in the workforce.
Burton, who has led Uniting NSW and ACT since 2018 and will be stepping down later this year, described a need to challenge the ingrained belief that superannuation is primarily for inheritance. “This idea that superannuation is intergenerational and for passing on to your kids. It’s not. It is there to help you have the best retirement you can have, so spend it on what you need, and if that’s the aged care system, then spend it there.”
The debate over the future of aged care funding is likely to intensify as Australia’s population ages. The coming months will be crucial in determining whether a broader societal shift in perspective on superannuation can be achieved, and whether it will translate into a more sustainable and equitable aged care system for all Australians.
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