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Aged Care: Funding increase welcomed, not enough


Aged Residential Care: Funding increase welcomed but not enough to address the big issues.

Funding for elderly residents in full time care will increase by $17 million per annum over four years, in line with the support agreement between Labour and the New Zealand First Party.

HealthCare Providers CEO Martin Taylor said the $17 million would possibly increase the subsidy paid to the sector to look after the country’s 46,000 elderly each year by 2 percent.

Mr Taylor said the Budget announcement noted that the $17 million was on top of a $39.5 million adjustment given to DHBs’ for home based care ($15.5 million) and residential care ($24 million), which relates to inflationary pressures over the last year.

As with the $17 million the Minister expects the $39.5 million to be passed on by DHB’s in its entirety. If this happens then the $24 million inflation adjustment in tandem with the $17 million new money, means providers should expect an increase of 5%.

“Right now, it is unclear whether DHBs will pass on all the funding, as an offer is yet to be made, due to a delay in negations caused by DHBs. However, it appears the funds will be passed on if Ministerial assurances made in Parliament yesterday are acted upon, i.e., “There will be full flow-through, and there is agreement as to the algorithm for calculating that flow-through”.

“The additional $17 million per annum will provide minimal assistance in covering the $63 million per annum impact of the Nurses’ Award. Furthermore, we strongly disagree with the Minister that this funding increase will allow a significant pay increase for those working in the sector”.

“While the $17 million per annum increase – totalling $68 million – is welcomed, it doesn’t reflect that this country has an ageing population that is expected to increase by nearly 70,000 or 13.5% over the next five years.

“Some long-term planning must be done to ensure that the sector is sustainable and the Government are able to meet the expected higher demand for aged care services as the percentage of elderly increase. A key part of that equation is planning around capacity demands - as yet this has not been done by the Government”.

“We are pleased that the New Zealand First Party has carried through on their election promises to promote the funding issues in aged residential care, and that the Labour led Government have promised additional funds to the elderly over the next four years,” Mr Taylor said.



What is the current aged residential care capacity in New Zealand?

There are currently 771 facilities providing aged residential care in New Zealand, operating a total of 32,833 beds(1).

Growing Elderly Population

The number of people over the age of 65 years is projected to increase from 511,400 in 2006(2) to 580,600 by 2011. This will mean an extra 69,200 people over the age of 65 – an increase of13.5%

In addition, the percentage of people aged over 85 will increase at a rapid rate – from 40,200 in 2006 to 50,200 in 2011(3). This is a 25% increase in people aged over 85 in the next five years.

The average age for people going into aged residential care is 83.

Will the need for beds change over time?

Taking into consideration, medium population growth estimates, the percentage of population coming into residential care, the demand for each service level within residential care, length of stay, and facilities occupancy levels, it is anticipated that the total number of beds required in aged residential care will grow at low or moderate levels in comparison to the overall elderly population growth.

However, the type of beds required to cope with future demand will change. In future there will be a significantly higher demand for hospital and dementia beds.

What does the Government spend on Aged Residential Care?

In 2004/05, the Government spent $887 million on aged residential care. Although the total amount of funding to aged residential care has increased in previous years, so has the number of people requiring that care, so funding increases have only covered greater volumes of people requiring care.


(1) Figures provided to HCPNZ under OIA by District Health Boards (April 2005)
(2) Source: Stats NZ (Table Builder) Population Projections for 65+ aged population in NZ, Assumes medium birthrates, medium mortality and net annual migration of 10,000
(3) Source: Stats NZ (Table Builder) Population Projections for 65+ aged population in NZ, Assumes medium birthrates, medium mortality and net annual migration of 10,000

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