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Elderly in Care likely to Miss Out Again

Elderly in Care likely to Miss Out Again

12 October 2008

The Government, on October 1, made a windfall gain of $11 million, from the elderly in aged residential care.

On 1 October, the superannuation component of the aged-care subsidy went up which meant the Government component of the subsidy went down resulting in a net gain to the Government of $11 million dollars.

"We are surprised that the money has not already been passed on considering the sector only received a partial inflation adjustment of 2.8% in July despite inflation being 3.5% this year," said Martin Taylor, CEO of HealthCare Providers NZ.

"DHBs have said the money will be used for aged care, but they have explicitly remained silent as to whether this means it would be passed onto the sector in compensation for withholding a full inflation adjustment in July."

"Ultimately the Minister is responsible as DHBs are his agents, but he has made no move to ensure it is passed on. At the end of the day it is his call whether the government will retain the windfall or pass it on to compensate the sector for not ensuring a full inflation increase this election year."

The issue of automatic inflation adjustments is very important if the sector is to remain sustainable in the short, medium and long term.

"Everyone agrees that we need to inflation index superannuation to guarantee the elderly have a decent quality of life, but this understanding has not been accepted for those who look after the elderly."

Currently, the entitlement the elderly in care receive is not indexed to inflation, despite the negative affect this has on care delivery and future sustainability. The entitlement is to ensure their quality of life.

"If the sector does not receive automatic inflation adjustments then this will contribute to the looming crisis in aged care which will hit by 2011," Mr Taylor said. "We have asked all political parties to show leadership and commit to ensuring the elderly in care are protected from inflationary costs, and that the sector's sustainability is thoroughly looked into to ensure the elderly get the right care at the right time".

The responses received from political parties to date are :

Labour: Labour will review the way funding is distributed to aged care providers by DHBs, including consideration of whether aged residential care subsidies should be automatically indexed to inflation or whether DHBs should retain discretion."

National: National will require DHBs to index the subsidy paid for elderly in care by the annual FFT adjustment.

New Zeland First: New Zealand First believes that just as New Zealand Superannuation is indexed for inflation annually, then the subsidy paid to elderly in care should follow a similar formulae as a minimum.

United Future: UnitedFuture will ensure that subsidies paid to the elderly in care are indexed to CPI."

Greens: Yes. It is Green Party policy to improve funding of residential care for older people to recognise increased costs and develop a sustainable funding path.

Full responses can be viewed at

"While some parties are clearly avoiding making a commitment, it is clear the majority of parties believe the inflation issue is a problem because they have made robust policy commitments to address the issue. For the sector to be sustainable, politicians need to show strategic leadership and, if this does not happen, the sector will be in crisis by 2011," said Mr Taylor.


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