The private sector has been the major beneficiary of a large rise in aged care spending in recent years, evidence from the Productivity Commission shows.

The PC has begun releasing its annual Report on Government Services, which examines expenditure on services and its effectiveness. The first tranche of the report, on community services and housing, was released on Thursday.

Its aged care report sheds light on a sector that was the subject of a scathing interim report by a royal commission last year, which savaged the sector’s failings in caring for Australian seniors.

Total aged care funding reached $20.1 billion in 2018-19, up from $18.7 billion in 2017-18 and $18 billion in 2016-17, PC data shows, with around 70% of funding going into residential aged care.

This has fuelled an increase in the total number of residential aged care places from 180,000 in 2010 to 213,000 now.

These have increasingly been places owned by for-profit service providers.

In 2010, according to PC data, around 35% of residential aged care places were run by for-profit providers. In 2019, that had reached 41%. Religious providers have fallen from 28% to 23.4%, while the other two major sub-sectors — community and charitable — had both maintained or slightly increased their share.

Over the last decade, the Commonwealth has invested heavily in home care to try to reduce the costs associated with residential care.

Home care packages have expanded from 73,000 in 2015 to 107,000 in 2019, with the package requiring the most complex level of home care, level four, expanding the most. That level now forms 28% of home care funding compared to 20% in 2015.

Level three packages have also increased from just 5% of all packages to 19%, indicating that while successive governments have tipped more money into home care, much of its has been absorbed by seniors with more complex needs.

But the spending has been successful in reducing residential aged spending below what it otherwise would have been: the number of residential care places per 1000 population has fallen from 86 to 76 since 2010.

Private sector providers have also reaped the rewards of this increased funding: just 10.3% of home care packages were provided by private providers in 2016; that has now doubled to 20.9%.

Religious providers have fallen from 32% of home care packages to 23.9%; charitable providers have also declined slightly, while community sector-provided places have grown slightly to 19%.

Private sector growth was especially strong in NSW, where 27.3% of home care packages are now provided by private sector operators, and Victoria where the proportion of private places has nearly tripled to 17%.

Since 2016-17, the number of complaints about home care package providers has soared from 690 to over 1500, despite the number of home care packages only increasing 33% in that time.

What has been good for private sector aged care service providers hasn’t necessarily been good for senior Australians.

Peter Fray

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