Keating proposes HECS-style loans to fund aged care

Senior counsel assisting Peter Gray told commissioners that aged care providers weren’t required to report how much they were actually spending on care.

“Reporting is inadequate,” he said.

“The current funding system does not seek to establish whether funding is matched to need or the cost of supplying the care that would meet need.”

Mr Gray said providers followed a vague requirement of “adequate and appropriately skilled” when it came to addressing staff numbers and their qualifications.

The retirement system should morph into an aged care system.

— Paul Keating, former prime minister

Commissioner Tony Pagone asked Mr Keating if his HECS-style proposal could be seen as a death tax by requiring people to pay off their loans with their assets.

“Putting on my former hat as a tax lawyer, I can see lots of people trying to make sure they don’t have the assets there that can be called upon,” Mr Pagone said.

Mr Keating said the government would have to introduce policies to make sure that didn’t happen.

Similar to HECS, Mr Keating said the loan would not have to be repaid if it couldn’t, like university students who never meet the income threshold to start paying off their debt.

Brick and mortar assets, superannuation, cash and other investments would all be called upon after the person died to pay off the loan, he said.

“In such a proposition you couldn’t think of much political opposition from any quarter,” Mr Keating said.

The former prime minister and father of Australia’s compulsory superannuation said he had changed his thinking on his previously proposed “longevity levy”.

The levy would tack an 0.5 to 1 per cent extra on super payments to fund an insurance scheme for Australians once they passed their mid-80s.

But he said such a system would be politically impossible now.

“You’ll get the moans of the small business organisations and the violin playing by members of the Liberal Party backbench,” Mr Keating said.

Even if it was introduced today, he said it wouldn’t be able to address current shortfalls in aged care, like 18-month wait times for high-level home care packages.

He said with Australia’s population living longer, some well into their 90s or past 100, people’s superannuation couldn’t be expected to support them once they retired.

“The retirement system should morph into an aged care system,” Mr Keating said.

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