On Sunday’s ABC Insiders program, Aged Care Minister Anika Wells flagged the prospect of charging younger Australians a levy to pay for the aged care of the baby boomer generation.
“We need to have an honest, responsible and mature discussion about what aged care looks like in this country”, Wells said.
“If you need to raise an extra $10 billion a year to deliver the extra services that people want in aged care … a levy across the board, all taxpayers, might be where you have to go”, host David Spears probed.
“Are you open to a Medicare-style levy on all taxpayers?”.
Wells evaded the topic, but she did hint that the government has a “genuine duty” to think about this possibility.
The Aged Care Royal Commission issued its report in 2021, recommending the imposition of a levy. However, Labor had already ruled this out before the federal election.
Labor has since established a task force to advise them on future reforms in the industry, suggesting it might have softened to the idea of a levy.
The government will receive an interim report in October, and the full report will be delivered by the end of December.
Political journalist Samantha Maiden rubbished the idea of younger Australians paying a levy when they are being smashed by soaring mortgage repayments and rents, while the baby boomers are going largely unscathed, are spending like drunken sailors, and have actually gotten wealthier over the pandemic.
“Hello? This is going to hit headlong into this intergenerational warfare that is about to spring up in Australia”, Maiden said.
“Why should young people who are facing HECS debts and rising interest rates and inflation pay for a levy for the baby boomers to have lava lamps in their aged care home?”
“I’m sorry if they have houses, it is time that they started paying for it themselves. A lot of these families are very asset-rich”.
Well said Sam Maiden.
Instead of accentuating Australia’s already extreme reliance on inefficient personal income taxes, and making Australia’s diminishing pool of workers shoulder even more of the tax burden, Australia should instead broaden the tax base by say raising the GST and indirect taxes, and implementing taxes on land and minerals.
Alternatively, the federal government could set up a HECS-style loan system to help fund aged care, with people given credits to finance their care and their estate repaying their debt once they die.
Australia already has a “national insurance scheme” to look after oldies: it’s called the Aged Pension and Medicare.
Over 80% of over-65s own their homes, most outright.
This means many are sitting on vast sums of wealth, while their children and grandchildren struggle to pay their mortgages or rent.
If these oldies need additional funds, they can also take out a ‘reverse mortgage’ from the government’s generous Pension Loans Scheme.
Australia has already found itself in the perverse situation where the older aged generations have enjoyed an unparalleled rise in wealth at the same time as their dependence on the Aged Pension has risen rapidly, and is projected to continue doing so.
Meanwhile, relatively poorer younger Australians are heavily subsidising the retirements of many wealthy retirees, whose biggest asset (their principal place of residence) is largely excluded from their ability to fund their own retirements.
This situation makes no sense from either a budgetary or an inter-generational equity perspective.
Implementing an aged care levy would merely make the intergenerational inequities even worse.
