AUSTRALIA'S aged care costs will balloon to unsustainable levels unless the federal government introduces more user-pays services, big business says.
The Business Council of Australia yesterday urged the Gillard government to deregulate aged care and require more Australians to pay for care out of their own pockets.
Without major reform, government spending on health and aged care will drive deficits to 5 per cent of gross domestic product by 2050 or $70 billion in today's terms, according to the council's chief executive, Jennifer Westacott.
She appealed to both sides of Parliament to agree to the long-term reforms proposed by the Productivity Commission that are under consideration by the government.
The commission has proposed changes that would shift aged care from a rationed system to a more means-tested, needs-based system.
It would also require more co-payments to encourage investment but aim to empower consumers by increasing choice and deregulating services to promote more competition between aged-care services.
Changes aimed at removing barriers to wider choices for aged-care residents would include financing reforms, providing more support for people remaining in their own home, getting care in retirement villages and providing alternatives to the accommodation bonds required at present for low-care nursing homes.
The government has indicated it will announce a new policy on aged care before the next federal election and the industry hopes the plan will be announced by the May budget.
Ms Westacott welcomed the elevation of the Minister for Ageing, Mark Butler, to cabinet this week as an indication of the importance Prime Minister Julia Gillard was attaching to the issue.
"Surely if there was ever an issue that Parliament could find common ground on it would be making sure we provide the services that we will all need as we age and in a way that is going to be affordable for all governments long term," Ms Westacott said.
Research by the Business Council has found that spending on healthcare and ageing is projected to exceed 40 per cent of total budgets of most state governments by 2050.
It says that without fundamental reform, care systems would become unaffordable "with ever more difficult choices about how to ration services including who might have to miss out", the report says.
Ms Westacott acknowledged that the Government would have to grapple with the politically difficult challenge of unveiling a policy requiring more co-payments by many people.
But that would be offset by the positive features of much greater choice in the type of service to be offered and greater competition among service providers.
"The greatest risk in addressing the growing and significant challenges presented by the aged-care system is that people do not recognise or accept the fundamental nature of change that will be needed in the next few years," Ms Westacott said.