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  • Local governments are being pushed out of aged care. But at what cost?

Local governments are being pushed out of aged care. But at what cost?


Due to media focus on cases of abuse and COVID-19 deaths in nursing homes, residential aged care has received a lot more attention than in-home aged care. This is despite the critical importance of in-home services — such as showering, toileting, cleaning, cooking, delivery of meals and home maintenance — for preserving their independence of elderly people and keeping them out of residential facilities. More than one million older Australians receive home support services — far more than the roughly 300,000 living in nursing homes.

Like the aged care sector more broadly, home care is in the process of transition as the federal government implements a system designed around the principles of consumer choice and efficiency.

The efficiency push is driven by expectations that the number of Australians accessing aged care services will more than triple by 2050. Simultaneously, the federal government is under pressure to improve the quality of aged care services in response to the damning findings of the Royal Commission into Aged Care Quality and Standards.

Caught between these conflicting objectives are Victorian local councils, where a long-term partnership with the Federal government has been undermined by the process of reform. Since the 1980s — and to some extent even earlier — Victorian local councils have played a central role as providers of in-home aged care.  In 2019, Victoria had more than twice the number of local councils providing aged care than any other state. The majority of the money has always come from the Federal government, but there was an understanding that councils had the local knowledge and connections to best deliver the services.

Under the long-established ‘block funding’ model, the Federal government gave local councils a set amount of money — based on how many elderly people needed support — and the councils decided how to spend it. However, block funding is being supplanted by a new consumer-directed model, under which clients are allocated a set amount of money and then choose among a selection of competing providers. At the moment, both models are run side-by-side, with block funding delivered through the Commonwealth Home Support Program and client-directed funding through Home Care Packages. The Federal government has announced that by June 2023, the two programs will be rolled into one. Although it hasn’t released the technical design of the program, it is widely believed that funding will be largely consumer-directed and based on regulated market competition.


"In a submission to the Royal Commission, the ASU said that its members ‘regularly report concerns about clients …who wish to return to Council home care services after they have moved to another provider.’" 


Over the last few years, many local councils have decided that there is no place for them in the new structure. According to the Australian Services Union (ASU), which represents over 5,000 home care workers across Victorian local councils, at least five had stopped providing home care services in the last five years and six more have announced that their exit this year. Casey City Council recently made the headlines after being criticised by the ASU for its ‘secret’ decision to discontinue its aged care program — and possibly lay off over 200 workers. Mildura Rural City Council has also recently announced its departure, saying that the federal government’s new funding model had made it ‘completely unviable’ for the council to continue. Reportedly, many more councils are also considering their future in the sector.  

The ASU wants local councils to stay on as providers, arguing that councils provide better wages and working conditions than private providers. Research from aged care experts offers some support for this claim. In a submission to the Fair Work Commission in 2021, Professor Sara Charlesworth presented a comparison between enterprise agreements for aged care workers at Frankston and Kingston city councils and several non-for-profit and for-profit employers, which showed that the local government home care workers had significantly higher wages. The private providers generally paid close to the ‘rock bottom’ industry minimum award wage, as Professor Charlesworth describes it, while council aged care workers had wages between $6.40 and $10 above the Award. She also argued that only council workers were sufficiently paid for their travel time between different clients, which can be significant as many carers will work several short shifts over the course of any single day.  

Former personal care assistant Alana Walsh, who spent 10 years working at Yarra Ranges Council and three for a private company, agrees that councils are better employers. ‘Council is better than private. Better pay, better WHS (Work, Health & Safety), better conditions, clearer boundaries. To the clients we are all the same, but I felt more dignified working for council than for private companies,’ she said. The aforementioned Herald Sun story reported that Casey City Council aged care workers ‘earned more than $31 per hour, compared with the $23 per hour offered at larger non-council aged care services providers.’

Professor Charlesworth and the ASU also argue that the superior work conditions at local councils help to maintain a long-term workforce, which means that clients are more familiar with the carers who often provide physically intimate assistance such as showering and toileting. ‘The continuity of care and matching in-home aged care workers to the individual needs of older people is a feature of council provide care that is most usually not seen in private providers,’ an ASU spokesperson said. Government-funded research from 2019 found that ‘the most common complaint about home care providers was the high turnover of unqualified, inexperienced and untrained support workers.’

In a submission to the Royal Commission, the ASU said that its members ‘regularly report concerns about clients …who wish to return to Council home care services after they have moved to another provider.’ An anonymous council worker who operated a phone hotline told me that he received a lot of complaints from former clients when his council stopped providing aged care services in 2021. ‘Initially we were getting many calls for a few months. Clients were not happy, saying that the other company is hard to contact by phone, workers not experienced, charge higher rates and missed services due to staff availability issues,’ he said.

‘In Victorian local government, we have had a model of home care that has worked well for many years. It provides, not only decent conditions for workers, but good-quality care,’ Professor Charlesworth said. ‘It’s entirely tragic that we are moving to a situation where, for want of decent funding, we’ve got local governments looking at abandoning the direct provision of home care at a time where the Royal Commission has established that aged care including home care, is an abysmal mess,’ she added. Professor Charlesworth acknowledges that operating in the new regulatory environment of individualised funding is difficult, but nonetheless urges councils to think twice about exiting aged care. ‘It’s been fiscally difficult, but I think the provision of home care is just as important as roads and garbage — probably more important. While clearly adequate federal funding will be crucial, the financial decisions made by councils are political decisions,’ she said.


'Most council aged care services are currently too small and inefficient to operate in the Federal government’s regulated market model. The largest councils in Melbourne deliver around 120,000 hours of home care a year, far below the 1-3 million hours provided by larger private organisations.' 


However, these political decisions may come with legal and financial risks. Mach2 Consulting, which has provided advice to around 30 councils in the last five years, says that most council aged care services are currently too small and inefficient to operate in the Federal government’s regulated market model. The largest councils in Melbourne deliver around 120,000 hours of home care a year, far below the 1-3 million hours provided by larger private organisations. The average cost of production for an hour of in-home services provided by local councils in financial analysis we have undertaken is between $70-110 per hour. Of this, just under $50 comes from the Federal government, between $5-10 comes from the client, and the rest is supported by a ratepayer subsidy,’ Mach2 consultant Craig Kenny says.

Mach2 Consulting has advised councils that, from June 2023, when block funding ends and National Competition Policy will be applied to the sector, there is a risk that these subsidies will be considered a breach of competitive neutrality. In essence, private providers could complain that councils have an unfair advantage in the aged care market. If the regulator accepts that argument, councils will be unable to continue subsidising their services. According to a 2018 policy platform, the Victorian Labor Party planned to ‘amend any state policies, such as competitive neutrality policy, to encourage council to remain HACC [Home and Community Care] providers’, but this commitment remains undelivered. In that same year, the Municipal Association of Victoria (MAV) estimated that Victorian councils collectively contributed between $150-200 million in ratepayer funds to their aged care services.  

The ASU says that this ratepayer contribution directly improves the service quality for clients and workers and is advising councils that they can continue to fund services if they can demonstrate that policy objectives won’t be met by the private sector alone. Some local council services have passed these so-called ‘public interest tests’ in the past. A recent City of Port Phillip public interest test decided that ratepayer subsidies should continue as council services ‘provide greater levels of accessible care and quality education for vulnerable children in the municipality than other providers’. However, the council has also reduced ratepayer subsidies by gradually increasing fees and implementing efficiency savings. Many council-operated swimming pools are also exempt from competitive neutrality. However, Darebin City Council has been advised that their aged-care subsidies would be unlikely to pass a public interest test due to the ‘size and sophistication of the aged care services market’.

Some local councils are confident about staying on as providers of in-home aged care services, regardless of the regulatory environment. Inner-city councils Kingston, Bayside and Darebin have all signalled their intention to continue and have already moved, or are moving, into providing aged care through the consumer-directed Home Care Packages. Kingston City Council Mayor Steve Staikos told me that, although the council isn’t the largest provider of home care services in the area, its client base had steadily expanded over the last few years, and he was confident about the council’s future in aged care. ‘It is possible [for councils to stay in aged care], but it will take commitment,’ he said.

Bayside City Council recently ran a trial of Home Care Packages and in mid-March voted to start providing them as part of its regular services. Bayside Mayor Cr Alex del Porto said that the work of Council’s aged care staff is fundamental to the health and wellbeing of our older community members. ‘As a Council, we’re committed to continuing to consider the varying support needs of our residents, partnering with our community to protect and care for the community of life in Bayside, making an inclusive, active, healthy and connected Bayside for everyone,’ he said.




Zacharias Szumer is a freelance writer from Melbourne. Some of his other published work can be seen here.

Main image:  Man leaning on his walking stick. (Getty Images)

Topic tags: Zacharias Szumer, Aged Care, Funding, Covid-19, In-home Care, Council



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Existing comments

Surf Coast Council last year also gave up on Home Care Services and tendered out to several providers. It remains to be seen how successful this was.

John Bartlett | 05 April 2022  

NSW is an example of private Home Care service providers. Clients choose their service provider, usually with a lack of knowledge Some charge monthly fees. I've been fortunate to have an excellent provider with no fees. Perhaps if Councils were providers the quality of care may be more uniform. There is a bigger problem that all states are facing, the emasculation of Home Care by the Morrison government. Until recently clients had quite a bit of autonomy over what services they required. Over the last several months services are being drastically reduced. Originally quality of care was a paramount aim. No longer.

Packages continue to be funded but because services provided have been reduced, money accrues and is returned to the government when the client does or moveds to institutional care. Sneaky, isn't it?

Anna | 05 April 2022  

Zacharias is on the money. Victoria's model of service delivery via local government worked well. Staff knew their client base, councillors exercised political oversight, home care could be integrated with community care, and local service models could be integrated with local needs and resources. There was also the opportunity, though few used it, for Councils to supplement the funding for the service. The new Commonwealth model is all ideology, said to be about empowering the 'consumer', but really about screwing the provider, and especially the provider's labour. When will we ever learn that the Commonwealth is pathetic at delivering grass-roots services?

Ginger Meggs | 05 April 2022  

Just after sending an email to my rep on council about this very topic, I receive this article. I had no idea why everything had stopped. My sheets have not been changed for more than 12 months. Nobody has been here to clean for over a year. I am 80, live alone and no longer able to do these things for myself. Thanks for the article.

L Hayward | 05 April 2022  

The end result of the government giving this "industry" to outsider is we will be forced to pay much more while the new "owners" will be allowed to make much mort money than ever! Pity help all of us who will need home care services to continue to live a reasonably comfortable life! John.

John B. Wilson | 08 April 2022  

Many problems of aged care would be removed through direct public provision of aged care, as was once the case.

Shortcomings of aged care today were largely created by a specific event, from which time today’s problems were entirely foreseeable.

Exactly as with the promotion of private education plus the promotion of private health care and the promotion of private child-care centres, the (Coalition’s, supported by Labor) Aged Care Act 1997 promoted private investment in aged care. Private equity firms, new foreign investors, and superannuation and property real estate investment trusts entered the residential aged care market. As intended, they were there for the money.

Nursing home problems in many respects simply stem from chronic and bipartisan underfunding. Bureaucracy is a problem largely because there isn't the money for the staff to do both it and nursing care to a satisfactory standard. Staffing is a problem because neoliberal policy has for five decades worked to cut wages therefore staff commitment and quality.

Council provision of aged care deserves total support.

R. Ambrose Raven | 16 April 2022  

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