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Press Release

Budget 2016: time to iron out the wrinkles in aged care

Budget 2015 saw the Government allocate $76.1 million to help hospices expand palliative care services. While this is a solid start, more investment is needed to comprehensively change the way healthcare services are delivered to people 65+ in New Zealand.

We have an increasing proportion of people in older age groups and a declining number of children. This is a hot topic globally as several other countries are experiencing this phenomenon, but what will it mean for New Zealand?

In 2010, the Grant Thornton Aged Residential Care Service Review warned that by 2026 the over 65 population is expected to increase by 84 per cent, from 512,000 to 944,000 people. During this period the overall population is projected to grow by 20 per cent, from 4.2 million to 5 million.

The report revealed that by 2026:

  • between 12,000 and 20,000 people will require aged residential care
  • new beds in the sector need to increase by 78-110 per cent to accommodate demand and to replace aging facilities
  • the current operating profits from stand-alone residential care facilities will be insufficient to stimulate the required private sector investment
  • the workforce needed to service the aged care sector must increase by 50 to 75 per cent.

The review also states that investment in the residential aged care sector requires significant planning and lead-in time to ensure that demand, supply and workforce models are established to meet these future challenges.

The research found that demand for rest homecare will begin to increase between 2012 and 2015 – so the time to act is well and truly upon us.

As a country, we need to recognise the need for more aged care services and funding to meet future demand. The current regulatory environment’s influence on supply and demand needs to be reviewed and refocussed to support appropriate investment models of care.

Current trends in preference for alternative care will also continue into the future and need to be taken into consideration. For example, international literature suggests that informal care by family and friends is a viable option for someone with limited, but not severe, disability.

Pre-emptive strikes like United Future’s proposal to provide free annual health checks for everyone over the age of 65 are well intended measures to maintain health and hence reduce demand for resources, but they simply won’t stop the onslaught of those needing care in their twilight years; a 2014 costing update to Grant Thornton Aged Residential Aged Care Review reveals that two thirds of New Zealand facilities are over 20 years old and new supply has grown at just 1.2% per annum over the past five years (excluding Canterbury). The Ministry of Health’s forecast models indicate that a severe shortage of supply will exist by 2022 if current growth rates don’t pick up. Some providers have projected the shortfall to come as soon as 2018.

One of the priorities in the Government’s 2016 Budget Policy Statement is to spend to achieve better outcomes for New Zealanders. Policy and funding needs to have an impact on investment levels so that New Zealand is prepared for the unprecedented number of older New Zealanders requiring support. After all, this is an issue that will ultimately affect all of us.

Further enquiries, please contact:

Paul Kane
Partner, Privately Held Business
Grant Thornton New Zealand
T +64 (0)9 308 2576

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