35. Expenditure on aged care

Expenditure is a key indicator of changes occurring in any service delivery system over time. Changes in the allocation of resources among nursing homes, hostels and community care are an important measure of changing patterns of service provision. In current prices, expenditure on aged care and related services in 1996 - 97 is expected to be $3,232.9 million.

Total recurrent expenditure on aged care services in constant price terms increased from $2,181.8 million in 1991 - 92 to $2,725.9 million in 1995 - 96. (The 1989 - 90 Government Final Consumption Expenditure (GFCE) deflator has been used to calculate constant prices for the time series data.) Expenditure on assessment, Home and Community Care (HACC) and hostels increased by over 300% and nursing homes by 93% between 1986 - 87 and 1995 - 96. The rates of increase have moderated in recent years, however, in keeping with government policy of restraining expenditure of aged care. Between 1991 - 92 and 1995 - 96, recurrent expenditure on assessment increased by 11%, on HACC by 22%, on hostels by 68%, on nursing homes by 18%, and on all sectors by 25%.

The proportion of aged care expenditure allocated to HACC and aged care assessment have remained relatively constant over the period (21% for HACC and 1% for assessment), while the proportion of expenditure allocated to hostels increased from 10% in 1991 - 92 to 13% in 1995 - 96. Expenditure on community aged care packages increased from a zero base, but is still less than 2% of total expenditure in 1995 - 96. Total aged care expenditure on nursing homes declined from 67% to 63%, consistent with the decline in the size of this sector relative to the hostel and home-based care sectors. Nursing home expenditure remains, however, the single most expensive component of the aged care service system. These changes are broadly consistent with government policy to control increases in nursing home expenditure, and to direct additional resources to the hostel and community care sectors.

Expenditure on a per capita basis provides an indication of levels of service provision in relation to the size of the aged population. In Australia, both the number of older people, and the proportion who are aged 80 and over, have been growing quite rapidly in recent years. Indeed, the last decade has seen the fastest rates of growth this century in the population aged 80 and over (among whom aged care service use is concentrated); this rate of growth will not be equalled until 2021.

Aged care expenditure per person aged 65 and over with a profound or severe handicap in 1995 - 96 was $8,160 - an increase of 7% from 1994 - 95. The rates of increase were significantly lower between 1991 - 92 and 1993 - 94, in the vicinity of 2 - 3% per annum. The higher growth rate in 1995 - 96 was largely influenced by a 7.2% increase in nursing home expenditure. The growth in expenditure on hostels has remained relatively constant over the period from 1991 - 92 to 1995 - 96, with substantial growth in expenditure on community aged care packages. Per person expenditure on assessment appears to be reducing, while for HACC the trends were much more variable.

Recurrent expenditure (in constant prices) per person aged 65 and over with a profound or severe handicap, Australia 1991 - 92 to 1995 - 96 ($)

Aged care recurrent funding in constant prices (GFCE deflator) by program, Australia 1991 - 92 to 1995 - 96 ($m)

References/further reading

Australian Institute of Health and Welfare 1995. Australia's welfare 1995: services and assistance. Canberra: Australian Government Publishing Service (AGPS).

Australian Institute of Health and Welfare 1995. Welfare Services Expenditure Bulletin No. 1, May. Canberra: AGPS.

Australian Institute of Health and Welfare 1996. Welfare Services Expenditure Bulletin No. 2, July. Canberra: AGPS.

Mathur S 1996. Aged care services in Australia's States and Territories. Aged Care Series No. 2. Canberra: Australian Institute of Health and Welfare.

Data sources

Data presented here are drawn from Australian Bureau of Statistics (ABS), Estimated resident population by sex and age: States and Territories of Australia. Cat No. 3201.0 for various years (June 1991 to June 1996). Canberra: AGPS; Australian Institute of Health and Welfare 1995; Department of Health and Family Services (DHFS), Annual report for various years (1992 - 93 to 1995 - 96). Canberra: DHFS; DHFS Community care statistics for 1994 - 95 and 1995 - 96. Canberra: DHFS; unpublished data from the Department of Health and Family Services.

Prepared by the Australian Institute of Health and Welfare