OPINION | Howard’s way: turning aged care into profit


Crispin Hull

Guest Columnist

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One of the greatest sins of the Howard Government was its changes to aged care. And I must apologise for not mentioning it in last week’s column on the appalling legacy of the Howard Government. Events this past week show it was a bad omission.

In 1997, the Howard Government introduced the Aged Care Act. Under the guise of streamlining hostel and nursing care into one system, it opened the way for aged care to become a for-profit industry.

Under the new system, people going into care had to pay a means-tested, up-front bond. More importantly, though, it did not stipulate adequate standards of care, nor any means of enforcing them, nor any means of data collection to see if care was up to standard.

A score of inquiries over a score of years later, the sad, grim legacy of mistreatment of aged Australians was laid bare this week with the findings of the Royal Commission.

The fate of 1.3 million Australians now, and most people in future, lies in the way the Government responds. It will not be enough just to throw some money at it. A wholesale change of thinking about how to govern is needed, not just in aged care.

We need a winding back of the key ideologies which flourished under the Howard Government: privatisation, user pays, de-regulation, self-regulation and out-sourcing.

Some of these things, some of the time, in some areas can be helpful, but when they become an ideological underpinning of government, disasters like Australia’s aged-care horror become inevitable.

It became plain by 2000 when the kerosene baths scandal hit. Elderly people in care were being bathed in kerosene as a treatment for scabies.

Once you replace “quality care” as the imperative with “pursuit of profit” as the imperative, of course, an aged-care operator is going to cut corners. Why waste money on expensive scabies treatments when you can use cheap kerosene? Worse, once one operator gets costs down in whatever grisly way, other operators have to follow suit to stay competitive.

Cutting costs and introducing efficiencies are fine if you are producing widgets. In aged care, child care, hospitals and schools, on the other hand, they result in human misery.

Staying competitive in aged care also means wasting money on idyllic television ads that gloss over the maladious reality. And, of course, lots of money goes to profit instead of care.

For too long, examples of poor care were dismissed as isolated incidents in a generally excellent system. Not so. The profit and competition motives made poor care endemic and inevitable. The Royal Commission’s recommendations will help change this, but not eradicate it.

Private providers can do a good job, but it is naïve to think that they will all do that of their own volition without a regime of enforced regulation. Adam Smith’s invisible hand is not enough.

History tells us that whenever governments throw money to private enterprise to provide services, a few grifter moths will move in to grab a bit of the light. We have seen it in aged care, vocational training, the National Disability Insurance Scheme and elsewhere. They come in like pawn shops to a new casino.

The most telling truth on this is the trip to Damascus taken by Australian Competition and Consumer Commissioner Rod Sims. In his early days Sims was an avowed privateer. As time went on, however, Sims – charged with the statutory duty of upholding consumer interests – fulfilled that duty. 

He is on record now as saying that the advantages of privatisation come to nought unless there is enforced regulation to ensure that the new private owners of what were once public assets behave themselves. He cited toll roads, electricity and water as major examples of poorly regulated new private owners ripping off the consumer.

Without that regulation, he has rightly argued, you just replace an inefficient public monopoly with a rapacious private monopoly.

Surely, this aged-care debacle should be a turning point. Usually, the wealthy can buy their way to get whatever they want. But age – which happens to us all – means loss of control, even over big finances. The largest of tycoons faces the prospect of being wheeled into the aged-care abyss, just as ultimately, however wealthy, individuals with catastrophic illness or trauma have to go into the public health system. The private system simply does not provide those services.

So, Rupert, Gina, and Clive, and well-heeled Coalition voters do not resist the need for an aged-care tax levy and tough regulation.

The aged-care debacle demands a complete rethink about the way we do government in Australia.

We have to recognise that unregulated market capitalism is not well-suited to providing aged care, child care, health, or education. It is fabulous for producing widgets, tourism services, heavy engineering, cars, refrigerators, food, clothing, even funerals, and the list goes on. But not vital human services.

The neo-liberal economic leaders like Margaret Thatcher and Ronald Reagan imbued with the theories of Milton Friedman were quite right to argue for freeing western economies of unnecessary stifling regulation and public bureaucratic ownership of enterprises that the public sector was unsuited to run.

But when they – and later John Howard – turned their pragmatic programs into an ideological assault on what governments could always do better than private enterprise – health, aged and child care, education and disability – they betrayed their people.

In effect, they sanctioned the kerosene baths – the symbol of private-sector non-delivery.

No carpet is big enough for this week’s Royal Commission findings to be swept under. Something will be done and will be seen to be done. Too many voters are themselves, or have parents, facing the aged-care dilemma. But watch out for the easy throw-a-bit-of-money-at-it solution. Do not be satisfied with that, however large the sum may seem.

Nothing short of a wholesale revamp of the way government works will be enough. Otherwise, government provision of services will revert to lightly regulated provision by the private sector for benefit of the private sector and provision of public services for the people according to their needs will perish.


Crispin Hull is a current columnist and the former Editor of the Canberra Times.

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