Young Aussies face prospect of new levy to pay for ageing boomers

The Boomers are coming.

That was the warning from Aged Care Minister Anika Wells this week as Labor tries to make good on an election promise and bring dramatic improvements to the country's caring economy for older Australians.

But no matter how you look at it, the promises Labor made – and the programs many deem as necessary – are going to be expensive. And working Australians could be facing an extra Medicare-style levy to pay for it all.

Appearing on the ABC's Insiders on Sunday morning, Ms Wells wouldn't rule out a major new tax to revamp the aged care system.

"We need to have an honest, responsible and mature discussion about what aged care looks like in this country," she said, but danced around committing to a levy by saying; "we're still not advocating a particular policy".

"If you need to raise an extra $10 billion a year to deliver the extra services that people want in aged care ... a levy across the board, all taxpayers, might be where you have to go," host David Spears probed.

In response, Ms Wells said older Australians need choice, including "the choice to stay home for longer" with better in-home care before touting "innovative models" of aged care where people live in share house "villages" with facilities such as restaurants and gyms.

"It sounds wonderful but it does sound expensive," Spears said. "So it gets us back to the issue of how you fund it. Are you open to a Medicare-style levy on all taxpayers?"

Largely dodging the question, Ms Wells intimated that the government has a "genuine duty" to consider such an idea.

Labor has controversially backed the previous government's Stage 3 tax cuts which see benefits overwhelmingly accrue to the richest Australians. "Is this a way to [potentially] claw back some of the Stage 3 tax benefits that will flow to the top?" Spears asked.

"That is not my guiding principal," Ms Wells responded.

A levy was recommended by the Aged Care Royal Commission which handed down it findings in 2021 but was something Labor had ruled out prior to the federal election. It has now clearly softened on the idea with the government setting up a task force to advise it on the next steps in sector reform. An interim report will be provided to the government in October with a final report due by the end of December.

Government risks stoking 'intergenerational warfare'

Shortly after the royal commission findings shocked many Australians, support for a levy to improve the sector was broadly supported by the public with a 2021 ANU study finding eight in 10 Australians backed a tax-based levy to improve aged care.

But that was before a historically rapid interest rate hiking cycle and a much publicised 'cost of living crisis' hit household budgets. Younger Australians trying to get into the housing market and recent home buyers are bearing the brunt of the current crisis and asking them to pay for asset-rich boomers could prove politically tricky.

It was a point not lost on Insiders panelist and veteran political journalist Samantha Maiden.

"Hello? This is going to hit headlong into this intergenerational warfare that is about to spring up in Australia," she said on the program. "Why should young people who are facing HECS debts and rising interest rates and inflation pay for a levy for the baby boomers to have lava lamps in their aged care home?

"I'm sorry if they have houses, it is time that they started paying for it themselves. A lot of these families are very asset-rich".

She argued the government needs to look at ways for older Australians to tap into often large amounts of home equity to pay for better services.

"If people are living in a $2 million, $3 million, God knows what house in Sydney, we're going to put a levy on people who can't afford a house to pay for their aged care?"

Levy idea labelled 'lazy' by Opposition

Opposition aged care spokeswoman Anne Ruston said earlier this week that while there were many ways of addressing shortfalls in the industry, imposing a levy was not the answer.

"Putting a tax or a levy on the table up front, quite frankly, is a lazy way to go," she told ABC Radio on Friday.

"There's some pretty eminent and experienced people on that task force and what we're looking forward to is seeing some of the innovative and reformist ideas that they're going to come up with."

The taskforce will include a mix of economic, finance, public policy, First Nations and consumer advocacy representatives.

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