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Balance Retirement & Aged Care Specialists

The 2014 Federal Budget: How Will It Affect Aged Care?

Posted on: May 14th, 2014 by Eric Hiam in Aged Care Planning

Australia’s ageing population was a key factor to the outcomes of last night’s Federal Budget where Treasurer Joe Hockey ‘tightened the belts’ of many Australians in order to alleviate the countries debt and better plan for the future.

The budget’s broad recommendations mainly focused on health, the ageing and education sectors which will account for 70 per cent of total commonwealth spending over the next decade.

This is good news for Aged Care as the Government promises to flood more money into building and resourcing the Aged Care Industry to help cater for the coming generations.

Of course this money needs to come from somewhere and while residents currently in aged care or receiving the aged pension won’t be affected, the next generation will find getting older increasingly expensive.

In line with keeping the Abbott Government’s election promise to not raise the Age Pension in the first term, Hockey did confirm that the payments will grow slowly from 2017.

Hockey described this decision as making the pensions “affordable and sustainable for decades to come”.

By 2035, the qualifying age for the pension and official retirement will be raised to 70. “Australians born after 1965 will have to work until they are 70 before they are eligible for the age pension,” said Mr Hockey.

Current seniors will be affected through abolishing the seniors supplement and offset tax for dependent spouses over the age of 60. However, the money saved from these cuts will go into other areas to cater for the coming ageing population.

Social Services Minister Kevin Andrews said these decisions were necessary to improve home care and aged care providers and their services, saying that the aim is “to better meet community demand and give providers more certainty” when the aged care crisis hits.

“Australia faces a major demographic shift as the baby boomer generation enters retirement. We will have more retirees than ever before, and they will be living longer. If we wish to have a sustainable age pension system that looks after those who need it most, now and into the future, we must reform it,” he said.