Ideas@TheCentre – The Centre for Independent Studies


Ideas@TheCentre brings you ammunition for conversations around the table.  3 short articles from CIS researchers emailed every Friday on the issues of the week.

Government is the cause of the aged care crisis

19 July 2013

jeremy-sammut Lateline's report this week on the aged care crisis has sparked an understandably emotional debate about the quality of care in Australia's nursing homes.

The maltreatment of vulnerable residents detailed in the story was horrific, and should rightly prompt scrutiny of the sector, even if these kinds of cases are as rare and isolated as industry representatives claim.

Predictably, however, the scandal has led to renewed expectations that the federal government do 'something' to fix the problems by increasing funding and/or regulation.

But in aged care, government is the problem not the solution.

The aged care sector is already heavily regulated and providers are largely reliant on government funding for their income.

Despite periodic increases, aged care fees fail to cover the real and ever-rising cost of care, and the shortfall inevitably impacts on staffing levels and standards.

The current funding arrangements are not sustainable. Unprecedented numbers of Australians are going to live to very old ages in coming decades, and the federal government simply will not be able to afford to fund the much higher capital and recurrent cost of aged care.

This is why major reports into the future of the sector – starting with the 2004 Hogan Review and including the 2011 Productivity Commission inquiry – have recommended that aged care providers be allowed to charge residents an accommodation bond.

Bonds would usually be financed by the sale of the resident's home. Bonds are held in trust, are returned to the resident's estate upon death, and are used to fund the construction of additional capacity and contribute to the recurrent cost of care.

Greater self-funding and cost sharing via the use of bonds is the fair and sustainable way to improve the quality of aged care.

However, successive federal governments – starting with the Howard Government in the late 1990s – have baulked at this policy change. Instead of explaining the problems and the rationale for levying bonds, politicians have been spooked by irresponsible and dishonest scare campaigns of the 'Canberra to rob the old of their homes' variety.

Let's hope the latest crisis to hit aged care finally leads to some sensible policy, if not in an election year, then soon after a new federal government is elected.

Dr Jeremy Sammut is a Research Fellow at The Centre for Independent Studies.

Australians want opportunity, not equality

19 July 2013

benjamin-herscovitch In an article about Labor MP Andrew Leigh's latest book, Battlers and Billionaires, economics editor of The Sydney Morning Herald Ross Gittins claims that Australian egalitarianism has become a 'façade.'

According to Gittins, evidence of increasing income inequality shows that Australia is slipping from its egalitarian moorings. Since the late 1970s, the share of income going to the top 1% of earners has increased from 5% to approximately 9%, while Australia now has the 9th highest level of inequality among 34 leading industrialised nations.

Leigh's stories of Australian streets where the typical house sells for more than $7 million and a Porsche 911 or a Maserati Quattroporte is de rigueur are certainly powerful fodder for class warriors.

However, concerns about rising income inequality are misplaced.

At the heart of Australian egalitarianism is the ideal of a fair go for all: Everyone should have the opportunity to improve their position in society with the right combination of ambition and natural ability.

This ideal stretches back to the anti-authoritarian and egalitarian ethos of Henry Lawson's Australia. And with 91% of us saying that it is a fundamental Australian value, it still defines the way we see the relationship between society and the individual.

But guaranteeing what Gittins calls a 'reasonably equal distribution between households' is not a fair go; it is equality of outcomes.

Rather than ensuring that everyone has the tools to play the game of life to the best of their abilities, equality of outcomes effectively means rigging the game so that everyone ends up with the same results.

Not surprisingly, this ersatz version of Australian egalitarianism is out of step with community attitudes. An overwhelming majority (85%) of Australians think that a person's income 'should depend on how hard they work and how talented they are.'

A focus on equality of outcomes is not just at odds with Australian values; it also distracts us from what we should really be concerned about.

The average number of European sports cars in garages in Vaucluse, Toorak and Peppermint Grove has little bearing on whether Australia lives up to the ideal of a fair go.

As the late, great Helen Hughes stressed, the real test of whether Australia can 'hold its head up as a country that has a fair-go for all' is whether the most disadvantaged Australians can escape poverty and unemployment and take advantage of the abundant economic opportunities enjoyed by most Australians.

Benjamin Herscovitch is a Beijing-based Policy Analyst at The Centre for Independent Studies and author of A Fair Go: Fact or Fiction?.

Workplace rights taken to the extreme

19 July 2013

alex-philipatos When the Fair Work Act was unveiled it took a while for the effects of the new general protections provisions to become known. Passed with the best of intentions, Labor's general protections provisions were intended to ensure that employers did not violate the rights of their employees, or punish them for enforcing their rights.

Unfortunately the provisions have created a lawyer's picnic in the workplace. Take radio presenter Mel Greig's case against Southern Cross Austereo, owner of 2day FM, where Greig is employed.

Greig, along with her co-host Michael Christian, were responsible for the prank call made to a London Hospital where the Duchess of Cambridge was being treated for morning sickness in December last year. Three days later, Jacintha Saldanha, the nurse that spoke to Greig and Christian, committed suicide, citing the Melbourne DJs in her decision to end her own life.

Greig has now filed a general protections claim alleging her employer failed to provide a safe workplace. Meanwhile, her co-host has since returned to work and received the station's 'Next Top Jock' award.

While we should have sympathy for Greig, who has received counselling and remains on paid sick leave, it doesn't necessarily follow that she ought to receive compensation.

General protections laws prohibit employers from taking adverse actions against the employee where the employee is enforcing a 'workplace right.' An obvious example would be where a worker is demoted for becoming a union member.

But recently we've seen a steady increase in the scope of claims for employee protections, each of which increase business costs and create workplaces fraught with legal complexities.

Thanks to the poor construction of the laws, general protections claims can be difficult for employers to defend. They carry a reverse onus of proof, meaning that once the employee has established an action and can point to a workplace right, the employer must prove that their actions were not for a 'prohibited' reason. Normally the employee would need to demonstrate this link.

As the old adage goes, hard cases make bad law. With the new bullying legislation soon to be introduced, the balance of workplace protections could become unworkable.

Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies.