Potential workforce shortfall of 260,000 carers and nurses by 2025 Government budgets under threat. Business as usual “no longer an option”.

Australia faces shortfalls of hundreds of thousands of critical staff such as nurses and formal carers in less than 10 years, and will need to spend tens of billions extra on aged care and hospital beds alone to meet skyrocketing demand, a new report warns.

A rapidly ageing population and millions of Australians living with chronic illness are combining to accelerate demand for health and aged care services, threatening the sustainability of the system and viability of government budgets, the PwC report, commissioned and supported by Australian Unity, concludes.

“By 2025, just a few years beyond the next Commonwealth budget’s forward estimates, investment of up to an additional $24 billion in capital costs and $13 billion per annum in operating costs would be needed just to meet projected gaps in residential aged care, community aged care, and hospital beds,” it finds.

“More than 180,000 additional carers for the aged care sector will be needed by 2025, as well as an extra 85,000 nurses across both the health and ageing sectors.”

The shortfalls will only worsen on current trajectories.  By 2040, an additional $57 billion in capital costs and $30 billion in annual operating costs will be needed for aged care and hospitals, as well as more than 120,000 nurses and over 400,000 aged care workers, the report concludes.

“The health and ageing sectors can’t be just scaled up to meet growing demand,” it says. “Such an approach would quickly swamp government budgets. Without fundamental change, even in the next election cycle, the system will quickly become unsustainable and no longer fit for purpose.”

PwC Partner James van Smeerdijk says the report’s findings mean that ‘Business as usual is no longer an option. We need to think differently and work differently. We need to re-imagine the sector,” he says.

Australian Unity group managing director Rohan Mead agrees bold new ideas are needed to provide a sustainable future in health and aged care.

“We are experiencing mass ageing in this country for the first time. Already 400 people are turning 75 each day in Australia, a number that is accelerating. Ensuring their quality of life, but at the same time ensuring budget sustainability, is a balance that we must be seeking now, not when it’s too late.”

“Yet we don’t seem to be giving this issue the policy urgency it deserves. It is worth remembering that the report’s focus year of 2025 will likely be within the budget forward estimates of the next federal government,“ Mr Mead says.

The PwC report, Practical innovation: closing the social infrastructure gap in health and ageing,   includes geospatial modelling to identify, across Local Government Areas, future supply gaps in residential and community aged care, cardiovascular disease and mental health services, and recommends key system changes.

It proposes the creation of a $500 million “Innovation Accelerator”, funded from existing state and federal health budgets, to develop collaborations with the public, private and community sectors to pilot and drive change, with a special focus on better prevention and early intervention in the leading causes of ill-health.

“I believe the Innovation Accelerator can help catalyse faster and deeper innovation,” Mr van Smeerdijk says.

The geospatial modelling uncovers looming regional and socio-economic disparities in health and aged care services.

“Altogether, 184 of the 577 LGAs in Australia have gaps in two or more of the mapped supply indicators (aged care, mental health services, cardiovascular services) and have below average socio-economic status scores,” the report says. “This indicates more than a third of Australian LGAs could already be vulnerable, with social infrastructure gaps and fewer resources to meet their needs through private funding.”

A copy of the summary report can be found on right.

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