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Comparing Residential Aged Care in Australia and New Zealand

Ausmed Editorial

Last updated: 04 June 2024

Comparing Residential Aged Care in Australia and New Zealand

Ausmed Editorial

Last Updated: 23 August 2022

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Globally, populations are aging more rapidly than ever before. By 2026, over 22% of Australians will be over 65, marking an unprecedented growth rate in this demographic. Australia and New Zealand are experiencing significant increases in their aging populations, the impacts of which are yet to be fully recognised.

Consequently, the residential aged care sector is set to expand at rates comparable to the population growth in both countries. Various factors uniquely influence this growth in Australia and New Zealand. For instance, New Zealanders tend to only move out of their homes later in life, while Australians show a limited interest in retirement villages. But what are the differences between the two Tasman nations? And why do these differences exist?

Pensions and Superannuation

The difference that affects a potential resident before anything else is the retirement fund system. Both countries have public pensions and private superannuation funds available, but they function differently.

First, Australia’s age pension is means-tested to see whether or not you require financial assistance, while New Zealand’s age pension is available to everyone (Guest et al., 2017). Some journalists and researchers believe that this causes New Zealanders to work for a more extended period of their lives than Australians. However, there is little information on the tangible effects of the pension upon residential aged care choices besides dictating the average price consumers are willing to pay.

Second, Australian employers must make compulsory payments into their employees' superannuation accounts under the Superannuation Guarantee. Aussies cannot withdraw their superannuation, nor stop paying money into it unless in exceptional circumstances. In New Zealand, however, employers do not have to make deposits into an employee’s superannuation. Employees have the choice to either receive regular payments from their employer or contribute to their superannuation on their own in lump sum payments at a higher rate per annum (Guest et al., 2017).

Additionally, New Zealanders can halt or access their funds if required, such as if they do not have expendable cashflow or are buying property (Guest et al., 2017). In short, New Zealanders have more freedom to use their super throughout their lifetime, while Australians are strictly guaranteed a more robust super account relative to their earnings.

While this is a lot of data-driven information, it’s integral to understand how superannuation and pension programs influence the growth and implementation of Australia and New Zealand’s residential (and community-based) aged care support. The rate at which populations save for retirement and, in effect, for aged care directly influences the amount of money governments are willing to invest in that industry.

Why would a government support constructing thousands of residential aged care beds if nobody could afford them in 20 years? These choices are based on many long-term projections using data like that listed above.

Culture of Living Independently

On a more qualitative side of the issue, citizens of Australia and New Zealand have very different individual views about when and how they should move into community or residential aged care. Government regulations and the characteristics of the property market influence this choice, but people also cite a desire to retain their habits and lifestyle for as long as possible.

In New Zealand, aged care is a popular choice:

  • As of 30 June 2023, approximately 190,000 people are using permanent or respite residential care (GEN aged care data 2024)
  • Around 100 New Zealanders moved into retirement villages weekly (Collyns, 2021).

Australia has a far smaller culture of transitioning from independent living to a retirement village, from a town to an aged care residential facility. Instead, Australians are more likely to enter permanent residential aged care facilities later in life, having only accessed home care very late in life as well. On average:

  • Men and women start using home care packages at 80 and 81 years old (gender non-confirming averages are unavailable now) (AIHW, 2021).
  • Men and women enter permanent residential aged care at 82 and 85, respectively (AIHW, 2021).
  • Over 14% of people over 80 use long-term care in an institution (excluding hospitals) (AIHW, 2021).

However, these statistics will likely boom as baby boomers reach retirement age: by 2050, over 25% of all Australians will be over 65 (AHRC, 2014).

Are Australia and New Zealand Moving in the Same Direction?

As people start living longer lives, older adults are entering aged care homes at a later age. This is due to their improving health, access to medicines, and, at least in Australia and New Zealand, the option for appropriate people to access government-supported home care initiatives.

This trend is flattening the revenue growth curve and occupancy levels in aged facilities in both countries, despite the projected boom scheduled to hit already. A pre-boom is currently occurring, where home support is acting as a buffer between entirely independent living and residential aged care facilities (NAZCA, 2021). The Australian Government aims to ensure that by 2025, no person under 65 will reside in residential aged care except under extraordinary conditions (Australian Insitute of Health and Welfare, 2024).

With this in mind, both governments have made plans to assign large sums of money to provide reliable and affordable community care: the Australian Labour Party promised in 2022 to increase wages for aged care workers and to demand financial transparency from Australian residential aged care providers (ALP, 2022). Similarly, New Zealand’s Labour government commits to growth by assigning around NZD 50M per year as of 2021 (NZACA, 2021). Australia’s aged care industry is worth over $20B per annum, while New Zealand’s is worth around $3B per annum (Link Business, viewed 2022).

Both countries have initiated a move away from aiding the creation of residential aged care facilities and towards more accessible and wide-reaching community and home care.

References

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Ausmed Editorial Team

Ausmed Editorial Team 

Ausmed’s editorial team is committed to providing high-quality, well-researched and reputable education to our users, free of any commercial bias or conflict of interest. All education produced by Ausmed is developed in consultation with healthcare professionals and undergoes a rigorous review process to ensure the relevancy of all healthcare information and updates to changes in practice. If you have identified an issue with the education offered by Ausmed or wish to submit feedback to Ausmed’s editorial team, please email ausmed@ausmed.com.au with your concerns.

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