There are two conflicting market models for aged care.  The one sees aged care as primarily a market and the other as primarily a community service to which the market contributes. 

  1. On the one hand there is the market driven model which is based on the free-market belief that competing self-interests will always give the best outcomes.  In aged care this market is expected to meet the requirements of customers, in this case the frail elderly.  It is expected to adopt a culture that puts their interests first even when good relationship based care is more costly, and providing it is not in their commercial interests.  Those who successfully tokenise care (create a false impression of caring) while prioritising commercial competition have prospered.
  2. The second model is the community driven market model in which community values like altruism (selfless motivation) and responsible citizenship are the driving force.  It recognises that people are often vulnerable and can be exploited.  Markets are directly accountable to the communities they serve and are expected to meet their humanitarian requirements.  Those who cannot be trusted to do so are excluded by probity (trustworthiness) requirements. Those who fail to do so are expelled.  Those who meet expectations prosper.  The requirement to meet community expectations releases staff from competitive managerial pressures and enables them to express their humanity.

Background and history

Between 1960, and 1997 both models competed for legitimacy.  In the 1980s attempts were made to address problems in the market by moving more towards the second model.  Attempts were made to support local management and to involve communities. Powerful vested interests and the dominance of the new unregulated free-market ideology (belief system often called neoliberalism), saw a swing back towards the first model in the 1990s. 

In 1997 all markets including aged care became market driven.  Aged care was soon centrally managed and controlled. Communities were marginalised.  The system has steadily deteriorated over the last 23 years.  Many staff and families who have experienced the system have complained that care is compromised in order to increase profits.  Attempts at self-regulation using governance processes have failed. 

There have been over 30 inquiries in response to these failures but none have really challenged the belief in a market driven system.  Instead they have tinkered with the system. This belief is now so deeply embedded in policy that anyone who dares challenge something so obvious seems ridiculous to believers.

The Royal Commission and Government's position

In planning changes to address the failures it identified, the Royal Commission into aged care has engaged primarily with those responsible for the current system and not with its critics.  In their hearings they have not directly challenged the market driven system. 

While Counsel to the Royal Commission has recommended changes that would reduce government control over the funding and management of the system, they too have not directly challenged the market driven system.

Government's response to Counsel's recommendations

In its response to Counsel's recommendations, government has paid lip service to many of Counsel's aspirations but not necessarily the strategies adopted.  It has opposed or argued against changes that would disadvantage industry or reduce its own control - including control of funding and oversight.

The government's submission expressed its concern that Counsel had not addressed the cultural problems within the industry.  It expects self-regulation through industry governance processes to address these even though government's own policies are directed to exploiting the self-interest that drives this culture.   It insists, for example, that the industry largely responsible for the poor staffing in aged care "lead the implementation of many of the recommendations in the Workforce Strategy".

How a community led market differs from an industry led one

Community led care is not care provided by communities, although they may do so too.  It differs from industry-led care in that government manages, oversees and regulates care by working through and supporting existing or new regional and community bodies. 

This insures that aged care providers are directly responsible to local communities and serve them.  As a consequence, these communities know exactly what is happening. They have some say over the system and the sort of people who provide care in their communities.  Having a locally supported presence with the power to initiate prompt action ensures that the widespread neglect and abuse exposed at the Royal Commission, are detected early and addressed immediately.

Those responsible or who put profit before care, are soon ostracised (eg, excluded) and put out of business.  Communities have the power to hold both industry and government to account. That is how markets and democracy work.  This is the system that providers of care and those politicians who believe in the infallibility (impossible to fail) of free markets don't want.

Industry led care is designed by industry and implemented by government who work with industry, only hear their point of view and take their advice.  The communities where care is provided have been excluded. Governments try to regulate it centrally, but by the time anyone arrives on site, failures have been swept under the carpet. 

Inexperienced families and frail elderly must take on powerful corporations on their own and look to ineffective and impersonal regulators in Canberra for help.  Within this undemocratic system, our elderly parents have been neglected and abused. We have not been in a position to do anything to stop it.  This is the system industry are defending. They have mounted a campaign marketing it to the public and politicians.

Aged Care Crisis position

Aged Care Crisis advocates for a primarily community driven aged care market. 

Since 2008 we have been making submissions pressing for changes that would give local structures and communities greater input into aged care management and oversight.

Such a system requires structural changes that would see the decentralisation of management and oversight of aged care.  Direct management and oversight would be by regional and local bodies.  Communities that are currently excluded, would be encouraged to become actively involved.

Government and other central bodies would train, mentor, support and act in cooperation with local bodies and communities.  Local bodies would approve those providers they consider to be trustworthy to care for their elderly citizens and then work closely with them in providing care.

Such a system would release local provider managers and their staff from the perverse commercial pressures in the current system and allow them to express their humanity through caring empathic relationships.  Dignity, guided control and quality of life are a product of the trust generated by the empathic caring relationships we build – a feature of functioning communities but not of free markets.

In our submissions to the Royal Commission we have explained why the market driven system is fatally flawed.  We have advocated for a more community driven market system.  We have criticised the Commission for not confronting the root causes or failure in the market led system and not considering this option in its hearings.

There are powerful vested interests in this sector and they have been putting pressure on the Royal Commission and on Government.  We worry that the Royal Commission's report will result in another rearrangement of the current market driven system and fail to address the root causes of failure.  This has been the response to the last thirty plus inquiries.