Chapter 6 : Health and ageing - impact on local government
Australia's population aged 65 and older is projected to increase from 2.5 million (about 12 per cent of the population) in 2002 to 4.2 million in 2021 (about 18 per cent of the projected population) (Department of Health and Ageing 2002, p. 5). The ageing of the population is driven by declines in fertility and increased longevity. The working-age population that will provide most of the income to support these people will barely increase from 13.2 million to 15.1 million, while the youth population is expected to remain more or less the same. This means there is likely to be a higher level of dependence on government-funded health and ageing services. This may have a significant impact on local government.
Many of the costs of ageing will fall to the Australian and State governments. The Australian Government is the main provider of funding of health and aged care services in Australia, with their cost doubling to about 4 per cent of GDP in the last 30 years. Australian Government funds are provided through Medicare, the Pharmaceutical Benefits Scheme, private health insurance rebates, funding contributions to State hospitals and by grants to non-government organisations for residential care, community care and Indigenous health care. Aged care spending is expected to almost treble from 0.7 per cent of GDP in 2001-02 to 1.8 per cent of GDP in 2041-42 (Costello & Minchin 2002, pp. 8-9). The Australian Government also provides payments to individuals through the aged and service pensions and through superannuation concessions.
State governments will make a significant contribution to meeting the costs of an ageing community through public hospitals, policing and public transport.
The ageing of the population is likely to vary significantly by locality and this means the impact on local government will vary. There are two trends at work here, first a movement of younger people to the Central Business Districts and the outer metropolitan suburbs of the major cities and second the consolidation of older people in metropolitan inner suburbs and inland country towns (such as Dubbo, Mildura and Narrogin) and their movement to the coastal fringes. Many coastal communities within two or three hours drive from a major city (such as the Gold Coast, Sunshine Coast and Hervey Bay in Queensland, Victor Harbour in South Australia, Forster and Port Macquarie in New South Wales, Bairnsdale and Queenscliff in Victoria, Mandurah in Western Australia and Devonport in Tasmania) have already experienced a rapid growth in their ageing population.
The growth of the Gold Coast is a prime example of the move to the coastal fringe, with its population growing by 289 000 since 1976 to 405 392 at June 2000 (Salt 2001, pp.126 & 181). Nearby Tweed Shire in New South Wales is one of Australia's 'oldest' areas, with 27 per cent of residents now aged 55 and over. Land use planning and streamlining of development applications will be crucial to the capacity of coastal councils to deal with this growth. In the inland regional towns existing facilities will face capacity constraints as demand for aged care services grows.
Challenges for local government
A map showing the distribution of people aged 65 and over, by local government area at the 2001 Census, is included in the back sleeve of this report. The move of older people to coastal areas is already evident from this map.
The ageing of the population will be gradual and there will be some signposts as to how to adjust to an ageing population. The population of Tasmania (14.3 per cent of the population is now over 65) and South Australia (14.9 per cent of the population is now over 65) will age rapidly: by 2014, 19 per cent of their populations will be aged 65 and over. These States will also have a low proportion of young people in their populations. There is an opportunity for councils in other States to learn from the health and ageing strategies adopted in areas with a high share of aged population (such as Great Lakes or Tweed Shire in New South Wales) and from State-wide strategies adopted in South Australia and Tasmania. Experience in countries with a rapidly ageing population, such as Japan, Spain, Greece and Italy, may also generate successful approaches to supporting an ageing population.
It is too early for the impact of an ageing population on local government to be known with a high degree of certainty. However, from available information it seems likely that the ageing of the population will pose five challenges for local government. These challenges are in:
- planning for strong growth in ageing populations in certain localities
- providing an adequate standard of basic infrastructure
- providing an adequate and appropriate range of local government services
- managing the financial impact of the growing number of retirees
- harnessing the skills, wealth and business acumen of older people.
Planning for an ageing population
The first major challenge will be planning for an ageing population. Local government is directly responsible for only about 2 per cent of aged care accommodation.20 In New South Wales 14 per cent of councils provide residential aged care facilities and 12 per cent provide self care units (Baum & Jackson 2004, p. 67). However, local government has a much more significant role in determining the location of aged care facilities. At present it appears that the growth in older populations will be concentrated in inner metropolitan areas, inland country towns and in urban and rural areas on the coastal fringe (Productivity Commission 2004b, p. 12.4). The location, choice, affordability and design of housing for the elderly (such as self-contained units) and their carers (nurses, allied health professionals, domestic staff) and their proximity to support services and infrastructure in these areas will be major issues. Older people will look for housing which is smaller, safer, more secure and closer to services, transport and family (Costello and Minchin 2002, p. 27). Aged care developments will need to be planned in closer collaboration with aged care and service providers to ensure these factors are taken into account when choices are made about accommodation.
Many recent retirees on the coastal fringe are settling in towns and villages that are quite isolated from the infrastructure and services they will need as they grow older. For example, Shoalhaven City Council in New South Wales has 49 towns and villages, with many older people retiring in locations remote from the main towns of Ulladulla and Nowra.21 It will be more costly for councils to provide aged care services such as housing and home and community care services to the many fragmented communities that are now being established in coastal areas remote from regional towns. Better planning may help to reduce these costs.
Local governments, particularly those in rural and regional areas on the coastal fringe, will also need to plan for the mobility needs of older people. Mobility will be important in building and town design, in facilitating access to medical services, shops and other facilities and to enable older people to socialise. Single and two-person households make up half of all households22 and over 40 per cent of single-person households 65 years and over do not own a motor vehicle (Australian Bureau of Statistics 2001, p. 184). Local government can use its public places, such as libraries, art galleries and museums to bring people together and overcome the social isolation of many retirees. Buildings, dwellings and toilets will need to be readily accessible for people with a disability or frailty and they will need to be designed to minimise slips and falls, which are a leading cause of hospitalisation (Baum & Jackson 2004, p. 73). Remote access to library and information services will be important. Community transport will become more important in regional areas. Twenty-eight per cent of councils in New South Wales provide community transport services for older people and younger people with disabilities (Baum & Jackson 2004, p. 64).
20 Presentation of 9 November 2004 to ALGA National General Assembly by Mr Rod Young, Chief Executive Officer, Australian Nursing Homes and Extended Care Association.
21 Ms Judith Stubbs, Shoalhaven City Council, presentation to ALGA National General Assembly, 9 November 2004.
22 Dr Hugh Mackay, Is the Tide Turning for Communities?' keynote address 9 November 2004 to Australian Local Government Association National General Assembly at www.alga.asn.au/.
The second challenge faced by councils will be to upgrade or replace ageing basic infrastructure to deal with an influx of retirees. This infrastructure includes aged care accommodation but it also includes better water and sewerage, stormwater drainage, waste disposal, roads, footpaths and pedestrian crossings and public buildings. Many inland country councils and coastal fringe rural and regional councils do not have the quality of infrastructure needed to cater for a rapid influx of retirees or to deal with the environmental impact of rapid population growth. Local governments will face these pressures at the same time as much of the existing local road infrastructure demands replacement or upgrading. Fifty-six local governments from coastal areas around Australia have formed a Sea Change Task Force, chaired by Cr Joe Natoli, Mayor of Maroochy Council in Queensland to address the challenges faced in providing for an ageing population. The population of Mandurah in Western Australia has increased 20-fold, from 2700 in 1971 to 54 300 in 2004, creating major planning and infrastructure challenges. Local governments in areas like this need support from other spheres of government and the private sector to meet infrastructure needs. Flexible programs such as the Australian Government's Regional Partnerships and Sustainable Regions Programs can help regions plan and implement measures to support growth of the local economy and to provide essential services. A number of State government infrastructure programs can also provide support. For example, Queensland's Smaller Communities Assistance Program has a budget of $150 million over 10 years and is designed to help local councils provide reliable water supply and sewerage services of an acceptable standard and cost in smaller communities with populations fewer than 5000 people.
Matching services to demand
The third challenge will be to ensure that, as the population ages, the types of services provided match those actually needed. Education, health, welfare, public safety, housing and community amenities, and recreation and culture make up 49 per cent of local government expenditure (Productivity Commission 2004b, p. 12.11). The health and welfare services include providing for senior citizens' centres, meals-on-wheels, food safety, and immunisation. As over 90 per cent of the population prefer to age in their own home (Baum & Jackson 2004, p. 71), there will be an increase in the demand for home and community care services, meals-on-wheels and assistance with home maintenance, laundry, gardening, shopping etc. There will also be a need for extra spending on primary health care, health promotion, safety and security and for appropriate recreational services (for example, more walking trails, book clubs, choirs and fishing excursions). Meanwhile, the need for programs to address youth unemployment and the demand for children's services, such as childcare, sports grounds and playgrounds, may stabilise, thus providing some offset savings from demographic change.
The related challenge will be to find enough qualified staff to provide these services. The low birth rate will mean there are fewer adult children to provide support to retirees and there will be a general shortage of young people in the workforce who are able to meet retirees' need for caring. Research by Access Economics found that the working age population, currently growing by 170 000 each year, will grow by less than 13 000 per year during the 2020s (Baum & Jackson 2004, p. 80). Certain council occupations may be under pressure from the volume of demand for ageing services - these could include occupations such as ageing and disability planning development and coordination staff, community workers and case workers who assess the food, cleaning, personal care and respite care needs of the elderly. Road construction, waste collection services and emergency services that rely on the physical strength of younger workers may also be affected (Baum & Jackson 2004, p. 81). These workforce issues need to be monitored. As most Organization for Economic Cooperation and Development countries will age more quickly than Australia, international demand for skilled workers will be high and attracting and retaining young staff will be more difficult. Establishing and maintaining volunteer networks to assist in service delivery will be crucial.
Impact on council revenue
Demographic change will affect both the revenue-raising capacity of local government and councils' expenditure. Councils serving large inland country towns and on the coastal fringe will be at the forefront of these changes.
Many retirees will be eligible for rate and other concessions. Eligibility criteria are broadly similar across Australia. Holders of Pensioner Concession Cards issued by Centrelink and the Department of Veteran's Affairs, plus gold card holders who are war widows or are totally or permanently incapacitated are eligible for concessions on rates and essential services. In 2002-03 there were over 1.4 million pensioners who received a pensioner rate concession at a cost of $264.3 million to State governments and $117.7 million to local governments (Productivity Commission 2004b, p. 12.15).
The proportion of councils that offer rate concessions varies between the States. Overall, about half of all councils provide pensioner rate concessions. In New South Wales, all councils must provide pensioner concessions. Nambucca Shire Council reports that pensioner rate concessions now equate to 10 per cent of its rate revenue. Some councils also provide a range of other concessions, for example for water and sewerage supply. However, rate concessions are not so readily available in other States. Less than 3 per cent of councils in South Australia offer pensioner rate concessions (Productivity Commission 2004b, pp. 12.13-12.14). Councils experiencing an influx of retirees need to examine their rate concession policies carefully to determine their sustainability. Most pensioners who receive rate concessions have high rates of home ownership. Councils will face a growing number of retirees who are asset rich but income poor. Councils need to develop strategies to deal with this situation. One possible strategy is to allow people on low incomes to defer rate payments until a property is sold or transferred rather than to grant rate concessions. In New South Wales, deferring rate payments is at the discretion of the council.
Councils with a disproportionate share of older people in their population will experience significant growth in demand for services. Hume City Council, on Melbourne's fringe, is experiencing significant growth in its ageing population, but health and community care funding is not keeping pace with growing needs. Forty-three per cent of the council's population over 65 years of age has an income of less than $200 a week and 56 per cent of this population is in rented accommodation, highlighting the impact of retirees on council income and the importance of providing affordable accommodation.23
There are countervailing influences that will help councils deal with the ageing of the population. It is likely that the wealth of the Australian community will grow significantly over the next 15 years so the capacity of governments to help fund the demand for services should also grow. Local government financial assistance grants should help temper the impact of an ageing population by directing more of the grants to the councils with limited revenue- raising capacity and high expenditure needs. The private sector is likely to provide some integrated services incorporating accommodation, health and recreational services for retirees with the capacity to pay for these services. However, more user charging and capacity limitations (such as prioritised waiting lists and limiting hours of service) seem inevitable if councils are to cope with the demand for some services.
The Productivity Commission (2004b p. 12.18) has concluded that, ' overall, ... with current policy settings, many councils are likely to face an emerging fiscal deficit as Australia's population ages'.
23 Ms Nicole Mahoney, Hume City Council, presentation to the Australian Local Government Association National General Assembly, 9 November 2004.
Harnessing the skills of older people
Demographic change will bring opportunities for councils. While many retirees will have low incomes, a substantial minority of retirees (currently 20 per cent) will be self-funded retirees who bring significant wealth to their new areas. Many retirees will be well educated, skilled and have significant business experience, thus bringing a new dynamism to areas whose populations have been relatively static. The challenge will be for local governments to harness their skills. Many older people will not be in the workforce full-time, but may operate small businesses or work part-time. Some retirees' wealth can be invested locally in businesses to provide a wider range of shopping and other services in these localities. For example, many council areas that have undergone depopulation due to changes in agricultural productivity could attract retirees, who are no longer bound to their workplace, to retire in the area. This could occur by greater promotional activities, by providing quality health services, affordable housing, free or discounted land for home-sites or by providing incentives for aged care development. In many inland areas there are towns with under-utilised infrastructure and facilities and attractive localities with lakes, rivers and national parks (such as Echuca in Victoria or Mitchell in Queensland) that could sustain higher populations. Many country towns have regional universities or technical colleges that could be a beacon for retirees. Older people travel more and there will be an increased opportunity for councils to attract older tourists to visit their areas. Councils will need to examine capacity constraints for their caravan parks and rest areas.
It will be important for councils to deepen their understanding of the skill base of their local communities and to improve their methods of consultation with local communities (for example, through focus groups or community surveys). Retirees will contribute to development of businesses in their local area by broadening the range of services provided (such as more shopping choices). Some may volunteer to work on environmental, heritage or conservation projects. Many younger retirees will seek part- time work. Some of these could be attracted to providing council services, freeing council staff for delivery of the most skilled services. Councils could maximise these opportunities by developing strategies and policies for part- time work and job sharing.
Australian Government initiatives
The Australian Government has developed a 'National Strategy for an Ageing Australia' to provide a coordinated national response to issues surrounding population ageing and to ensure quality of life for older people, harmony between the generations and positive outcomes for the whole population.24
The strategy identifies broad areas of change and a wide range of issues to be addressed. These include:
- an ageing workforce and the need for action as the supply of younger entrants drops dramatically but the demand for economic growth persists and competition in a global economy continues to increase
- the need for adequate levels of, and sustainable sources of, retirement incomes to support retirement living
- the need for positive individual and community attitudes to ageing
- the need for age-friendly infrastructure and community support (including housing, transport and communications), to enable greater numbers of older Australians to participate in and remain connected to society
- the importance of healthy ageing to enable a greater number of older people to remain healthy and independent for as long as possible
- a growing demand for accessible, appropriate and high quality health and aged care services.
24 The strategy can be viewed at ichal06.longevity-international.com/cms/details.asp?NewsID=283.
National strategy principles
The strategy has laid down some principles to deal with the issues:
- The ageing of the Australian population is a significant common element to be addressed by governments, business and the community.
- All Australians, regardless of age, should have access to appropriate employment, training, learning, housing, transport, cultural and recreational opportunities and care services that are appropriate to their diverse needs, to enable them to optimise their quality of life over their entire lifespan.
- Opportunities should exist for Australians to make a life-long contribution to society and the economy.
- Both public and private contributions are required to meet the needs and aspirations of an older Australia.
- Public programs should supplement, rather than supplant, the role of individuals, their families and communities.
- A strong evidence base should inform policy responses to population ageing.
- The delivery of services and pensions for our ageing population is affordable so long as we have a well-managed economy and growth.
The National Strategy will be reviewed every three years to ensure it remains relevant to current circumstances.
During the 2004 Budget, the Australian Government announced a funding package of $2.2 billion for 'Investing in Australia's Aged Care: More Places, Better Care' to support actions under the strategy. The government also committed $6.4 million over the next four years to enhance the strategy, with funding of $400 000 to the Australian Local Government Association to support implementation of the Association's Population Ageing Action Plan.
Australian Local Government Association Population Ageing Action Plan
With support from the Australian Government's Department of Health and Ageing, and in consultation with State Local Government Associations and individual councils, the Australian Local Government Association has developed its own Australian Local Government
Population Ageing Action Plan 2004-08. The key elements involve:
- building awareness
- encouraging local government action
- fostering partnerships
- improving information access
- monitoring and evaluation.
Details of the plan are available at www.alga.asn.au/policy/healthAgeing/.
The Local Government Association of New South Wales and the Shires' Association of New South Wales commissioned demographer Dr Natalie Jackson to analyse and map the ageing of the population in New South Wales. The report provides a comprehensive analysis of the impact of ageing on local government. It is available at www.lgsa.org.au/. Great Lakes Council on the New South Wales coast has the greatest proportion of its population 65 years and older - 26.2 per cent in 2004; by 2024, this figure is expected to rise to 35.9 per cent.
A Partnership Protocol between the Municipal Association of Victoria and the Victorian Department of Human Services, signed in October 2002, provides for a range of health, housing and community services. The protocol provides a framework to guide existing and future relationships, agreements and activities undertaken by both parties, including planning, policy, program development, service coordination and evaluation at State, regional and local government levels.
In May 2004, the Victorian Auditor-General released a report on local government provision of Health and Community Care (HACC) Services. Councils are the single biggest provider of HACC services in Victoria, a situation that is unique in Australia. The Auditor-General concluded that the processes employed by local government in the provision of the services were sound. However, he recommended a range of measures to improve the quality of council services. Corroborating the issue of workforce planning raised above, the Auditor-General found that:
Recruiting and retaining staff to deliver HACC services is a challenge for many councils. Failure to fully meet this challenge can reduce the quantity and range of services delivered to clients. With demand for HACC services projected to grow as the population ages, some councils (especially rural and remote councils) will find it increasingly difficult to meet the needs of their clients. Councils are responsible for ensuring that qualified staff deliver HACC services. Councils not using appropriately qualified staff may place their clients at risk and compromise their duty of care to these clients. At the time of the audit, there were no qualification or competency standards (units of competence) specifically for HACC assessment staff. Given their diversity of occupational backgrounds and specific training needs, competency standards need to be developed (Auditor-General of Victoria 2004, p. 9).
The Auditor-General made recommendations to address this and other issues he raised. He also found HACC services had helped over 200 000 Victorians and that local government was contributing around $48 million to these services in 2002-03.
The Local Government Association of Queensland has contributed to a Queensland Government discussion paper on ageing of the Queensland population called Queensland 2020: A State for All Ages, September 2003 at www.communities.qld.gov.au/. This discussion paper identifies the areas of Queensland, such as Wide Bay Burnett, Moreton and the Darling Downs, that are likely to experience rapid growth of populations 65 years and over to 2021.
In August 2003, the Australian and Tasmanian Governments and the Local Government Association of Tasmania concluded a protocol for positive ageing. Under the protocol the parties aim to develop a partnership agreement to improve services to the community for the care of older Tasmanians and to improve their living and community environments. One of the aims is to ensure there are no barriers that impede the provision of aged care places. The protocol establishes a steering committee to identify and work on issues to be addressed under the agreement.
It is expected that key components of a formal agreement across the spheres of government will:
- provide better exchange of data
- increase the level of information and education available within the community
- generate a coordinated focus on healthy ageing activity
- enable better planning of residential and community aged care service delivery.
The outcomes sought from the partnership agreement include:
- more effective provision of aged care services
- collaboration in implementing standards for aged care facilities
- better matching of services to community need and demand
- greater encouragement of private investment in aged care
- better sharing of information and better communication, planning and investment by stakeholders.
Substantial progress has been made in developing the tripartite agreement focusing on community awareness, sharing of information and improved planning. It is expected to be finalised in 2004-05. If the agreement is concluded, it could be a model for similar arrangements with other States and Territories and in sectors other than aged care.