With average life expectancy rapidly increasing, aged-care expenditure is expected to nearly double from 0.9 per cent of the Australian GDP in 2014-15 to 1.7 per cent of the GDP by 2054-55.
Within the same time frame, the number of working taxpayers to each elderly person will decrease from 4.5 to 2.7, placing significant strain on the workforce and government to support the ageing population.
A report by the Aged Care Financing Authority has estimated a need for 76,000 new aged-care facilities over the next decade, with a capital investment of around $33 billion.
With supply constraints, rising property prices and emerging consumer preferences, the cost to develop residential aged-care facilities will increase, as will the entry price for residents.
The auditing firm predicted a shift towards a ‘user pays model’, with Australia’s current consumer contribution of 26 per cent lagging behind the UK’s 45 per cent.
This move will push some to sell the family home to access capital, challenging current expectations on intergenerational wealth.