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Baby boomers' bleak future

By Jeremy Sammut - posted Tuesday, 3 February 2009

They say the 1960s didn’t begin in Australia until the 1970s. It also true that the full-blown welfare state - the idea that the only way to provide community services is for governments to run and heavily regulate them, for taxpayers to pay for them, and for consumers to use them for “free” - didn’t arrive in Australia until the 70s either.

The greatest champions of this approach to social policy, particularly in health and related areas, have been the baby boomers. Medicare, and its Whitlam-ite precursor Medibank, were primarily the political creations of this generation. The lasting political effect has been to make the market and user-pay principles a policy taboo.

The irony is that baby boomers may reap the worst of what they have sowed. The question for boomers to consider is the quality of the hospital and aged care they are likely to receive if existing policy settings, which are steeped in the doctrines of the 70s, remain in place.


The bulk of the baby boomers are about to turn 65. Due to more effective prevention, they can expect at least another 10 to 15 years in good health. The downside of longevity is that inevitably people will become older and sicker, and end up needing acute care in a hospital and “high care” in a nursing home.

Everyone has heard of the “hospital crisis” - the fact that patients wait a long time to be treated in public hospitals. The crisis - which impacts on elderly patients the most - is a product of our taxpayer-funded, bureaucratically-administered, “free” public hospital system.

Long waits are the norm in public hospitals because emergency departments are routinely clogged with patients who can’t be admitted because a hospital bed is not available (not even for miscarrying women). It is rising numbers of acutely ill patients aged 75-plus who are frequently left to languish on trolleys while waiting for a bed to become available.

Overcrowded public hospitals are short on beds because bed numbers have been slashed by one-third since 1983. The resources withheld from patient care have been misappropriated to pay for the massive expansion of the “area health services” that administer public hospitals. The bureaucrats responsible for planning and funding hospitals have a vested interest against increasing bed numbers.

Unless market-based reforms of the way hospitals are funded and administered are implemented, the hospital crisis will remain intractable, and long waits on trolleys in overcrowded corridors await the baby boomers when they too get old and sick. A voucher system, in combination with the re-establishment of local hospital boards and the slashing of the parasitic bureaucracy, will allow money to follow patients to private or public hospitals, and give hospitals the incentive required to open and staff the acute beds that are desperately needed.

The crisis in aged care is equally serious and the future equally bleak for the boomers.


High Care nursing homes are heavily dependent on federal government funding that has not kept pace with the real cost of providing care. The latest industry surveys show that 40 per cent of providers are currently operating at a loss.

Government regulation currently prevents residents being charged a refundable deposit to partly offset the cost of their care. As a result, the sector is facing a $27 billion capital shortfall in the next decade alone, and will struggle to update facilities and build the additional beds the ageing of the population demands. The majority of the new bed licenses offered by the federal government have not been taken up this year because the existing government subsidy does not cover the real cost of building beds.

The case for allowing deposits - which are usually financed by sale of the family home and are returned upon death to the family estate minus an administrative charge - is overwhelming. Neither the Howard government nor the Rudd Government has had the foresight to take this step, in part because aged care bureaucrats in Canberra are schooled in the doctrines of the 70s. Committed to the idea that aged care should be entirely funded by government, they loathe the user-pay principle and have opposed its introduction tooth and nail.

You don’t need much imagination to see how short-sighted this is. The looming shortage of quality high care places is sure to encourage providers to entirely by-pass the existing funding arrangements. More nursing homes which receive deposits from residents willing and able to pay are certain to be established in the years ahead, while the remainder of the boomers face ending their days in out-dated and under-funded facilities.

Baby boomers are invariably nostalgic about the 1970s, which they portray as era of unadulterated progressivism. But if hospital and aged care policy continues to live in the Seventies, it’s the boomers who will suffer the consequences.

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About the Author

Jeremy Sammut is a Research Fellow at the Centre for Independent Studies. Jeremy has a PhD in history. His current research for the CIS focuses on ageing, new technology, and the sustainability of Medicare. Future research for the health programme will examine the role of preventative care in the health system and the management of public hospitals. His paper, A Streak of Hypocrisy: Reactions to the Global Financial Crisis and Generational Debt (PDF 494KB), was released by the CIS in December 2008. He is author of the report Fatally Flawed: the child protection crisis in Australia (PDF 341KB) published by the CIS in June 2009.

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