The Aged Care Royal Commission report includes a key suggestion for a new funding mechanism. 

The final report from the recent royal commission calls for an effective one per cent increase in the Medicare levy, or a new Medicare-style Aged Care levy which could be applied progressively based on income.

The seemingly simple measure would bring in millions of dollars; enough to shore up the system’s dwindling revenue base, according to analysts. 

“The shocking findings of the Royal Commission have highlighted the urgent need for additional funding for Australia’s aged care sector,” says Ben Oquist, executive director of the Australia Institute.

“As the Prime Minister has said, this is a once in a generation opportunity to address the aged care crisis.

“It is never politically easy to increase taxes, that is why it is crucial our Parliament does not to miss this opportunity to permanently increase Australia’s revenue base.

“Australia is a low tax country — in fact, the ninth lowest taxing country in the OECD. 

“If the OECD average tax to GDP ratio applied in Australia, revenue would be a staggering $107 billion higher per annum.

“A Medicare levy rise of one per cent is small compared to the size and scale of the recent income tax cuts.

“Collecting more revenue via a very modest permanent increase in the Medicare levy or a new progressive Aged Care levy will help ensure this opportunity is not lost, helping protect aged care funding into the future.”