Reciprocity Imbalances between Carers Contribution to Community and Government Budgets

In their May 2020 report, Deloitte Access Economics estimates the total value of informal care provided in Australia today and examines the implications of demographic trends and projections for informal care in the future.

Informal unpaid carers provide care for a parent, partner, child, relative or friend who has a disability, is frail, aged, is dependent on alcohol or other drugs, or has a chronic physical condition or mental illness. The estimated 2.8 million informal carers in Australia, comprise of 906,000 primary and 1.9 million non-primary carers. Carers make a significant contribution to the care and wellbeing of people with a disability, mental illness, chronic condition, terminal illness and the frail aged. Primary carers for example spend an average of 35.2 hours per week providing care. A significant number of primary carers (28%) spend more than 60 hours per week. It is estimated that a total of nearly 2.2 billion hours of care were provided in 2020. We know that carers are critical to the sustainability of the aged care and disability care systems across Australia.

Due to population growth, carer numbers have increased by 5.5% since 2018. However, the demand for informal carers will continue to outgrow the number of available carers. This trend is likely to continue.

Replacement Cost of Care:

The replacement cost measures the cost of ‘buying’ an equivalent amount of care from the formal sector at an average hourly rate, if the informal care were not supplied. Deloitte Access Economics calculated the current replacement cost of the care that unpaid family carers provide in South Australia at close to $ 5 billion. The total replacement cost contribution of the 2.8 million carers (906,000 primary carers and 1.9 million non-primary carers) nationally totals $77.9 billion. Two-thirds of that amount would support recipients of care with a profound disability and an additional 29.7% persons with a severe disability.

There can be no doubt that carers, in addition to the care they provide for others, also provide an extraordinary saving to the nation’s budget, which deserves recognition.

Opportunity Cost of Care – the lifelong financial burden for carers:

The opportunity cost method measures the formal productivity losses associated with caring, as time devoted to caring responsibilities is time which cannot be spent in the paid workforce.

Accordingly, carers cannot build up their own financial security with appropriate housing, food and health safety throughout their life as a carer, with irreversible consequences to retirement funding for the carer, but also for future Governments’ pension budgets.

Deloitte Access Economics calculated the total Opportunity Cost of Care for an estimated 160,900 primary carers and 53,000 non-primary carers who cannot engage in employment at $15.2 billion ($11.4 billion for primary carers).

Carers SA knows from listening to carers in South Australia and from our carer surveys, that the cost for all carers may be quite higher. This is because this measure does not take into account:

  • Any carers who are employed or self-employed, nor
  • Any career advancements or work hour extensions a carer may be missing out on due to the demands of the caring role; and
  • The Opportunity Cost of Care also does not include the non-tangible current and future costs to health and the wellbeing of carers who juggle work and caring roles. This specifically applies to the 23.7% of primary carers who also maintain full time employment.

In this context it is noteworthy that an estimated 24.6% of primary carers for those aged under 65 years stated that they took on the caring role because alternative care was too costly.

With the exclusion of potential financial and health cost stressors from the Opportunity Cost of Care calculations, it is quite incredible that carers are burdened with a raw cost factor of $15.2 billion per year on foregone earnings – on lost opportunities to pursue their own financial security and needs. Currently, 36% of primary carers – who also are the providers of the most amount of hours of care – fall within lowest socioeconomic quintiles 1 and 2, compared to nearly 26% of non-primary carers and 18% of non-carers.

Carers do have access to some Government payments like Carer Payment, Carer Allowance and Carer Supplement. During the 2017/18 financial year, these payments to carers totalled $8.5 billion. This amount equates to 11% (10.9%) of the Replacement Cost of Care $77.9 billion) and replaces only just over half 56% (55.92%) of the Opportunity Cost of Care.

In the light of the enormous Replacement Cost of Care savings that carers provide to the nation’s budgets, balancing carer commitment to care with providing only just over half of the Opportunity Cost of Care to carers is the biggest inequity.

This inequity keeps many carers and their families much too close, and often even below the poverty line often for the rest of the carer’s life.

This is an ongoing unfairness which must be addressed.

Continuing an in-equitable financial base support for carers when compared to their contributions will bring ongoing negative outcomes for community. Such a non-reciprocal approach to resource distribution will put continuingly increasing pressures on care systems and budgets and will jeopardise health and wellbeing outcomes of carers / families and the community.

Apart from changes in intergenerational attitudes the perceptions of caring in general and as a financially detrimental path, will make becoming a carer, or continuing a caring role a decreasingly viable proposition. The trends are clear:  Deloitte Access Economics reports that by 2030, the demand for informal carers will increase by an estimated 290,000 additional carers, yet we can only expect an increase in actual carer numbers by 106,000. This is another important service supply and economic reason to raise the recognition of carers and provide them with appropriate financial security.

From now on – Financial Equity for Carers.

Marianne Lewis

Senior Policy, Projects and Carer Engagement Officer