One of the biggest nursing home operators in the country has told the federal government it shouldn't be worried about providing reverse mortgages for the elderly who need cash to secure an aged-care bed.
The Productivity Commission last year recommended a complete overhaul of the sector with accommodation bonds allowed for all residential places.
Alternatively, people could choose to pay daily or weekly "rents".
To ensure people won't have to sell their homes, the commission wants the government to offer loans against their principal residence where dependants could continue living.
People who did opt to sell would be able to invest the proceeds in a government savings account. The money would be exempt from income or assets tests so that elderly Australians could keep their pensions.
AAP understands the government is baulking at the idea of essentially becoming the nation's biggest bank.
But Catholic Health Australia (CHA) chief executive Martin Laverty says Labor's fears aren't justified.
He says the government is already a bank carrying around $22 billion worth of university students' HECS debts.
"The government can't have it both ways," Mr Laverty told AAP on Wednesday.
The value of nursing home bonds currently deposited to secure low-care beds is around $9 billion.
If bonds were allowed for high-care beds too, as recommended by the Productivity Commission, that would probably double to almost $20 billion.
But Mr Laverty points out that's still less than the university loans being carried by the federal government.
He said if the private sector operated the reverse-mortgage scheme they would come with commercial interest rates, whereas the commission suggested the government provide interest-free loans.
"If government is going to go down that line what protection will it put in place so that the consumer doesn't pay more than it needs to under a government scheme," Mr Laverty said.
The Productivity Commission insists that if aged care is to be improved there must be a greater contribution from older Australians who have the financial capacity to pay.
Catholic Health Australia says people won't be too worried about paying bonds for high-care beds in nursing homes because they've been in place for 15 years for low-care spots.
"(Anyway) we have no choice," Mr Laverty said on Wednesday.
"We need a new aged-care financing compact that enables those that have the capacity to pay to do so in a safely regulated environment.
"Many consumers recognise that just as they've had to finance their accommodation at every other point in their lives, if they have means in their aged care it might need to be the same."
Mr Laverty said the alternative was higher taxes or no care at all for many.
Ageing Minister Mark Butler on Wednesday acknowledged the government needed to find better income streams for the system.
"It's about ensuring that people with capacity to pay (do) pay in an equitable and transparent way and the commonwealth government is able to support people who don't have a capacity to pay," he told Sky News.
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