Nola Marino (Forrest, Liberal Party) Share this | Hansard source

I acknowledge, for the member for Dobell, the wonderful facilities in his electorate that he has spoken about, but I will also quietly remind him that in regional areas it is a huge challenge to provide the types of facilities that he and his constituents have access to.

I rise to speak on the Aged Care Amendment (2008 Measures No. 2) Bill 2008. This bill does not go far enough in addressing the serious state the aged-care industry is in because of growth in the numbers of Australians who will need residential aged care. It does not encourage the necessary ongoing, continuous investment required to meet the demand. With an average return on a high-care bed in a modern facility at 1.1 per cent, it is no wonder the industry is in crisis and unable to attract investors. This bill merely updates regulatory safeguards in a half-hearted attempt to provide some confidence to the aged-care system but actually offers nothing in a practical sense. In many areas, confidence has already left the industry, and clearly the Labor government has failed to address the serious state the aged-care industry is in.

Aged-care funding in my electorate of Forrest over the 2006-07 year totalled over $34.5 million. Currently, there are 17 residential care facilities, offering 399 high-care beds and 566 low-care beds, located in Harvey, Collie, Eaton, Bunbury, Donnybrook, Nannup, Busselton, Bridgetown, Manjimup and Margaret River. Three multipurpose services in Nannup, Augusta and Pemberton offer 25 high-care, 29 low-care and nine community care places. Two specific dementia facilities offer seven community care places in Bunbury and Busselton. Nine organisations offer 246 community care places in Busselton, Margaret River, Collie, Bunbury, Donnybrook and Manjimup, and two extended aged-care at-home services offer 17 community care places through Strelley Grange Home Care in Busselton and Silver Chain Bunbury/South West. These facilities service a total of 1,298 people.

In Forrest there are 17,981 people aged over 65, with 1,874 people aged over 85. It has been reported that half of the 2.8 million Australians aged over 65 will require some sort of assistance with their everyday activities. This means around 9,000 Forrest residents will require the services of one of the roughly 1,300 places available including community, low and high care. Ensuring strong growth in aged-care places is essential to providing a healthy, enjoyable and safe retirement for the general population of Australia.

WA has a unique set of circumstances, clearly not recognised by the Labor government—or is it simply because we have a Liberal-National state government in WA? I note a letter in the West Australian newspaper from Ray Glickman, CEO of Amana Living. He said:

Sometimes it seems that Canberra is a world away rather than just on the other side of our continent.

The impacts here on the elderly of the resources boom and associated rampant inflation go unrecognised or are just ignored by the Federal Government.

Your newspaper has shone a light on the immediate hardships being suffered by elderly pensioners, but if anything, the long-term prospects for these same people in terms of care and services are even more alarming.

The letter went on to say:

Despite their best efforts, aged-care providers in this State can no longer afford to develop new care beds or even keep open all the ones they currently have. While the true inflation rate for aged-care services is running at 8-9 per cent, Federal funding increases are at 4 percent at best. Construction costs for new beds are now running at more than double the income that is provided by the Government to pay for them. This situation is clearly now of crisis proportions

Mr Glickman also stated:

WA is currently 2000 care beds short of Government targets, with this number set to increase rapidly in the face of aged population growth.

One of the major issues facing the aged-care industry is the large number of providers that are operating at a loss, which is threatening the sector, clearly demonstrated in Mr Glickman’s letter. High care is the area most in need of assistance, as it is quickly becoming the area companies are least likely to upgrade, with 40 per cent of high-care operators running at a loss while, at the same time, being forecast as the type of care to experience the most growth over the coming years as Australians use fewer low-care options, instead utilising the growing community care facilities prior to making the move into high-care residential living.

For the first time ever, the profitability of the aged-care sector has fallen sharply, demonstrated by the undersubscription of places in Tasmania and Western Australia, despite robust competition for places. The release of the Grant Thornton Aged Care Survey 2008 predicts a dire future for aged care in Australia. Average earnings for aged-care providers have declined by 10 per cent in just one year according to the 2008 National Residential Aged Care Survey. In 2007, aged-care facilities were returning an average of $3,211 per bed. This figure has declined to $2,934 in 2008. High-care beds in particular performed exceptionally poorly, with modern, high-care, single-bedroom facilities averaging a return of just $2,191 per bed this year. That is a return of just 1.1 per cent on these facilities, and it is not surprising that companies are scrapping or postponing upgrade plans.

The survey highlights that declining earnings and increased construction costs have prevented the redevelopment of many aged-care facilities that are themselves ageing—and in country areas, ageing significantly. The viability of the aged-care sector is under serious threat as the government continues to ignore the very basic incentives needed to encourage investment in modern aged-care facilities. I am concerned that, as the Grant Thornton survey reported:

The regulatory and pricing framework now threatens the viability of the aged care sector by suppressing incentives to invest in modern aged care infrastructure.

This decline in investment severely limits choice for consumers of aged care services.

The last thing we need in an environment where we will soon be experiencing very high ratios of retired residents to working residents is a limited choice in aged-care services, particularly high-care services. What is even more alarming is that this dramatic fall in return on investment has coincided with growing demand for aged-care services which has forced some aged-care consumers onto the state hospital system. This is a most worrying trend. If the industry remains static or declines, our public hospitals will not be able to cope with having to provide aged care, not to mention the predicted half a million extra people who will be forced onto overflowing public hospital waiting lists as a result of the amendment to the Medicare levy surcharge.

Given that, in 44 per cent of aged-care facilities surveyed by Grant Thornton, the buildings—the actual bricks and mortar—are currently over 20 years old, I have grave concerns. I urge the government to take the action necessary to ensure investment in aged-care, particularly high-care, facilities so they remain viable and do not fall behind demand. This will ensure that Australians living in residential care facilities enjoy comfortable, safe, modern facilities and are not left with either inferior service or nowhere to go.

Equally important is ensuring that residents have a high quality of life when in aged care. The Aged Care Survey 2008 indicated there were concerns in the industry that budget constraints and poor financial performance of both small and large service providers was not only leading to poor quality facilities but also resulting in reductions in recreation and lifestyle activities. Our elderly Australians deserve to be able to have a good quality of life, a range of activities to enjoy, caring aged-care workers, and access to health and personal support services in their aged-care facility.

In recent years there has been a large shift in the structure of the companies that own and run aged-care facilities. As corporations have moved into the market, the status quo of aged-care facilities being small operations where the owner has significant influence over the day-to-day running of the facility has shifted to one where the owners of aged-care facilities—effectively the shareholders of such firms as Babcock and Brown, AMP and Macquarie Bank—are completely removed from the management of the facility. Effectively they are commercially driven and managed enterprises. Production costs have risen substantially over a very short space of time, encouraging firms to turn away from prospective expansions. Add to this the shrinking proportion of government subsidies and an acute shortage of nurses—problems shared by all in the health sector—and it is no wonder we find ourselves discussing the aged-care industry. Providers are handing back bed licences and decisions have been made at provider board level not to apply for further places unless there is structural reform to the industry. A number of providers are closing beds.

All this comes while demand for aged-care facilities is set to increase over the coming years with the number of over 85-year-olds, the demographic most likely to demand high care, set to increase fourfold from 400,000 to over 1.6 million over the next 40 years. The recent Productivity Commission research paper Trends in aged care services: some implications also predicts a significant rise in demand for aged-care services over the coming 40 years. If I were an aged-care operator, I would be very worried. With the government refusing to guarantee an adequate income stream past the 2009 budget for aged-care facilities, there is very little to encourage providers to invest in new facilities or to improve their services or existing facilities.

I am most concerned that Australia’s aged-care system will not be able to meet future challenges. These issues stem from aged-care providers recognising the unsustainable financial situation they find themselves in and needing to make commercial decisions. Since coming into government, Labor has ignored older Australians. It has undermined the aged-care industry and the dedicated employees who take care of our senior members by refusing to commit to time lines or concrete targets—therefore not providing the Australian people with any confidence. This is another example of their watching approach.

I looked at the MYEFO figures, the government’s economic mismanagement and bungling of the guarantee on bank deposits, and their failure to factor the current economic position into the emissions trading scheme modelling. I look at the education revolution and the additional costs to the states and I look at the national broadband network. In my area that is still to happen. But I have news for the government. The aged-care companies will not just watch; they will simply not invest if the government does not provide certainty. They will walk away and they will not invest in the aged-care sector or provide care to our elderly population. I will be very interested to see whether the 1,500 new places on offer will be taken up in the next round. With the older population set to make up nearly a third of our total population—more than double the current percentage—the Prime Minister will be held to account.

The previous government introduced significant changes to the aged-care sector as part of the 2007-08 budget. Many of these changes, such as the Aged Care Funding Instrument, have been retained by the current government, and peak bodies have expressed relief that there were no significant cuts to the aged-care sector in this government’s first budget. The conditional adjustment payment was introduced as part of the previous government’s initial response to the report of Professor Warren Hogan’s Review of pricing arrangements in residential aged care. The amount of CAP payable in respect of a resident is calculated as a percentage of the basic subsidy amount payable in respect of a resident. In 2004-05, the year of its introduction, this percentage was 1.75 per cent. It then rose annually in 1.75 per cent increments to 3.5 per cent in 2005-06; 5.25 per cent in 2006-07; and 7.0 per cent in 2007-08.

With the threat of a cut to aged-care funding in the budget, the Prime Minister intervened at the last moment—actually the Sunday before the budget—and provided indexation to the CAP subsidy of 1.75 per cent to continue for one year only. It was therefore continued and maintained by the new government and announced in its 2008-09 budget. With indexation to the CAP subsidy increasing by the same increment of 1.75 per cent, the CAP level was lifted to 8.75 per cent. Discontinuing the indexation of CAP would have sent some aged-care providers to the wall, adding to the 40 per cent in the sector already operating at a loss.

It was also disappointing that the budget did not make any meaningful contribution towards addressing the significant health workforce challenges. An extra 1,000 nurses over five years in the residential aged-care sector will do little to address the declining workforce and the pay disparities in the sector or the broader challenges facing the aged-care workforce. A research paper by the Productivity Commission released last month forecast that the number of Australians over 85 years would quadruple to 1.6 million and that governments would need to spend $450 million each year to ensure aged-care nurses were paid the same as hospital nursing staff.

The previous coalition government placed significant emphasis on wide-ranging reforms to deliver a high-quality, affordable and accessible aged-care system that understood the needs and preferences of older Australians. The reforms began in 1997 when the Aged Care Act 1997 and the Aged Care Principles introduced a unified residential care and payments system and a national quality assurance framework for residential aged care, combining accreditation, certification and the Aged Care Complaints Investigation Scheme. These measures gave the community greater confidence in the quality of care, services and standards of accommodation and protected the rights of older Australians. The coalition places significant importance on older Australians having access to high-quality aged care.

Since the act came into effect in 1997, the industry has matured significantly. The setting in 2008 is significantly different from what existed in 1997, with the sector evolving into multisite, multistate, multiservice operations using complex financial and legal arrangements. The previous coalition government’s substantial commitment to the aged-care sector is demonstrated by the increase in the total number of operational aged-care places. In December 2006, this represented a 48 per cent increase compared to Labor’s previous policies in 1996. There was a 21 per cent increase in residential care places, a 795 per cent increase in community care places and our total aged-care funding was just on 100 per cent more than Labor’s 1996 figures. The previous federal government also provided funding for nursing homes to install clinical and patient management systems that help in the sharing of information between residential care providers, hospitals and general practitioners.

The ageing of our population is the biggest social issue that Australia faces and it will present considerable budgetary pressures. The Australian government’s spending on health is projected to increase as a proportion of GDP from 3.8 per cent in 2006-07 to 7.3 per cent in 2046-47. The growth of real GDP per person is projected to slow because of the ageing of the population and increasing life spans. Spending on health and aged care is projected to grow significantly over the next 40 years due to improved drugs and medical technologies.

Australia is facing a demographic shift. Australians now have one of the world’s longest life expectancy rates in the world. At present, Centrelink is the agency which determines an aged-care recipient’s financial status for the payment of bonds et cetera. Industry has reservations about this power being conferred on the Secretary of the Department of Health and Ageing, who may attempt to extend capping bonds for other aged-care residents.

The bill widens the powers of the department to enable it to impose sanctions on behalf of future aged-care residents and to allow it to impose sanctions to act as a deterrent on future noncompliance. Because of the subjective nature of these provisions, it would be difficult to argue against an appeal. The act currently has considerable powers to impose sanctions and revocation of licences. These provisions introduce unnecessary uncertainty and complexity into the act. In practical terms, what concerns me most, and what lies at the heart of this legislation, is the capacity to deliver a high-quality, well-serviced, caring environment for our aged citizens. For both the residents and their families, there is an absolute imperative to know that the quality of care is the very best possible. So often, one of the hardest decisions loving family members have to make is the decision to have their parent or grandparent enter an aged-care facility. Not only do they want their parent or grandparent in good facilities, they also want to know they are being genuinely cared for, and their needs respected and understood, by those who look after them. They want their loved ones to have access to the best possible allied health services they need, a range of activities and entertainment, and a quality of life in the aged-care facility. The national head of aged-care services at Grant Thornton, Cam Ansell, is quoted in the WA Business News as saying that:

Although the cost of building and operating modern facilities is much higher than running older-style shared room accommodation, the current funding model does not provide additional compensation for operators that meet consumer demands for privacy and dignity.

At the same time, Aged Care Association Australia’s chief executive, Rod Young, said that ‘the federal government’s $10.4 billion economic stimulus package ignored the frail elderly’ and described the future of Australian aged-care services as ‘grim’. (Time expired)

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