Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

As I was saying before question time interrupted my contribution to this debate on the Aged Care (Bond Security) Bill 2005 and cognate bills, this legislation enhances protections available for residents of aged care facilities. At that particular time I was reflecting on residents that utilise multipurpose services, MPS. I was making the point that these services are a very valuable innovation in the delivery of aged care services and was noting the importance of this government entering into an agreement with the states. MPS allow for the effective delivery of services to communities where both health and aged care services are at risk, under threat or non-existent. So I think that this is a very good avenue for the government to actually work in partnerships with the states. It should be used as a model to get away from the blame game of one arm of government blaming the other arm of government for problems that exist.

Under the current arrangements, if a residential care facility provider becomes bankrupt or insolvent, the resident is not guaranteed that they will get the relevant accommodation bond amount refunded. That is not good enough, and I believe that this legislation is essential to address that problem. The bond security bill provides for a scheme whereby the Commonwealth will repay outstanding accommodation bond balances to relevant aged care recipients in cases where aged care providers default. The Commonwealth can then attempt to recover the balance amount from the defaulting aged care provider.

Also contained are administrative steps that must be taken so that a levy on aged care providers can be imposed under the levy bill. The levy bill will enable the Commonwealth to impose a levy on approved providers of aged care if it needs to recover its costs after repaying accommodation bonds to aged care residents whose approved provider becomes insolvent and defaults. The bill will enable the Commonwealth to impose a levy on aged care providers to the extent necessary to recover the amounts that it has not been able to obtain from defaulting providers and disclosure. This new prudential requirement will be developed over time and will be subject to review. The Aged Care (Bond Security) Levy Bill will enable the Commonwealth to impose a levy on approved providers of aged care if it needs to recover its costs after repaying accommodation bonds to aged care residents whose approved providers become insolvent and default.

Levies can be imposed on approved providers of aged care once a cost recoupment determination is made by the minister. The determination is made when the Commonwealth has not recouped money it has paid out in compensation to aged care residents entitled to bond refunds from a defaulting approved provider or when the Commonwealth wants to recover associated administrative costs. The bond security bill provides for the making of cost recoupment determinations and contains the process by which defaulting approved providers are identified and arrangements are made for the Commonwealth to compensate affected aged care residents and recoup its costs. This bill does not actually impose a levy. The rate of any levy will be determined by regulation and cannot exceed the cost recoupment determination amount in any particular case. While any levy imposed may apply different rates to different classes of approved providers, it cannot discriminate between providers on the basis of their location in a particular state or part of a state.

Whilst we are discussing this legislation, I believe that it is imperative that I bring to the attention of the House some of the issues that have been of real concern to both providers of aged care and those people who utilise aged care services. Unfortunately, the provision of aged care has been flawed. The government spruiks its innovations and the exciting things that it has done in aged care but, unfortunately, they are not working on the ground. The providers of aged care services find that the true cost of effective models of residential and community care are not being funded and that they should be indexed adequately. They are particularly concerned about the quality of services that are available to meet the needs of older people and younger Australians.

The issue I think the government needs to address is the Commonwealth own purpose outlays—COPOs. It is currently at 1.86 per cent and is linked to the minimum wage. My question to the government is: what will happen to the COPO indexation now that minimum wages are to change and that the Fair Pay Commission is to be considering wage increases? I see this having the potential to impact on the provision of aged care services and the potential to impact on the viability of residential aged care facilities. I know that residential aged care facilities believe that they are underfunded and that the COPO payment should be somewhere between four and six per cent as it currently does not meet the costs that are associated with the index.

The government is constantly telling us that we have an ageing population and that in 2011 the baby boomers of the world will begin to reach the age of 65. This is a crisis and something that we must address immediately. We have had the Treasurer’s Intergenerational report and last night and earlier today we debated the Future Fund, but I still do not believe that the government has in place the proper legislation to address these needs.

I will quickly mention that aged care providers in both residential and community aged care services since 1997—which puts it right in the government’s court—have experienced costs rising faster than their income. This is because when the government fixes the subsidies that the providers will be paying it does not look at things like workers compensation, wages, utility payments, general insurance, professional indemnity insurance and many other fixed costs that do not come into the formula. This is not good enough. Whilst this legislation will improve the situation for residents of aged care facilities and their families in relation to aged care bond security, I do not think it addresses any of the issues that I have touched on so far.

In addition to that, we have the existing chronic bed shortage. I know that within the Shortland electorate that I represent in this parliament there is an enormous waiting time for both assessment by the aged care assessment teams, particularly in the Hunter area of the Shortland electorate, and the delivery of services—be they in the community or actually accessing a bed in a residential care facility. Part of the problem is dealt with by the states absorbing the problem. Those people who are waiting for a residential bed are being housed or cared for in an acute bed in a hospital. This is not the optimal outcome for those people awaiting a placement in the residential aged care facility and also creates a problem for acute care hospitals.

These are some of the issues that need to be addressed in addition to looking at the aged care bond security. I would add to that the fact that we have a chronic workforce shortage within the health system. There is a chronic shortage of nurses within the acute care system and, more particularly, within the aged care system. This government has failed to address that. There are many more vacancies for assistance in nursing and nurses in the aged care facilities than there are people to fill them. I fear that that may increase as the government’s new industrial relations legislation kicks in and those people’s wages will become even lower than they are today.

Back in the 40th Parliament there was an inquiry into the future ageing needs of Australia. It enquired into long-term strategies to address the ageing of the Australian population over the next 40 years. Unfortunately, that inquiry went through the whole of the 40th Parliament and at the end of that parliament a draft report was produced. To me, that says that the government is not serious about aged care. It looked at the recommendations of Hogan, who expressed concerns about the workforce issues. He linked that in one respect to the disparity of wages between the acute sector and the aged care industry. This inquiry highlighted a number of problems. I will highlight the broad themes that were identified by that inquiry. There was an inadequate focus on services aimed at maintaining healthy functions such as physiotherapy, podiatry, nutrition, speech, oral health and the diversity of settings—the availability and quality of care for people with dementia or mental health problems and needing respite. Respite came up time and time again, on a daily basis and from the perspective of residential aged care. There was confusion about multicommunity care services and issues around the quality of community care services. You could have a number of organisations competing within the one area with a duplication of services and still people in the community could not access those services. This has not been dealt with. These are real issues that are affecting people on a daily basis.

One of the other issues that are having an enormous impact on residential aged care and older people in the community is the chronic doctor shortage. People are being denied beds in residential care facilities simply because this government has not ensured that there are enough doctors to go into those residential care facilities and make sure that those people can get the services they need. I recommend that all members of the House read this document on the future ageing of Australia. I recommend that the government thinks very carefully about its commitment to older people, because if it cannot even develop a full report to this parliament that addresses the needs of older Australians then it has a big problem. It really does show a lack of commitment in the area of aged care.

I reiterate that issues such as the shortage of aged care beds, the inordinate amount of time that people have to wait for a place in a residential aged care facility, the lengthy time that people have to wait to actually be assessed by ACAT and then access services in the community are a real problem for our ageing population.

The Aged Care Amendment (2005 Measures No. 1) Bill 2005 will enable the strengthening of the existing prudential requirements relating to accommodation bonds, especially in relation to liquidity, record keeping and disclosure. The new prudential requirements will be developed over time and will be subject to review. Flexible care services are those that are provided outside the normal residential and community care system. Multipurpose services—MPSs, as I mentioned earlier—provide a much more flexible model because they have aged care and health care services combined. They are particularly useful in smaller communities. I was fortunate enough to visit Tullamore and see them operating in that community. I reiterate what I said earlier and recommend them to this government. Each should be extended. They operate very effectively. They allow people to stay in their own home and get the high-level care that they would receive in a residential care facility.

Entry contributions are amended in schedule 2. That means that all rules applying to approved providers of residential care services and flexible care services that hold accommodation bonds will also apply to approved providers that hold entry contributions paid before October 1997. Schedule 3 provides that approved providers will comply with the prudential requirements if they comply with the new prudential standards that will be imposed under proposed new section 57(4). User rights principles may be set out in prudential standards, and these are defined as standards providing for the protection of accommodation bonds and entry contributions, balances of care recipients, sound financial management of approved providers and the provision of financial management.

Three standards are intended: liquidity standards, records standards and information standards. Implementation of the last two standards will assist with the operation of the guarantee and the recoupment schemes provided for under the Aged Care (Bond Security) Levy Bill 2005. Records standards will mean that approved providers holding bonds will establish and maintain independent audited records and ensure refunds of accommodation bonds.

Once again, I would like to reiterate that there is more to aged care and more to providing services than the government has here. I do not oppose what is in these bills, but I think there is a long way to go and a lot of issues that this government needs to look at. We need to ensure that services are out there in the community for our frail aged Australians. We need to ensure that the aged care facilities are properly funded, that the services provided in the community are provided in the best possible way, that we do not have duplication of services and that we actually provide the best service available to those people who need those services.

Christopher Pyne (Sturt, Liberal Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

I would like to thank the House for the opportunity to sum up these important bills in the aged care sector: the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005. I would also like to apologise to the member for Shortland for trying to cut her off before question time, not realising that the speakers list had moved around a little. I would also like to thank the member for Shortland and the opposition generally for their support for the bills. I would like to thank the members for Reid, Rankin, Cowper, Banks, Riverina, Fowler, Hasluck, Chisholm, Canberra and Calare for their contributions.

Jennie George (Throsby, Australian Labor Party, Shadow Parliamentary Secretary for Environment and Heritage) Share this | Link to this | Hansard source

That is very courteous.

Christopher Pyne (Sturt, Liberal Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

The member for Throsby says I am being very courteous, but when the opposition and the government are in furious agreement about important changes it is worth while being courteous. It does not happen as often as it should. I thank the government for putting these bills forward and the opposition for supporting them. The government has presented three very important bills which guarantee the repayment of bonds to residents in the event of an approved provider becoming bankrupt or insolvent. The bills also ensure improved prudential arrangements in aged care services holding bonds. The government is delighted with the support that it has received, and I will happily sum up the debate.

The Aged Care (Bond Security) Bill 2005 enables the Australian government to repay residents’ bond balances with interest in accordance with the amendments in the measures bill if the residents’ approved provider of aged care becomes bankrupt or insolvent. This means that every resident who has paid or, in the future, will pay an accommodation bond is guaranteed to have their money repaid even if their approved provider becomes bankrupt or insolvent. The legislation protects all pre-1997 entry contributions for entry to Commonwealth funded services. The legislation also protects bonds paid by aged care residents in flexible care services known as multipurpose services. Without this new government guarantee, a resident would continue to rank as an unsecured creditor to an insolvent or bankrupt approved provider and may have to wait months or even years to have their bond balance repaid and still not be sure of recovering all of the money owed to them. Under the arrangements set out in the bill the government will repay the bond balance owing to the resident and in exchange any rights the resident had to recover the amount from the approved provider will be transferred to the Commonwealth. The government will then stand in the shoes of the resident and seek to recover the money paid by pursuing the defaulting provider. If necessary, through the provisions set out in the Aged Care (Bond Security) Levy Bill 2005 the government will levy all aged care providers who hold bonds to recover any amount owing.

Existing protections under the Aged Care Act 1997 have worked well, as is shown by the fact there has not been an instance where a resident’s bonds balance has not been repaid because of the bankruptcy or insolvency of a provider. The government believes, however, that these additional protections are timely. The average new bond was valued at $26,000 in 1996-97 and was $127,600 in 2004-05. Bonds can represent a significant proportion of a resident’s life savings and, understandably, residents and their families expect secure arrangements for their bonds and reassurance that their bond balances will be repaid when the resident leaves the home.

This legislation reflects the government’s three objectives. The first objective is to improve the efficiency and sustainability of the aged care sector and strengthen the management of bond moneys to reduce the likelihood of providers becoming insolvent or bankrupt and being unable to pay bond balances. The second objective is to strike a balance between the added security for residents that is provided by this strengthening and the financial impact of the new arrangements on the sector’s viability and its standing with the capital markets, including its ability to construct and maintain aged care homes. The final objective is to ensure that all residents who pay bonds receive their full entitlement to the balance of the bonds that they have paid in the event that a provider becomes insolvent or bankrupt.

The new arrangements set out in the three bills will improve both the security of bonds and the management of bonds by the sector. They will complement the $877 million conditional adjustment payment which was implemented in 2004 and which requires approved providers to prepare audited general purpose financial reports. These are two government initiatives which over time will assist to make the residential aged care industry more financially mature and more sustainable. The introduction of these protections demonstrates the coalition government’s commitment to a world-class system of aged care that provides high-quality, affordable and accessible services to meet the individual needs and choices of older Australians. With that, I commend the three bills to the House.

Question agreed to.

Bill read a second time.

Message from the Governor-General recommending appropriation announced.