Craig Emerson (Rankin, Australian Labor Party) Share this | Hansard source

The Aged Care (Bond Security) Bill 2005 and cognate bills aim to secure accommodation deposits by surrounding them with some accountability and prudential requirements. The way it works is that, in the unfortunate event that a nursing home was to become insolvent, the Commonwealth would step in and ensure that the accommodation deposits were refunded to the families of the residents. That is a welcome move because it does provide greater security for those deposits, and it is a reflection of the report prepared by Professor Warren Hogan, Review of pricing arrangements in aged care.

Professor Hogan dealt with the issue in a broader context, however. That context is his support for accommodation deposits for high-care residential accommodation. I, too, support accommodation deposits for high-care residential care, subject to a number of qualifications that I will spell out. There have been very long and acrimonious debates about this matter in the past. I think we need to move on and look again at the question of accommodation deposits for high-care residential care because, as is so often the case, under the current arrangements it is the poor who are disadvantaged by the absence of such arrangements.

However, to put the entire debate into context it is worth looking at the Intergenerational report prepared by Treasury in 2002 and also the Productivity Commission’s major report on the economic implications of the ageing of the population. Both of those reports show that we have a very substantial problem on our hands in terms of the economic impact of the ageing of the population of this country. It is projected that by the mid-2040s Australia will have an extra four million people over the age of 65, yet just a few hundred thousand extra young people. So the profile of our population will definitely be greying. That presents major challenges for Australia, which need to be addressed now, before we get to an absolute crisis. I assert that we are already in crisis on aged care accommodation.

To give perspective to the dimension of the problem in aged care, in these reports it is projected that government spending on aged care as a share of gross domestic product will more than double in the coming 40 years. Furthermore, it is projected that the number of older Australians in high-care residential aged care alone will increase from fewer than 100,000 in 2003 to 337,000 in 40 years time. That gives us an idea of the size of the challenge. But the government is not preparing us for the challenge. It is finding the whole area of aged care too hard—almost too hot to handle. As a consequence, we are confronted with the reality, as laid out by the shadow minister, Julia Gillard, of cost-shifting from the Commonwealth to the states. Instead of taking its responsibilities for aged care seriously and accommodating older people who need high-care accommodation in such facilities, the Commonwealth is leaving people who should be in aged care facilities in hospitals, which takes up very scarce acute-care beds in our hospitals. That might be all right for the Commonwealth, because it shifts much of the cost onto the states. But it is not any good at all for older Australians themselves, it is not good for the system and it reflects the fact that we do not have in place in this country a comprehensive and fair aged care system which anticipates the very real problem of the ageing of the population.

What is happening is that queues are forming. Again, the shadow minister pointed to the size of the queues. This problem has doubled in just the last few years. Whenever we have a situation of queues, whether in aged care, health care or just about any other walk of life, if you examine who is in the queues you find that, most often, it is not the wealthy. Poor people occupy queues, because wealthy people have the capacity to buy their way out of a queue or jump to the front of the queue. Labor in particular should be very concerned about queueing. Of course, the coalition should be concerned too, but, because it is often the poor who are in queues, we find that the coalition is less concerned about that. We should be concerned about the formation of ever-lengthening queues and take remedial measures.

I would like to provide a bit of background about the current arrangements. My professor of old—I will not call him an old professor—Warren Hogan at the University of Sydney alludes to a heavily centrally-planned aged care system. It is ironic that another eminent economist, Professor Max Corden of the ANU, described our university regulatory system as ‘Moscow on the Molonglo’. So we have two eminent professors describing government systems for aged care and education as ‘central planning at its worst’. And I have to agree. That might seem a little odd coming from a Labor member of parliament, but it is true. This government feels that it has to centrally control the provision of aged care and our university system. The government does not let the market play a role in creating the fairer and more affordable system that could prevail if it were to let go of the controls at least a little.

Under the current very complex system, there are two types of charges in residential aged care facilities: accommodation payments and daily care fees. Accommodation payments are designed to help provide a stream of capital for operators to build and maintain aged care facilities, while the daily care fees are a contribution to the running costs of these facilities. Accommodation payments can take the form of deposits—formerly known as bonds—for low-care places but, as a result of government legislation, they are banned for high-care places. In high-care facilities, where accommodation payments are banned, accommodation charges can apply, but they are limited to a maximum charge of just $16.25 a day. So it does not take too much thinking to work out that there is a shortage of funding for the accommodation part of high-care residential aged care. The running costs are covered by daily care fees. Whilst there are limits on those fees, the limits are higher, and therefore there is less of a problem with the running of the facilities but a big problem with the construction and maintenance of high-care residential aged care facilities. There are exceptions to these rules in two circumstances: firstly, up to 15 per cent of high-care residential places can be what are called ‘extra service places’, for which accommodation payments are allowed; and, secondly, when someone enters a low-care facility and pays an accommodation deposit—where they are allowed by law to do so—and then moves to high-care residential aged care, they can carry the accommodation deposit with them.

I think people who are listening to this contribution will begin to understand the absurdity of the situation. There cannot be any philosophical basis for banning accommodation deposits in high-care facilities when they are allowed in low-care residential aged care and in extra service places. I would be interested in hearing the government explain what the philosophical basis for this prohibition is, because there cannot be such a philosophical basis.

The accommodation deposits being provided for low-care residential facilities are being used to cross-subsidise the construction and maintenance of high-care facilities. People who enter low-care residential aged care are effectively subsidising those in high-care accommodation, including people on low incomes in low-care residential facilities cross-subsidising people on high incomes in high-care facilities. So we have the ludicrous situation where, under the current arrangements for residential aged care, the poor are subsidising the wealthy.

Around 65 per cent of residents in residential aged care have high-care needs, yet the Commonwealth has been approving almost twice as many low-care beds as high-care places. So it is beginning to become clear that there is something stuck, and that is a result of this central-planning approach of the Commonwealth. The needs are in high-care residential care, yet the government has been approving twice as many low-care places. The reason for that is the prohibition on accommodation deposits in high-care residential aged care.

There was a big debate about this between 1996 and 1998. The argument used in that debate against accommodation deposits for high-care places was that moving into a high-care residential facility from a low-care facility is traumatic enough without being required to sell your home. That was in the days when low-care facilities were really hostels, and they did not have much of an aged care component to them. They were really like secured premises with not a lot of aged care services provided. Now, several years later, much more commonplace is the situation where low-care and high-care services and facilities are provided on the same site. That is why it is permissible for people who enter a low-care facility to be able to carry their accommodation deposit into a high-care facility. So it is not as if there is this huge traumatic disruption as they move from one facility to another, because commonly now the facilities are on the same site. They may move from one building to another, or they may move even move from one room to another. So the arguments that were carried back in that period have been overtaken by a change in the way that aged care accommodation is provided in this country.

There are already protections in place in relation to the argument about the added trauma of selling the family home in moving from low-care to high-care accommodation. For example, accommodation deposits cannot be levied where the resident has a spouse, relative or other carer living in the resident’s former home. Also, there is an asset limit such that people who are very poor cannot be forced to pay accommodation deposits. These restrictions are designed to ensure that a prospective resident in an aged care facility is not forced to sell a home where it is occupied by a spouse, relative or friend who has been providing care in recent years.

So we have this situation where the Commonwealth of Australia is saying, ‘We are applying by law a limit to the quality of aged care that high-income earners can buy.’ Imagine the furore if the Commonwealth government passed legislation banning the provision of five-star hotel accommodation in Australia on the basis that it is unfair to allow people who have the income, who have the wealth, to buy five-star hotel accommodation in Australia. People would regard that as absolutely absurd. Yet that is exactly the situation that applies in residential aged care, where the Commonwealth bans the use of accommodation deposits.

Baby boomers are beginning to retire. Many of those baby boomers are very wealthy and many of those baby boomers are willing and able to pay for high-quality aged care accommodation but are prohibited by law from doing so. Is this truly 21st century Australia?

As I pointed out, the people who really lose from this limitation on the quality of aged care accommodation that can be purchased by high-income earners are not the high-income earners but the low-income earners: either they are in low-care accommodation and are cross-subsidising high-income earners in high-care accommodation or there are not enough high-care accommodation places because this limitation means that the industry is unable to build sufficient capacity to accommodate residents in high-care accommodation. The ones who miss out are not the wealthy. The ones who miss out are the poor. So we need to look afresh at accommodation deposits.

I do not assert that allowing accommodation deposits in high-care residential aged care will fix all the problems in the aged care sector. I do not assert that, but it is absurd that those restrictions are in place. They should be eased, but subject to a number of caveats. One of those caveats is of course that people should not be forced to sell their homes where they have a relative or someone who has been caring for them for some time living in that home.

A very important caveat is that the proceeds of this extra funding coming from wealthy people going into high-care residential aged care should be used to cross-subsidise the poor, to help those poor people who are sitting in the queues trying to get decent quality aged care to get off the queues and into high-care residential aged care. That seems to me to be a fairly obvious reform that should be contemplated. The reason we are debating this legislation is that Professor Hogan effectively recommended those changes in his report and, as an interim step or as one step along the way, he wanted to provide greater security around accommodation deposits in the event of the collapse of a residential aged care facility. As I understand it, there has not been any great prevalence of such collapses, but it is a prudent measure to provide that protection. But we should then be taking the next big step and look afresh at aged care accommodation deposits for high-care residential aged care places.

When the Minister for Education, Science and Training, who is at the table, was the aged care minister, she floated some other related proposals which are worth debating. They included allocating dollars to the person rather than to the facility. I have one qualification about that: I would prefer to see that occur such that people who are in high need or on low incomes have more dollars attached to them than very wealthy people, so I think consideration could be given to that. The minister further suggested that, in doing this, people who could be in receipt of that funding could include those associated with personal care by a spouse, relative or friend. That does raise some questions about the quality of care, but that does not mean that the issue could not be debated and considered. But there is, in my view, a flaw in the argument. That is that, as a result of the proposals that the minister put up, it is likely that people will stay in their homes longer—that is fine; that is one of the objectives—but then they would move into high-care accommodation. Unless we solve the problem of the costs of high-care accommodation, ultimately that will exacerbate the situation, not improve it—and I see the minister is, in her own inimitable way, acknowledging this point. The minister’s solution is worth debating. It is worth considering but it must be considered within the broader context of the adequacy of funding of high-care residential aged care. If people are willing and able to pay more, why would a government that purports to be in support of self-reliance prevent them from doing so? The Labor Party should consider these proposals because, as I said, it is the poor who lose out, we have a responsibility to the poor and we have a responsibility to all Australians. This debate should continue in earnest.

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