Stuart Henry (Hasluck, Liberal Party) Share this | Hansard source

I am very pleased to take this opportunity today to speak in support of 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 2005excellent measures to address the ageing of the population; a constructive, well set out policy direction for the government under the previous Minister for Ageing. Before I turn to the substance of these bills, I would like to congratulate the former Minister for Ageing, the Hon. Julie Bishop MP—a fellow West Australian—for her hard work and foresight in bringing these bills to parliament and to congratulate her upon her promotion to cabinet.

These bills will form the legislative framework of a comprehensive new system to safeguard the accommodation bonds of residents of aged care facilities. This new system will provide peace of mind for residents and their families. This peace of mind will be appreciated by many residents and families in the electorate of Hasluck. These bills are a striking example of the Howard government’s commitment to the welfare and dignity of senior Australians—a growing group, of which we will all eventually be members.

The bond security bill will allow the Commonwealth government to compensate residents when their bond cannot be repaid due to the bankruptcy or insolvency of their approved aged care service provider. The levy bill allows for the subsequent recovery of those moneys, either from the defaulting provider or by way of a levy on all bond-holding providers. Perhaps most importantly, the measures bill sets out new prudential regulatory arrangements to minimise the risk of approved aged care providers becoming bankrupt or insolvent in the first place.

The decision to strengthen the protection of accommodation bonds has not come about as a result of a breakdown of the existing system. In fact, to date there has not been a single instance of a bond not being repaid due to bankruptcy or insolvency of an aged care service provider. However, as the value of accommodation bonds has increased, the Howard government, residents and aged care service providers have identified the need to strengthen these bond safeguards. The average new bond paid has increased from $26,000 in 1996-97 to $127,600 in 2004-05. This is a substantial increase, and current figures represent a significant proportion of the life savings of residents.

In light of this, the Howard government has taken the very prudent action of strengthening the safeguards provided under the Aged Care Act 1997. While these existing safeguards have proved adequate thus far, the changes we are debating today recognise that residents and their families should be confident that their bond balances will be paid, even if a provider becomes bankrupt or insolvent and the provider is, therefore, unable to pay in full bond balances owed to residents. Currently residents are classified as unsecured creditors and would have little expectation of recovering their accommodation bond should their aged care service provider become bankrupt or insolvent.

The Aged Care (Bond Security) Bill will offer far greater protection to residents in the future. In the unlikely event of an approved aged care service provider becoming bankrupt or insolvent and, therefore, unable to repay residents’ accommodation bonds, the Commonwealth government will pay these amounts. This will ensure that residents are paid in a timely fashion and are not caught up in protracted battles for the return of their money. The resident will then assign their right to recovery to the Commonwealth, allowing the government to act directly against the defaulting provider to recover the money.

The levy bill allows the Commonwealth government, in circumstances where the amount of the accommodation bond is not able to be recovered from the defaulting service provider, to levy other bond-holding aged care service providers in order to recover the funds required. The new prudential regulatory arrangements introduced by the measures bill provide for improved management of bond holdings by approved providers and an increase in the level of information available to residents about the security of their bonds. Providers will initially be required to comply with three prudential standards relating to liquidity, record keeping and disclosure. Compliance with these prudential standards will be monitored by the Department of Health and Ageing.

While protection of the individual resident is the overriding aim of this package of bills, the new prudential regulatory arrangements also recognise the growing impact of aged care services on our economy. An estimated 74 per cent of aged care services, including multipurpose services, held accommodation bonds at some time during 2003-04. The total value of bonds held in 2004-05 is estimated to be around $4.3 billion. This already significant sum of money will only increase, as the baby boomer generation begins to demand aged care services. Improved financial management and performance of this enormous resource is vital to the viability of our aged care industry into the future and, over time, may allow government and industry to explore alternatives to the guarantee scheme offered in the package of the bills we are debating here today.

Indeed, investment in the sector will also be encouraged as a result of the new prudential regulatory arrangements. On 13 December last year, Ms Robyn Baker, a partner in the Melbourne office of Clayton Utz and a former adviser to the government in the area of health, said:

The Federal Government’s new three-pronged legislative approach would not only strengthen the prudential regime under which aged care providers operated but would also give greater certainty to aged care residents as well as investors in the sector.

Ms Baker went on to say:

The proposals are to be welcomed as improving the regulatory environment in a sector that will be increasingly critical to Australia’s economic and social wellbeing.

The sector is really coming of age. However to encourage ongoing investment, prudential reform as the Government has proposed is drastically needed.

The Howard government has allocated $8.5 million over three years to introduce the new prudential regulatory arrangements in the industry. After this time it is expected that the cost of administration will be met by industry.

I was pleased to hear these measures have been developed with extensive input from the residential aged care sector over the past year. Once again, the Howard government has demonstrated that, by working with industry and consulting with residents and other stakeholders, standards can be improved without prohibitive costs or inconvenience. Indeed, I have spoken to aged care providers in my electorate of Hasluck and they are happy with this legislation. They are keen to see this program of reform continue to ensure the sustainability of their industry and allow them to maintain the very high standards that the government holds them to.

This new legislation demonstrates the Howard government’s commitment to provide Australians with a world-class aged care system. By 2040 one-quarter of the population will be over the age of 65, with over one million people over the age of 85. Constant reform and improvement of our aged care system is vital if we are to meet the challenges posed by our ageing population. The Aged Care (Bond Security) Bill 2005 is just one plank of a comprehensive approach by the Howard government to review and reform the aged care sector to ensure that the industry is viable, self-reliant and responsive to consumer needs well into the future. Providing high quality, affordable and accessible services which meet the individual needs and choices of older Australians is a priority for the Howard government. I am pleased to say that the Aged Care (Bond Security) Bill 2005 and associated bills do just that. I commend these bills to the House.

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