Christopher Pyne (Sturt, Liberal Party, Parliamentary Secretary to the Minister for Health and Ageing) Share 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.

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