Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Hansard source

A society is judged by the way in which it cares for those people who cannot care for themselves. The assurance that any elderly Australian who needs care will have access to safe, secure and compassionate aged care is of the utmost importance.

The aged-care industry in Australia looks after some 760,000 people in their own homes and around 145,000 people in residential facilities. Residential care services are the most resource intensive aged-care service and will become more important as Australia’s population ages and our society changes.

Before I move on to the significant challenges facing the aged-care sector, it would be inappropriate not to mention the hardworking and dedicated staff and management who work in the aged-care industry. One of the privileges of being an MP is having the opportunity to travel to nursing homes for various functions. Over the years I have met at these events hundreds of highly skilled and dedicated nurses and support staff who brighten the lives of so many older Australians. Nursing homes are not easy places at which to work. Residents may have a variety of complex needs and are often struggling with physical and mental illness and injury. Despite these difficult circumstances, staff consistently provide high levels of care.

The Rudd government inherited a world-class aged-care system. The Howard government implemented wide-ranging reforms of the aged-care system, beginning with the Aged Care Act 1997. Our Aged Care Principles introduced a better payments framework and a national quality assurance framework for residential aged care, which combined accreditation, certification and the Aged Care Complaints Investigation Scheme. These measures gave the community greater confidence in the efficiency and quality of care in Australian aged-care facilities. These measures have also protected the rights of older Australians. In government, and now in opposition, the coalition places a strong emphasis on ensuring that older Australians have access to high-quality aged care.

Australia’s aged-care industry is at a crossroads. Australia is ageing rapidly due to lower birthrates and longer life expectancy. Currently, about 2.8 million Australians, or 13 per cent of the population, are over the age of 65 and about half of these require some sort of assistance to carry out their regular daily activities. By 2047, the number of Australians over 65 will have jumped to seven million or 25 per cent of the population. In 2007, there were five people of working age to support every person over 65. In 40 years time the number will be only 2.4.

Estimates show that, in 2055, Australia will have 78,000 people over the age of 100, compared with just 2,860 today. Over the next 40 years, the number of Australians aged over 85 will increase by 400 per cent from 400,000 to 1.6 million. This ageing of our population will present massive social challenges for Australia over the coming decades and will place considerable pressure on the budget. Without wholesale changes to the aged-care system in Australia, there is a risk that future generations will not have guaranteed access to residential aged-care facilities, a fundamental principle of the Aged Care Act 1997.

Locally, my electorate already has one of Australia’s oldest population bases. According to the 2006 census, 20 per cent of people living on the mid-North Coast are over 65, compared to the national average of 13 per cent, and 14 per cent are over 70, compared with the national average of just 10 per cent. A new report from the New South Wales government has shown that the over-65 population in Coffs Harbour is growing by five per cent per year. By 2016, there will be 18,000 people in Coffs Harbour over 65. This presents a massive challenge for the government and the aged-care industry. ABS figures show that the mid-North Coast is well above the national population averages for people aged 50 and above, meaning that my region will feel the effects of Australia’s ageing population much more than many other areas.

In addition to these figures, the recently released Grant Thornton report paints a grim picture of the future of the aged-care industry. The report surveyed almost a quarter of Australia’s residential aged-care facilities, and the findings of the survey are very concerning. The simple message of the report is that Australia’s aged-care needs are increasing and our preferences are changing but the aged-care sector is not well placed to respond to these changes.

Many people are now choosing to stay in their own homes for as long as possible. This option is often better for everyone involved as it allows the resident to stay living in familiar surroundings and the government saves money in comparison with formal care. However, this has led to a large increase in the ratio of high-care patients in residential care. In 1998, only 58 per cent of permanent residents were assessed as requiring high care. By 2007, 70 per cent of residents required high care. For both government and providers, this represents a significant increase in costs.

The preference for privacy and personal space is also having a major impact on the viability of many aged-care providers. It is much more expensive to care for two people in two single rooms than to care for two people in a shared room. Over the past decade, the average number of people in a residential aged-care room has decreased significantly. One would expect that these trends will continue into the future, requiring considerable investment in new high-care facilities. The increase in high-care residents and single-bed rooms has eroded the financial returns of aged-care providers. I quote from the report, which said:

Providers of residential aged care services are experiencing low and deteriorating financial returns at a time of unprecedented demand for high care services. This is particularly the case for the modern, single room facilities most preferred by consumers       … These results reveal a lack of incentive to renovate old facilities, or to build new ones, representing a threat to the viability of the residential aged care sector.

At the moment, there is no incentive for providers to build more aged-care places. After expenses and depreciation, the average return on investment for a single-room service is 1.1 per cent. For a new residential facility, providers expect to pay about $176,000 per bed in construction costs, excluding land. In 2003 that figure was only $80,000. Modern single-bed facilities are more expensive to build and bring lower returns than traditional multi-bed facilities. In fact, shared bedroom facilities provide returns almost double those of single-bed facilities.

The low returns available to aged-care providers have led to aged-care approval rounds being undersubscribed in some states. In some areas, providers are actually handing back their bed licences. Low returns also impact on not-for-profit aged-care providers. In their submissions to the inquiry, not-for-profit providers indicated that their deteriorating financial positions had led to the implementation of more commercially focused admissions policies. This change comes at a cost to financially and socially disadvantaged Australians.

Earlier, I mentioned that the average return on investment for a modern aged-care institution is around 1.1 per cent. Unfortunately, some aged-care providers have been losing money—to the point where a number of providers have recently closed facilities. The distress this causes for residents, staff and families is very obvious and unfortunate. The Grant Thornton survey suggests that these closures are likely to become more common unless the underlying problems with regulation and pricing arrangements are addressed.

I am familiar with the aged-care situation in my electorate, and I have regular contact with aged-care providers in my area. I recently received an email from a provider who noted the challenges facing the aged-care industry on the mid-North Coast. The provider listed a number of concerns. Firstly, the new aged-care funding instrument has actually reduced the funding for incoming residents compared to the previous system. With the rapid increase in costs and overheads, this poses a serious risk to the viability of the sector. My constituent went on to note that an aged-care facility in New South Wales with about 150 residents can expect a workers compensation bill of around $300,000 a year and insurance costs of about $50,000. Add to that the sharp increases in electricity, gas and water prices and an aged-care facility must pay out hundreds of thousands of dollars before a resident receives a minute of personal care. To put it simply, costs are rising and funding is not keeping pace.

If this continues, the industry will be unviable within a very short time. One aged-care facility in my electorate calculated that it would be almost $180,000 per year worse off for just 30 residents under the government’s new funding instrument. The only thing that prevents this huge loss is the ‘grandparenting rule’, which does not allow the funding for existing residents to decrease. The inclusion of the grandparenting rule in the new funding instrument makes it clear that the government was aware that the new funding arrangements would result in decreased funding for the aged-care industry. As current residents pass away or move on, new residents will not be under the protection of the grandparenting rule, and many will therefore attract lower funding. Over time, this will decrease the funding base of aged-care providers and further threaten the viability of the aged-care sector.

To help with the construction of new facilities, the government has implemented a zero-interest loan scheme. In theory, this is a worthwhile initiative. Unfortunately, like so many other programs that the government has bungled, its implementation is imperfect and this has prevented the funding from getting to where it is most needed. As I have stated, my electorate has one of the oldest population bases in the country, yet we are not considered important enough to warrant inclusion in the zero-interest loan scheme. This will make it less attractive to build new aged-care facilities on the mid-North Coast and will eventually disadvantage the older constituents in my electorate. This is just another example of the Rudd government’s contempt for senior Australians.

The aged-care industry needs a minister who will stand up and fight for the industry. The industry needs a strong voice in the media and in government to support and advocate for the future of the aged-care industry. Instead, the minister has demonised the industry, focusing almost entirely on the handful of providers who are not up to standard. Instead of providing more funding, the minister has overseen an increase in costly surprise inspections.

The industry feels that the Minister for Ageing has spent her time talking down the quality of care given by providers and inferring that they are greedy. The minister should be praising the majority of providers and their staff, who give the highest quality care and are working on very tight budgets. The following quote is taken directly from a constituent’s letter. He said:

Please acknowledge the aged care industry. They are not asking for rewards, they are just asking for adequate funds to provide the high level of care that the minister is so vocal in saying she wants to give.

Because of the difficulties facing the aged-care industry, it is essential that the government create an environment that makes investment in aged care attractive. Investors and providers need to know that adequate funding is guaranteed. They need to know that the regulations and enforcement regimes are consistent. They need open channels of communication with the minister and her department. Most of all, they need to know that they will be viable into the future. Unfortunately, this bill does not achieve these outcomes.

The bill before the House today will address a number of regulatory issues in the Aged Care Act and the Aged Care (Bond Security) Act. When the Howard government introduced the Aged Care Act in 1997, the typical business model involved the owner of the facility also managing the facility. The regulatory framework reflected the nature of the industry at the time. Over the past decade, we have seen a different business model emerge. Often the owner or developer of a facility is quite separate from the manager of the facility. Investment in aged care by large corporations is also becoming more prevalent.

The difference between the regulatory framework and the modern business model has created inconsistencies in the application of the regulations, and this bill attempts to rectify those problems. Under the current legislation, key personnel in an aged-care facility are under scrutiny to ensure that the regulations are adhered to. Because of the change in business models, the people who control the finances of an aged-care facility may not be ‘key personnel’ as defined in the legislation. This amendment will alter the legislation to allow scrutiny of all relevant people. This amendment also clarifies the rules surrounding the co-location of different types of facilities on one property. Some providers have constructed retirement villages, nursing homes and disability or step-down care in one location. This amendment will clear up uncertainty as to how the regulations apply in these cases.

One important part of this amendment is the changes to the Aged Care (Bond Security) Act. As of 2007, aged-care providers held about $6.3 billion in accommodation bonds. Since the introduction of the accommodation bond guarantee scheme in 2006, some parts of the legislation have been identified as perhaps needing strengthening to protect residents. This bill will amend those areas and better protect resident accommodation bonds.

Although this amendment does achieve some worthwhile goals, it falls down in two areas. The first area is aged care assessments by the ACAT team. Under a new financial instrument introduced in March, some older Australians enter residential aged care needing a higher level of care than they have been assessed as needing. Because of this, a reassessment may have to take place. There is often a delay of several months before the reassessment is completed. During this time, the provider may be providing high care to the resident while receiving a subsidy at a lower level. This leaves the provider out of pocket. During the consultation process for this bill, providers were led to believe that this problem would be fixed and providers would be able to receive retrospective funding to cover the period when the care provided and the government subsidy did not match. Unfortunately, this is not the case and providers will still be out of pocket if a reassessment is needed. With providers already struggling to remain viable, this problem must be resolved quickly. It is issues such as this that cause providers to lose confidence in the minister and, as a result, lose confidence in and the desire to invest in the industry.

The other major issue with this bill is the introduction of subjectivity into the regulations. This amendment hands unprecedented power to the Secretary of the Department of Health and Ageing to impose sanctions on an aged-care provider. The new regulations will even allow the secretary to impose a penalty or sanction in the event of a possible future breach of rules or guidelines. The power handed to the department is subjective, leaving providers with little certainty about the way in which aged-care regulations will be monitored and breaches punished.

Aged care is a vital industry in this country and it should be supported. The minister has failed to support it with anywhere near enough effort so far. There have certainly been a range of concerns raised with me about the minister’s stance in relation to the industry, and she certainly needs to improve her game. The coalition is absolutely committed to a high-quality aged-care system for this country, and I wish the minister would follow the coalition’s lead.

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