Sid Sidebottom (Braddon, Australian Labor Party) Share this | Hansard source

I acknowledge the very positive contribution from the member for Gippsland. He may be interested to know that most of the economic and social indices studies of Gippsland and Braddon are very similar indeed. He mentioned, very rightly, at the end how his community is trying to come together to deal with some of the serious issues that are facing the aged-care industry, particularly the not-for-profit sector of it. I share with him that I have been working with my community to start to develop a regional model for aged care to try and look at how they can better and more efficiently support each other and, at the same time, retain the financial viability which is so necessary. I am more than happy to share that with the member at a later time.

Member for Gippsland, I also acknowledge that you made reference to the Minister for Ageing for her positive communications with you. The minister has always been very positive in her communications with us. She came to visit us. She met with all the providers and representatives of the industry in my electorate. I was very pleased with that. And I know that she is very determined to try and deal with what is a very complex area. I do not think any of us deny that. And I quite agree with you: the blame game is not going to solve this. We have to get on with this. The legislation before us today, the Aged Care Amendment (2008 Measures No. 2) Bill 2008, is an attempt, in part, to be able to do that correctly and to fix some anomalies that needed to be fixed. So I do thank you for your contribution, and I am more than happy to discuss our communities, which obviously share a lot in common.

I would like to start that way, because I think it is really important that, as the member for Gippsland quite rightly said, we are talking about people and, most especially, our aged community. I would just like to look at some of the statistics with you, Mr Deputy Speaker and colleagues, if I may, to highlight the challenges that face all our communities, particularly in regional Australia. Metropolitan Australia, through its critical mass, is able to have access to persons with greater funds, in order to deal with some of their issues. I know that there are many who cannot. But in regional Australia it is particularly difficult, particularly as we rely more and more on not-for-profit organisations.

I will give an example from my own area of the Cradle Coast. It is slightly bigger than Braddon and involves nine major municipalities, with a population of around 100,000. There are 16 aged-care providers, and the majority of those are not-for-profit. And each one tells me that, as much as they try, with all the best will in the world, financial viability is really a problem, as is attracting and retaining staff. I reckon that if, as a group, we were to sit down and, with common sense, start to look at the roles that are required of trained nurses, and at creating an intermediary nursing qualification for the aged-care industry, we would help them a great deal with this. We also know that they are burdened with red tape, with over-regulation. This bill attempts to tackle some of that—although some argue that it is just adding to it. But it is trying to deal with the anomalies. We have to look, as a group, at the areas of massive red tape and of accreditation; there is no doubt about it. And, of course, for these people, keeping the wolf from the centre door is really going to be an issue.

We have to look at how to best fund the aged-care services that we need. There are some words that some people do not want to talk about. The ‘b’ word is an example—the bond word—and other means of funding these very vital and much-needed services. We have to look at this. Some members were perhaps suggesting that these issues started with us. We all know that is silly. We have got to get on with it; we have got to have much more substantial reform, but this is the beginning from our point of view.

I would like people to note that over the next four years $41 billion—a record amount, which means that there are more who need it—is dedicated to aged care and community care, with $28.6 billion of that for residential aged care alone. Our greatest aim is to help people to age gracefully, productively, fruitfully and enthusiastically in their homes. But at some stage there are those who will take the option of residential care. That, of course, is changing. The nature of residential care is going from low care to high care. That is where the cost is but, unfortunately, the options to fund this are limited.

Just out of interest, 35.8 per cent of people in my electorate are 50-plus; 28 per cent are 55-plus; and 7.6 per cent are 75-plus. I suggest to you—and I am sure this would be reflected in Gippsland and other rural areas—that there is a tremendous demand coming for residential aged-care and community care services. It is huge. The Productivity Commission research paper Trends in aged care services: some implications is worth looking at. It says that, in 2007, there were around 2,872 residential aged-care providers in Australia. Of these, approximately 61.4 per cent are private not-for-profit; 26.9 per cent are private for-profit; and the remaining 11.75 per cent are government providers.

Speaker after speaker has pointed out that the aged-care industry has undergone significant change since the enactment of the Aged Care Act in 1997. A recent report by Grant Thornton, Aged care survey 2008, notes that the number of people receiving subsidised care has doubled between 1997 and 2007. In addition, the nature of the aged-care industry has changed significantly. Some say it has gone from a cottage industry to a multidisciplinary, multifaceted industry. It is enlightening to look at some of the other statistics associated with the industry. We know that the Australian population is ageing. Currently older Australians, aged 65 years and over, make up 13.4 per cent of the population, or 2.8 million, or one in seven Australians. The Productivity Commission report which I mentioned estimates that, by 2050, one in four Australians will be aged 65 or over. As individuals age, some form of assistance with personal and everyday activities is usually required. The latest available data indicates that 32 per cent of those aged between 65 and 74 years, and 86 per cent of those aged 85 and over, require some form of assistance. Consequently, there has been an increase in the number of people seeking to access aged care—whether it be in their home or in residential care.

A further trend relating to an increase in the number of people seeking to access aged care is that family structures have changed. The family unit may no longer be a primary source of aged care for increasing numbers of people as it has been in the past. That is a demographic and sociological fact. Another emerging trend is that people are entering residential aged care requiring a higher level of care, which I mentioned earlier. That is a highly costly service to provide, yet service providers have less ability to ‘charge’ for that service than they do for low care. That is an issue we have to deal with.

The legislation before us provides a regulatory framework for Commonwealth funded aged care, with the core objective of the legislation, as the minister has made clear on several occasions, being the protection of the health, wellbeing and interests of care recipients. The bill is part of a package of reforms designed to ensure that the approximately one-quarter of a million frail older Australians who are either in residential care or receiving community care services in their home receive high-quality care, that the often significant sums of money paid by care recipients are managed responsibly and that the regulatory framework is robust. I do not think any of us disagree with those objectives.

In the decade since 1997, when the Aged Care Act first came into effect, the industry has matured significantly and changed in nature. The setting is significantly different in 2008. The sector is evolving from a typically one-site, one-service cottage type arrangement to multisite, multistate and multiservice operations using complex financial and legal arrangements. The 1997 act as it is currently written does not scrutinise these complex corporate structures to the same extent as it does the business model that existed when the act was first developed. I like robust discussion. I think it is very important to have that and to have contrary views. I myself might have some contrary views! But it all goes together to hopefully search out sensible answers and sensible policies. I was particularly interested in Aged and Community Services Australia’s submission in response to the legislation—a democratic right that they exercised—particularly in relation to the changes in the aged-care sector. I would like to share those with you, because I think they complement the intention of the package and maybe add some things for us to consider.

They reinforce the fact that almost two-thirds of services are and have always been provided by not-for-profit organisations. The corporatisation of aged care is still not as extensive as some would think, but it is a trend. Unless financial viability surrounds these not-for-profit organisations, I can assure you that either the corporate profit sector will move in or we will not have any services. Then it will be incumbent upon communities or the government to do something. ACSA writes:

These range from large church or community-based charities, who have operated multi-site and multi-service aged care services for several decades, to small, often rural services - supported by the input of social capital by local communities. The changes in ownership patterns described by the Minister are characteristic of the minority for-profit component of the industry but not of the industry as a whole. Nonetheless the Bill’s intention of keeping up-to-date with changes in private ownership and management structures is acknowledged and supported.

The amendments proposed reflect these and other developments in the sector, which I have mentioned, and are intended to ensure that the regulations keep pace with further industry developments. Technically, the bill amends the Aged Care Act 1997 and the Aged Care (Bond Security) Act 2006 to address current legislative inadequacies and maintain effective regulatory safeguards to ensure high-quality care for older Australians.

When the aged-care legislation was developed in 1997, the typical business model adopted by aged-care providers was one whereby the owner of the facilities also operated the aged-care facility. The regulatory framework reflected the ‘cottage’ nature of the sector as it was then. In recent years, a different model of aged care has emerged, one in which the owner and operator of a facility have distinct roles and responsibilities and may function quite separately. The last decade has also seen a significant increase in the level of investment in the sector from large corporate entities, as I have already mentioned. The regulatory framework has not kept pace with this shift in business practice. This lack of consistency between the regulatory framework and contemporary business practice means that the regulations have not been able to be applied equally to all approved providers regardless of their corporate structure.

The shortcomings of the existing regulatory framework are varied, impacting upon care providers, care recipients and the broader community. Under the current regulations there is limited capacity for the Department of Health and Ageing to consider the record of ‘related entities’ when making decisions about approvals which unnecessarily and inappropriately limit the ability of the department to make an informed assessment of a company’s record in service delivery and its suitability to deliver care in the future. The bill addresses this issue to provide better protection for residents and promote public confidence.

I note again that Aged and Community Services Australia cite in their observation of this point:

The potential for complex corporate structures to dilute responsibility for flaws in operational or financial performance is a risk shared by all service providers - by association in terms of risks to the reputation of the industry; and more concretely in terms of the measures introduced by the previous Government (the Accommodation Bond Guarantee Scheme) that would seek to recover bad debts incurred by one provider from the rest of the industry, notwithstanding their complete separation from any actions that may have resulted in such bad debts. Care will be needed however to prevent ‘considering the record of related entities’ becoming ‘guilt by association’ and being used inappropriately in support of compliance action.

It concludes:

Transparency of decision-making is essential to prevent this.

Similarly, under current arrangements, those pulling the financial strings may not currently be considered key personnel for the purposes of regulatory scrutiny. Amendments to the range of people considered to be key personnel of an approved provider will ensure an inspection of those pulling the financial strings and the relevant provisions applied consistently to approved providers.

Another feature of the sector in 2008 not envisaged in the 1997 legislation relates to the provision of a broad range of aged-care services within the one facility. Increasingly, developers are putting aged care, retirement villages and sometimes disability or step-down care all in the same development—naturally enough—giving rise to uncertainty relating to the regulatory reach of the act. Changes to the regulatory and administrative framework will clarify that only the aged-care services are regulated by the act. This provision was also raised and supported by ACSA in its considered submission to the bill.

In recent years, there has been significant growth in the value of accommodation bonds held by aged-care providers. Out of interest, as at 30 June 2007 around 970 approved providers—that is, 75 per cent of all approved providers—held accommodation bonds, with a total value of $6.3 billion. It is obviously extremely important in terms of consumer confidence, and to maintain and increase the level of corporate investment into the sector, that the regulatory framework that governs these financial arrangements is as robust and as current as possible. Changes will ensure that any accommodation bonds or like payments that have been paid by care recipients for entry into aged-care services are fully protected under the Accommodation Bond Guarantee Scheme—or the guarantee scheme, as it is called—and that residents in similar circumstances are accorded similar protections. Since the introduction in 2006 of the guarantee scheme, which guarantees the refunds of bonds in the event that an approved provider becomes insolvent, experience has highlighted some areas in which the protections for residents could be strengthened. The bill therefore amends both the act and the bond security act to improve the operation of the guarantee scheme.

There are other issues related to this bill that I could comment on, but I would like to finish by saying that we do indeed have a major challenge in how we deal with providing aged-care services in our community both now and into the future. I think we need a lot more flexibility in the way we look at some of these solutions. I think we need a lot more consultation, particularly from providers. I am looking forward to working with the minister to develop a regional model, which I hope can be replicated throughout the rest of regional Australia, where our providers can retain their identity—because that is absolutely crucial in not-for-profit, community based aged-care services—where we look at the red tape involved and where we protect residents in a cooperative manner with the agencies that are required to do the accreditation and the spot checks. I want to thank the 16 aged-care providers in my community for the terrific work they do. Those individuals have been advising me and seeking clarification on aspects of our policy throughout. I am very pleased to have contributed to this important discussion on legislation affecting the aged-care industry.

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