Mark Butler (Port Adelaide, Australian Labor Party, Minister for Mental Health and Ageing) Share this | Hansard source

I will go superfast to try and deal with those in five minutes, and I can deal with some of them on notice if I cannot make it. In response to the first point that the shadow minister reiterated at the end, around savings for the Tasmanian program, I think the Minister for Health has made it clear that we are going to have to find money for that. As to beyond that, that is the level of discussion I have been involved in about that issue.

I want to deal in some more detail with the changes to the aged-care funding instrument, though. The shadow minister has picked up on some particular speculation by Grant Thornton with a report that had some publicity over the last several days, and this requires a bit of background. Firstly, the government introduced a new aged-care funding instrument in 2008 which we think better reflected particularly high needs of residents but also better reflected those needs than the previous system did. That was the Resident Classification Scale, the RCS, which had been in place for some years. When we did that, after significant clinical trials and engagement with the sector, the budget—the forward estimates—reflected our expectation that there would be significant frailty growth per resident for a period of some years while people were moved from the old RCS system to the ACFI system because of that better reflection of high needs. I think the per-resident growth in real terms—so over and above indexation—in the years following ACFI was in the order of six per cent or a little bit more than six per cent per-resident growth over and above indexation. That compares to the historical trend of around two per cent real growth under the RCS.

There was always the expectation that after a period of a few years the frailty growth, or the growth in care subsidies per resident, in real terms would return to those historical trends of around two per cent plus indexation, so in actual terms somewhere around four to five per cent per-resident growth in subsidies. In the lead-up to MYEFO, as the shadow minister knows, it became apparent that funding for this element of the aged-care program had not started to taper off in the way that was expected when ACFI was introduced. That was made clear in the MYEFO statement with an upward revision of aged-care expenditure for this element of the program of around $2.3 billion over the forward estimates, or around $3.2 billion over the five-year period that we have been using in discussing the Living Longer, Living Better program. The government indicated that that upward revision already assumed that the frailty growth, or the growth in per-resident subsidies, from 2012-13 onward would return to the historical trend of around two per cent. So there was already from MYEFO, in November or December or whenever MYEFO was, a very clear indication to the sector that there was an expectation that frailty growth would return to trend, as was clearly recognised as being the case when ACFI was introduced in 2008. At that time I established an ACFI monitoring group that included provider representatives, the peak groups—many of whom have engaged Grant Thornton in the recent report—consumer representatives and clinicians, to advise on what was happening out there in relation to ACFI to cause the unusual continued growth. That group has been working for some time.

I want to be clear on this, because there has been some speculation publicly about the impact of our changes. The forward estimates, or the five-year period, continue to incorporate about $3.2 billion in additional ACFI funding over that five-year period compared to the case before the MYEFO in December, and $1.6 billion—so half of that additional revenue for aged-care providers—has been redirected under the Living Longer, Living Better package. But funding under ACFI will be higher by $1.6 billion in net terms than it was before December. Now it is very clear on our modelling that per-resident growth will be 2.3 per cent in real terms each year over the next five years, so returning to the historical position before the introduction of the new ACFI. It will be 2.3 per cent in real terms, or 3.3 per cent in real terms if you include the conditional adjustment payment which is funded largely through the ACFI redirection of $1.6 billion. I reject the idea that there is a reduction in funding. There will continue to be substantial real growth in per resident funding. I will have to take the mental health and Mental Health Nurse Incentive Program questions on notice. I am always happy to talk to the shadow minister one-on-one and I welcome his interest in these programs.

Proposed expenditure agreed to.

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