Christopher Pyne (Sturt, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Earlier this year the government announced a $1.6 billion package of reforms, known as Securing the Future of Aged Care for Australians, aimed at creating a fairer system to finance aged care, provide greater access to capital funding in high care, and continue to grow and develop care for people in their own homes.

I am very pleased today to introduce the Aged Care Amendment (Securing the Future of Aged Care for Australians) Bill 2007, which provides the legislative framework necessary to implement the financial aspects of these significant reforms.

Before I describe the major elements of the bill, I will provide some background about the reforms.

These reforms complete the government’s response to the 2004 report by Professor Warren Hogan on how to improve funding of our aged-care system. Professor Hogan’s report recognised that Australia’s population is changing and that as the number of elderly people increases, so does the need to support them. At the same time the proportion of people in the workforce is shrinking, reducing the potential for government to meet an ever-growing aged-care bill.

These population changes require a new and fairer system to finance aged care in Australia—to allow it to expand while also ensuring that older Australians can continue to experience quality, choice and affordability in aged care.

The bill before us amends the Aged Care Act 1997 to simplify the fees and charges paid by residents, as well as the supplements paid by government, by better targeting both the assets test that determines the level of accommodation fees required from residents and the aged-care income test.

For example, currently, self-funded retirees pay higher income-tested fees because nearly all of their income is counted under the income test. However, pension income is currently not counted under the income test. This disadvantages self-funded retirees compared to part-pensioners of similar means. The new income test treats all people in the same way and all income the same, irrespective of whether it is a pension or private income.

The new arrangements will also combine the current concessional resident supplement and pensioner supplement into a single, asset-tested accommodation supplement for supported residents. The maximum level of the new accommodation supplement will also be increased, through principles and determinations which will be made under the amended legislation.  Self-funded retiree residents with few assets will become eligible for accommodation assistance from the Australian government for the first time.

Those who can afford it will be asked to contribute more towards their accommodation, while the level of government payments will increase for those who cannot meet the costs themselves. Importantly, the fee paid by existing residents will not be increased by this package. All residents in high care will be of equal value to the provider and, to ensure equity of access, the 40 per cent threshold for supported, assisted and concessional residents will be retained.

The proposed changes have been the subject of extensive consultation with the aged-care sector. The reforms will benefit older Australians, their families and carers, both those needing assistance at home and those requiring residential care.

The bill before us makes technical amendments to improve consistency and clarity within the legislation, to address unintended consequences of the operation of the legislation and to streamline the administration of the legislation. These changes complement the changes proposed as part of the Securing the Future of Aged Care for Australians package. It is opportune to make all of the changes at the same time in order to ensure the successful implementation of the reforms, to minimise confusion and uncertainty for approved providers and care recipients.

These reforms will, subject to the agreement of parliament, take effect from 20 March 2008. Prior to that time the government will be developing comprehensive principles and determinations which will be made under the act, and which will provide further detail about the reforms.

The Department of Health and Ageing will consult with the sector on the detail of those instruments. The department will also be issuing approved providers, aged-care recipients and their families with information about the changes and their impacts.

Overall, the combination of new government accommodation payments and new resident accommodation fees will see an additional $847 million over four years flowing to the sector, including $577.8 million in additional government payments. The majority of this funding is to support increased investment in aged-care homes to provide high-level care so that these places will be available when people need them.

These changes will provide additional funding for investment in aged-care accommodation, in particular high-level homes where additional funding will rise to over $300 million per year from 2011-12.

This government believes that the whole country will benefit from having an aged-care system that is secure into the future, that is well financed, and that is flexible enough to take account both of the increasing number of older people who will need care and of the shrinking workforce. This bill is an important step towards achieving this goal and I look forward to debate on the bill.

Debate (on motion by Dr Emerson) adjourned.