Craig Thomson (Dobell, Australian Labor Party) Share this | Link to this | Hansard source

It appears that the opposition does not have a lot of interest in aged care and could not make it down to the chamber. I welcome the opportunity to speak to the Aged Care Amendment Bill 2011—a very important bill in a very important area of government policy. It is a shame that when the opposition was in government it did not have the same attention to detail on this bill as this government has taken. This bill is part of the reforms to aged care that this government is looking to put in place. The purpose of the bill is to amend the Aged Care Act 1997 to strengthen protections for accommodation bonds paid by care recipients to providers of residential and flexible aged-care services. In particular, the proposed amendments will limit the permitted uses for accommodation bonds taken after 1 October 2011 such that providers of aged care may still use bonds for capital improvements to aged-care services and prudent financial investments but may not use bonds for operational purposes. However, it will provide a two-year transition period to allow time for the sector to adjust to the new arrangements.

The amendments to this bill will: introduce new criminal offences where significant misuse of bonds has been identified; introduce new information-gathering powers to enable the Secretary of the Department of Health and Ageing to better monitor approved providers that may be experiencing financial difficulties or using bonds for non-permitted uses; and remove restrictions on the use of income derived from bonds, retention amounts and accommodation charges. This gives aged-care providers an unrestricted source of income, offsetting the proposed restrictions on the use of accommodation bonds.

The bill will also introduce complaints principles, replacing the existing investigation principles, which will improve the process of handling aged-care complaints. The legislation will also make other minor amendments to remove redundant provisions.

Since the introduction of the Aged Care Act 1997, there has been strong growth in the value of accommodation bonds. During the four years since 30 June 2006, the total value of bonds held has doubled. As at 30 June 2010, approved providers held more than $10.6 billion in bonds on behalf of more than 63,000 aged-care residents. The average total bond holding held by an individual approved provider was $11.2 million and the average accommodation bond held was $167,000. The total value of bonds held by providers has increased by around 20 per cent per annum. This constitutes significant amounts held by approved providers.

Currently, a care recipient may be asked to pay an accommodation bond when entering a low-care or extra service high-care aged-care facility, and approved providers have a responsibility to refund the bond when a care recipient exits the facility. The original policy intent was that accommodation bonds be used for capital funding for investment in building stock and retirement of associated debt. However, this is not clearly articulated in the legislation with respect to the principal amount of the accommodation bond.

Bonds are, in effect, an interest-free loan to the provider and care recipients are unsecured creditors, with the Accommodation Bond Guarantee Scheme as the only protection currently available to ensure they receive their bond refund. Given the significant and increasing amount of funds that approved providers are holding, it is appropriate that residents have some reassurance that their funds are being used for the intended purpose, that there is transparency about the use and that there is sound regulation in place to monitor and protect their savings.

On 12 April 2010, the government announced it would increase protection for aged-care residents' savings. The announcement was made as part of More Support for Older Australians in the National Health and Hospitals Network. Since then, the Department of Health and Ageing has undertaken extensive consultation with industry, community and government stakeholders on the options for enhancing prudential regulation of accommodation bonds to: identify the best means by which to ensure, as far as possible, that the financial interests of residents are protected; maintain effective regulatory safeguards for accommodation bonds; provide a regulated source of capital funding for investment in aged-care infrastructure; provide a regulatory framework that is commensurate to the risk associated with the exponential growth of accommodation bond holdings, which is currently over $10 billion; and promote public confidence in the aged-care system.

As a result of the consultation process, it is proposed that the following changes be made to the act to strengthen consumer protection for accommodation bonds. The bill proposes to make amendments to address the lack of clarity in the act to ensure investment in aged-care infrastructure by clearly articulating that accommodation bonds should be used only for capital works, investment in financial products, loans associated with capital works, investment in financial products and refunding bonds. The bill proposes to make amendments to also introduce new criminal offences where a misuse of bonds has been identified. The bill proposes that an approved provider would commit an offence when there has been a misuse of bond funds and, within two years of that misuse, the provider becomes insolvent and fails to refund bonds. In the very worst cases, offences will also apply to individuals within the organisation, such as when the individual knew bonds were being used for a non-permitted use and was in a position to take reasonable steps to prevent the misuse but had not done so.

The bill proposes to introduce new information-gathering powers for government in circumstances where concerns exist regarding the capacity of an approved provider to repay accommodation bonds and, finally, to remove restrictions on the use of income derived from bonds, retention amounts and accommodation charges. This will focus the regulation more on the associated risks of the bond principle rather than on the income derived from the bond, retention amounts and accommodation charges. It is proposed that the changes take effect from 1 October 2011, with provision for a two-year transitional period to allow the sector time to become more familiar with the new requirements. Initially in the transition period, approved providers would continue to be able to use bonds in line with the current regulatory requirements and prepare for the start of the new requirements. Later in the transition period, approved providers not ready to meet the new requirements could continue to use bonds for existing purposes but would report to the department on this use and on actions being taken to become compliant.

In relation to the impact of the proposed reforms on the Productivity Commission's current inquiry into aged-care there is movement here as well. The proposed prudential reforms are consistent with the direction of the Productivity Commission's draft report. The proposed prudential reforms reinforce the requirements that accommodation bonds should primarily be directed to investment in aged-care infrastructure. The Productivity Commission acknowledged the ongoing need for prudential regulation and that these prudential reforms were currently under consideration.

A second part of the legislation relates to the complaints scheme. The bill proposes amendments to the act which would enable the investigation principles, which currently describe the investigation process in relation to complaints, to be replaced with complaints principles. The Aged Care Complaints Investigation Scheme provides a means through which concerns relating to the delivery of residential, community and flexible aged-care services, subsidised by the government, can be investigated. In July 2009, in response to industry and community concerns about the scheme's operation, the then Minister for Ageing commissioned an independent review to identify areas of improvement to ensure the scheme achieves best practice aged-care complaints management arrangements. The review recommended a number of changes to improve the operation of the scheme in terms of timeliness, transparency and consumer focus.

Following consideration of the review and further consultation regarding proposed amendments to the act, proposed new complaints principles will describe the improved new complaints scheme and will have a stronger focus on resolution rather than investigation of complaints. The bill proposes to shift the focus of the system from investigation, whereby the department investigates complaints and determines whether there has been a breach or not, to a more flexible scheme, whereby the department can employ a range of mechanisms for assisting to resolve a complaint—including early resolution, conciliation and mediation—that encourage the parties to resolve the issues themselves.

Other amendments contained within the bill will make some minor operational changes to remove redundant provisions relating to aged care. Amendments to the Aged Care Act 1997 will strengthen consumer protection around accommodation bonds and the arrangements for managing complaints. The purpose of the bill is to amend the Aged Care Act 1997 to address current legislative inadequacies regarding the permitted use of accommodation bonds. In particular the proposed amendments will clearly articulate the permitted use of accommodation bonds, introduce new criminal offences where misuse has been identified, introduce new information-gathering powers and remove restrictions on the use of income derived from bonds, retention amounts and accommodation charges. The bill will also enable the making of the complaints principle in place of the existing investigation principles, which will improve the process of handling aged-care complaints and make other minor amendments to remove redundant provisions.

Subject to the passage of the bill through parliament and the development of associated changes to delegated legislation, it is proposed that the reforms regarding accommodation bonds will take effect in relation to new accommodation bonds taken by approved providers from 1 October 2011. A two-year transition period until the end of September 2013 will allow the sector time to become more familiar with the new requirements. It is proposed that the introduction of the new aged-care complaints scheme will take effect from 1 September 2011 with a limited transition period for existing complaints to be transferred to the new arrangements. To ensure smooth implementation, the government will continue to work collaboratively with providers and key stakeholders and listen closely to all their views. It is proposed that the effectiveness of any changes to the legislation be monitored by the department and that a post-implementation review be conducted. Given the two-year transition periods for reforms to accommodation bonds, it is anticipated that the review is likely to be conducted in 2014-15.

These are important changes to aged care that aim to ensure there is better regulation around the operation of accommodation bonds to give greater confidence to the public and also to set in place a new complaints regime so that the public can have greater confidence in the operation of our aged-care sector. This is an important bill and I commend it to the House.

Peter Dutton (Dickson, Liberal Party, Shadow Minister for Health and Ageing) Share this | Link to this | Hansard source

The Aged Care Amendment Bill 2011 introduces a number of changes to the Aged Care Act 1997. The act describes a regulatory framework within which Commonwealth government subsidised aged-care providers, known as approved providers, must operate in order to obtain funding. Amongst other things, the act describes the rules relating to the charging and use of accommodation bonds, which is the money given to approved providers by residents of aged-care services. In effect, the accommodation bonds are interest-free, unsecured loans to the provider from the resident due for repayment when the resident leaves the home.

The amendments in this bill seek to limit the permitted uses for accommodation bonds, specifying that the bonds may be used for capital works, investment in financial products, loans for those purposes and refunding accommodation bonds. At the same time, the amendments are claimed to provide greater flexibility for aged-care providers in managing their cash flows by removing restrictions on the use of income derived from the accommodation bonds, retention amounts and accommodation charges. The bill will introduce new criminal offences where misuse of accommodation bonds has been identified and the approved provider has failed financially, owing accommodation bond refunds. It also introduces new information-gathering powers to enable the Secretary of the Department of Health and Ageing to better monitor approved providers that may be experiencing financial difficulties or using accommodation bonds for non-permitted uses.

Additionally, the bill will make amendments in relation to complaints against providers about Commonwealth funded aged-care services. It will enable the making of complaints principles in place of the existing investigation principles. The bill's explanatory memorandum states that this will improve the process of handling aged-care complaints with increased focus on achieving outcomes for care recipients, their families and other representatives by allowing DoHA to adopt a range of approaches such as conciliation, mediation and investigation to resolve complaints cooperatively with care recipients and providers of care. In short, the Minister for Ageing says the bill will increase protection for accommodation bonds and strengthen complaints management. The amendments relating to the accommodation bonds will take effect for bonds taken after 1 October 2011, with a two-year transition period to allow the aged-care sector to become familiar with the new requirements. The new complaints principle will take effect from 1 September 2011.

The aged-care sector is at crisis point. In its 2011-12 budget submission, the Aged Care Industry Council stated:

A snapshot of the industry at the start of 2011 does not depict a sustainable system: only 40% of residential aged care services are operating in the black; hours of service are decreasing; hours of care provided under community aged care packages have fallen; and many providers are not building new residential care beds. The situation is worse in rural and regional areas where providers face generally higher costs with less ability to manage their income streams.

There are approximately 1,400 approved providers of aged care in Australia and over 970 of these providers hold accommodation bonds. Sixty-three thousand residents of aged-care facilities have paid accommodation bonds amounting to, on average over the last financial year, $232,000, according to the minister. Those moneys no doubt represent a significant part of each resident's life savings. Since the introduction of the Aged Care Act 1997 the value of accommodation bonds has risen from $500 million to more than $10.6 billion. During the four years since 30 June 2006 the total value of bonds has increased by around 20 per cent per annum, effectively doubling in that time from $5.2 billion. Prudential requirements for aged-care providers were introduced in 2006, as was the Accommodation Bond Guarantee Scheme, to cover residents when operators failed and bonds were not repaid. Since then 652 approved providers have been found to be non-compliant with the prudential standards. This amounted to noncompliance with the prudential standards by over 15 per cent of the aged-care industry. When I first read that figure I was struck by it because it is a significant number of providers who have been captured by this alleged breach.

Part of the problem that this government have is that they have an industry which is in a complete state of flux. They are concerned about whether there is going to be stability in the marketplace going forward, they are concerned about increasing burdens of regulation imposed by this government at every turn and they are concerned about withdrawal of capital investment by this government into the sector. They are certainly of the view that the Labor Party, this government in particular, simply do not understand small business or business and the way in which business operates or indeed not-for-profit operates in this sector. In the same timeframe, the risks of underwriting provider failures through the guarantee scheme has cost the Commonwealth $24.5 million.

A Grant Thornton aged-care survey of November 2007 found that 40 per cent of all providers were operating in the red. Given that aged care is in crisis and in need of reform, the financial viability of the sector is very much an issue. Any measures that can help make the sector more viable and able to meet the growing needs of an ageing population are essential. The minister tells us these measures are structured to ensure that crucial investment in aged-care infrastructure is maintained. We will wait to see. In 2007 the then Prime Minister Rudd promised Labor would deliver 'new directions for frail and older Australians', to quote him directly. What was delivered of course has been a period of sheer neglect. Rather than strengthen the sector, the then minister established an atmosphere of fear and worked against providers. In an admission of the failures in aged care the minister was later dumped. It was an unusual event in a number of areas, if you look back on the history, but there was of course a litany of reports and reviews right through that period. Again, as usual, the outcomes were ignored or were responded to with still more inquiries. The National Health and Hospitals Reform Commission outlined a framework for reform which pointed to a need for greater competition in the sector, less regulation and more consumer involvement. The Rudd and now Gillard government response was underwhelming, to state the obvious.

The aged-care sector is in meltdown. Under this government 2,000 beds were cut in the 2008-09 aged-care approvals round and the industry is rejecting government funded beds with a shortfall in residential bed licences. In recent Aged Care Approval Rounds, ACAR, providers are handing back licences, beds are left empty and senior Australians are having to wait longer and travel further to find a bed, all the while placing extra pressure on our public hospitals. Providers have gone to the wall or have been forced to sell to larger entities in the sector.

Since this government has come to power there have been budget cuts and little new spending in the area of aged care. Aged care has been overlooked at a time when the government has thrown billions of dollars out the door in failed stimulus packages, the list of which is long and getting longer. The Prime Minister oversaw the biggest of them all. Building the Education Revolution cost more than $16 billion, blown out by $1.7 billion and possibly $8 billion of the spending has been wasted. Think what just a small part of those billions of dollars could have done for aged-care services. Then of course there was the pink batts scandal, otherwise known as the Home Insulation Scheme. It was closed after it caused workers' deaths and at least 100 home fires, all at a cost of $2.5 billion. There is also the myriad of so-called green schemes instituted by this government and subsequently closed down because of their inefficiency. Who knows how much was wasted there? Into the future we have the $350 million being handed out for set-top boxes and the billions after billions that will be spent into the forward estimates and well beyond to the National Broadband Network.

Ageing and therefore aged care could be the biggest social issue facing Australia with our rapidly ageing population, yet under this government it has virtually been overlooked. The government tells us the measures contained in this bill are part of its so-called health reform. That does not inspire a great deal of confidence, though. Just this week in Senate estimates hearings the litany of failure in the Gillard version of health reform has again been exposed. We have a bill to establish a National Health Performance Authority before this House, a so-called key element of Labor's reforms according to the Minister for Health and Ageing. It will never proceed in its current form. It has been introduced but it has since disappeared. Why has that occurred? It has occurred because many of the states say the bill as presented is unacceptable to them because it does not reflect what was agreed to during the COAG process.

The National Health Performance Authority is supposed to be in operation on 1 July. That is just one month away. Yet the legislation to establish it has not even passed the parliament. From Senate estimates we learn that it is the subject of ongoing dispute between the Commonwealth and the states. It is a dispute so serious that Minister Roxon had to convene a teleconference of health ministers last week to try and avert yet another Roxon-made crisis. No resolution came from that conference and now she is seeking a face-to-face ministerial meeting sometime in the next week.

The performance authority is not the only debacle in this government's attempt at so-called reform. With the 1 July start date looming for many elements of Labor's health reform, the department of health revealed in Senate estimates that it still does not know how many local hospital networks there would be across Australia. It did not know how many would be ready to start on 1 July. Of course local hospital networks are at the core of Labor's reforms. Remember that line so often repeated: 'federally funded and locally controlled'? Well, there will not be very much local control from 1 July when the government does not know how many local hospital networks there will be.

Then there are the Medicare Locals, 15 of which are also supposed to start operating on 1 July. The House might be interested to know that not one exists at the moment. None have been formed. Indeed, none have even been contracted. At Senate estimates the department could not tell us how or when clinician groups would be established. What it could reveal was that the centrepiece of reform, the so-called Independent Hospital Pricing Authority, the organ that will decide how the nation's public hospitals will receive their funding under Labor's reforms—

Peter Slipper (Fisher, Liberal Party) Share this | Link to this | Hansard source

Order! The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour. At that time the honourable member will have the opportunity to continue speaking when the debate is resumed.