Judith Adams (WA, Liberal Party) Share this | Hansard source

I rise to speak to the Aged Care Amendment (Residential Care) Bill 2006, which proposes a number of amendments to the Aged Care Act 1997. These changes are designed to simplify the interaction of the aged-care and pension arrangements for greater transparency and to facilitate wise financial planning for older Australians. This bill recognises two core strengths of the Howard government’s dedication to our ageing population and the elimination of unnecessary paperwork, cutting red tape to provide more sustainable systems in the long term. These amendments will provide a saving of approximately $71.7 million in administered costs over five years. This is a very large saving for the government and provides a clear indication to Australian taxpayers that this government is committed to using their tax dollars responsibly.

The Howard government’s achievements in aged care to date are many. Before I discuss the outcomes of this bill, I would like to remind the Senate and those opposite just how effective the Howard government has been and continues to be in this sector. The 2006-07 budget committed $108.3 million over five years for new initiatives and $311.3 million over four years to extend existing programs. The 2005-06 budget provided $320.6 million to support people with dementia and their carers. Carers are very important. I went to the launch of National Carers Week this morning; I will speak about that a little later. The sum provided in the budget includes $70.5 million to make dementia a national health priority and $207.6 million to provide more choice in respite care and better access. The 2004-05 budget committed $2.2 billion towards aged care—the largest single investment in aged care by any Australian government. In 2006-07 funding available for all community care programs totals over $1.8 billion—an increase of $200 million over that available in 2005-06.

The government have greatly increased home and community care services. We provided $928.4 million to the Home and Community Care program in 2006-07, which is an increase of $506 million, or 119 per cent, since 1995-96. We have doubled the target ratio of community places allocated annually, from 10 to 20 places for every 1,000 people over 70 years of age. In July 2006, federal cabinet gave approval for up to $30 million in new HACC funding to the states and territories to assist them to implement common arrangements and more streamlined national processes. The states will not be required to contribute additional funds in order to access the extra funds. Over 21,000 new aged-care places will be allocated over the three years from 1 July 2006, including 6,387 in the year 2006-07. With these new places, the Australian government will have allocated more than 95,200 new aged-care places between 1996 and 2007-08.

In 1995 there was no program to provide high-care support in the home. Today there are 2,575 places in the form of Extended Aged Care at Home packages. The number of Community Aged Care packages and the Extended Aged Care at Home packages available nationally has increased from 4,431 in June 1996 to 32,941 in June 2005—an increase of 643 per cent. As at 30 June 1995, there were 93.8 operational aged-care places for every 1,000 people aged 70 and over. By 30 June 2006, this had increased to 105.8 operational aged-care places for every 1,000 people aged 70 or over. This represents a 49 per cent increase in the number of operational aged-care places, from about 137,000 places in June 1995 to 204,869 on 30 June 2006.

I note Senator Webber’s concern about the staffing requirements for aged-care places to cover this increase in the number of available places, so I think it is important that I advise her of what the Howard government has done. Since 2002, the Australian government has allocated $229 million for workforce initiatives designed to increase overall staff supply. These initiatives include: assistance for 15,750 aged-care workers to access recognised education and training opportunities such as Certificate III, Certificate IV and Enrolled Nurse qualifications; the capacity for 8,000 aged-care workers to access the Workplace English Language and Literacy program; the capacity for 5,250 enrolled nurses to access recognised and approved medication and administration education and training programs; the establishment of 1,600 new nursing places at universities that demonstrate their ability to meet aged-care nursing education benchmarks; the creation of 1,000 scholarships from 2006-07, on top of the 1,000 scholarships already taken up since 2002-03, to encourage more people to enter or re-enter aged-care nursing, especially in rural and regional areas; training for 2,700 community aged-care workers primarily involved in the delivery of care to recipients of Extended Aged Care at Home packages, known as EACH and EACH dementia packages; and the inclusion of the Community Aged Care Package and the EACH and EACH dementia packages in the next census and survey of the aged-care workforce.

Having set the scene on the importance of aged care to the Howard government, I will now turn to the contents of the bill. This bill was introduced into the Senate on 13 September this year and referred to the Senate Standing Committee on Community Affairs, of which I am a member. The five submissions to the inquiry were all in support of the proposed amendments. There are two parts to the bill which I would like to discuss. The first is the harmonisation of aged-care and pension requirements in relation to income streams and asset disposals. The review of pricing arrangements in residential aged care, commonly known as the Hogan report, was conducted to review and identify significant challenges facing the residential aged-care sector. Professor Hogan released his report in April 2004 and proposed a range of recommendations. Option 3 of the report said:

In the longer term, the aged care means testing arrangements should be brought into line with those that obtain the age pension.

Moreover, in determining an individual’s income and assets the same gifting and deeming rules as obtained for the age pension should apply

This bill aims to implement this option and enables gifts and income streams to be treated for the purposes of the act in the same way as they are treated for the pension assets test. When a person enters residential aged care, their assets are assessed to determine whether they can be asked to contribute to the costs of their accommodation and, if so, the assessment helps them to work out how much of a contribution the aged-care provider can request.

In July 2005 the responsibility for the assets testing of new residents entering aged-care homes transferred from the approved providers of residential aged care to Centrelink and the Department of Veterans’ Affairs. Once a resident is in care, their income is assessed to see whether they can be asked to further contribute to the costs of their care. The government indicated they would proceed with this initiative in the 2006-07 budget and, as I have said previously, this is expected to lead to net savings of $71.7 million over five years. These savings are largely attributable to savings of costs administered by the Department of Health and Ageing. By making assets-testing arrangements for the pension and aged care the same, entry to aged-care homes for prospective residents will be made far less complex. Older Australians who can afford it will make a fairer contribution to the cost of the residential aged-care services they receive. The rules for aged-care income testing are exactly the same as those for the age pension income test. But for assets testing, the rules for aged care differ from those of the age pension in some material respects. The harmonisation amendment addresses two of those differences.

As announced in the 2006-07 budget, this amendment aligns the treatment of gifting and income streams for aged-care assets-testing purposes with the treatment of gifts and income streams for age pension assets-testing purposes. The changes are designed to simplify the interaction of the aged-care and pension arrangements, allowing greater transparency and facilitating wise financial planning for older Australians.

Currently assets gifted by prospective residents are excluded from assessment for aged-care assets testing purposes but are included in the pension assets test and may reduce the amount of age pension a person receives. The current maximum amount allowed to be gifted is $10,000 in any financial year or $30,000 over five years. These arrangements apply until 1 January 2007, so people already in care or people entering or moving between residential aged-care homes up until the end of this year will not be affected.

From 1 January 2007, people who enter residential aged care or move between homes and seek an asset assessment will have any gifts they have made from 10 May 2006 that exceed the allowable amount included in their assessment. This means that a person who has given away assets in excess of the allowable amounts is not likely to be eligible for government assistance with their accommodation costs. This measure introduces a disincentive for prospective residents of aged-care homes to rely on the taxpayer to pay for their aged-care accommodation if they have the means to pay for it themselves.

The government is not preventing people from gifting money and assets to their loved ones; instead it is putting an end to a system that results in the taxpayer subsidising the gifts that prospective residents give away prior to going into aged care. This change will result in a more sustainable system in the long term, providing savings of approximately $71.7 million of administered costs over the current financial year and in the following four years. Some investment products that generate income streams are purchased using a person’s assets. Currently, the asset amount used to buy the income stream is exempted from the aged-care assets assessment.

In the 2006-07 budget, the government announced changes to superannuation arrangements which include the removal of the 50 per cent exemption under the pension assets test for complying income streams purchased on or after 20 September 2007. A minor amendment to this aspect of the bill has been made since the bill was debated before the Senate Standing Committee on Community Affairs. Effectively it changed the date of implementation of this measure to 20 September 2007, to make it consistent with changes to the superannuation scheme. This is necessary because should the bill have proceeded as originally intended it would have meant that complying income streams purchased on or after 20 September 2007 would be counted towards an individual’s asset base for the purpose of the aged-care asset test, despite the fact that such products would not be commutable.

The amendment therefore ensures that not only is a person’s income stream included in their asset base, thus being consistent with the pension rules, but also it will be available to them for the purpose of paying a residential aged-care accommodation bond. So, through these amendments, from 20 September 2007 there will be no exemption under the aged-care assets test for complying income streams purchased on or after 20 September 2007. The rules for the treatment of these income streams will be aligned under both the pension and aged-care assets tests.

The government has listened to feedback from stakeholders and will now continue the exemption under the aged-care assets test for all complying income streams purchased before 20 September 2007. As the aged-care assets test applies only on entry to an aged-care home or moving to another home, existing residents will not be affected by these changes while they remain in the same aged-care home.

The second part of this bill deals with the aged-care assessment teams. The role of ACATs is to comprehensively assess the care needs of frail older Australians with complex care needs and assist them to access the most appropriate care services available. Under the Aged Care Act 1997, residential respite care is limited to 63 days per financial year. However, at present, only the secretary of the department may increase the maximum days allowed by periods of 21 days, where there is a need to do so, such as carer stress or absence, or because of the severity of the care recipient’s condition. Currently, aged-care assessment team members assess the merits of respite care extensions but, unlike other care services, do not have the delegated authority to approve any extensions.

The amendment to the act will allow the secretary to delegate to ACAT members the secretary’s powers to extend the maximum number of days per year on which a person may be approved for residential respite care. The purpose of the change is to remove any uncertainty about the role of the aged-care assessment teams in this process. Coming from a rural area, I must say how important this will be to our aged-care facilities. On many occasions when a person is about to enter into residential care, they access the respite centre for their 14 days. The fact that they can now have an extension may just be what the carer needs and what that person needs to be able to settle in and enjoy the surroundings. This will make the transition period so much easier. For anyone who has had to do it, it is a very difficult thing to decide that you can no longer care for your elderly relative and that the big decision has to be made. I think the extension to the number of respite days is really going to help those people with that problem. I certainly commend the government for moving in this direction.

As I mentioned before, I have just attended the launch of National Carers Week, which is being held this week. I have been involved with the Senate Standing Committee on Community Affairs looking at the new Commonwealth, state and territory disability services plan, and we have had a large number of witnesses who are carers coming to speak to us. These people may be carers of young people, but so many were older people wishing to retire but still looking after their sons and daughters aged 50 or 55 and wondering just what was going to happen. The role of carers is just so important, and the fact is that we have 2.6 million carers. (Time expired)