Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Hansard source

I rise to put forward the opposition’s position on the Aged Care Amendment (2008 Measures No. 2) Bill 2008. The bill amends the Aged Care Act 1977 and the Aged Care (Bond Security) Act 2006, to strengthen the aged-care regulatory framework so that it reflects the current structure and nature of the aged-care industry. This bill is largely uncontroversial, and the opposition support it. However, at the outset I would like to put on record our concerns about certain aspects of the bill.

As a nation we have always placed significant importance on ensuring our frail and elderly have access to good-quality aged care. Significant pressure is building up in the aged-care system, and it is building up exponentially. Our capacity as a nation to ensure access to appropriate levels and appropriate quality of care for our frail and elderly will erode unless the correct policy settings are put in place, and put in place urgently. And it is the Commonwealth government that is responsible for both the regulation and the funding arrangements for aged care, including the regulation of the fees and charges providers can pass on to residents.

Australia’s ageing population is one of the biggest social challenges we face as a nation. There are currently about 2.8 million Australians aged 65 and over. In 40 years time there will be a staggering 7.2 million Australians aged 65 and over. The Australian Institute of Health and Welfare, in its latest report, Projection of Australian health care expenditure by disease, 2003 to 2033, projects:

Between 2003 and 2033, health and high-care residential aged care expenditure overall is projected to increase by 189%, whereas the high-care portion of residential aged care is projected to increase by 295%. Residential aged care is dominated by dementia, which is projected to have a large increase due to the ageing of the population.

Expenditure on high-level residential aged care is projected to increase by 519% for type 2 diabetes, 457% for other neurological conditions, 408% for sense disorders and 363% for dementia. …

The cost of increases over the period are projected to be greatest for dementia—an increase of $10.5 billion, from $2.9 billion in 2003 to $13.4 billion in 2033 …

These are staggering figures. Demand for quality aged-care services will continue to increase dramatically. That growth in demand will only accelerate in years to come and, as these figures indicate, so will the cost of providing that care.

Are we ready for what is coming our way? Is the Rudd government making today the decisions that are needed to ensure Australia is well placed to meet the current and emerging challenges faced by the aged-care sector? Is the Minister for Ageing ensuring that her government is making the decisions that need to be made for the future? At present it is the view of the opposition that there is serious doubt about that. The government needs to act more decisively and with a greater sense of urgency.

Right now, the aged-care system is in freefall and unravelling at the seams. This is due largely to the underfunding of the aged-care sector. Right now, the industry is in crisis; I do not know how to put it more clearly. Evidence of this can be seen in the number of nursing homes that are closing down across Australia. Only a few days ago it was reported that Blue Care in Queensland was handing back 210 bed licences, and Blue Care’s decision follows a similar announcement by Western Australian provider Bethanie, which handed back 110 bed licences last month. Two of Victoria’s largest providers, Uniting Aged Care and Benetas, have also announced that they will not apply for standard high-care beds in the current aged-care approvals round. Undersubscription of places, licences being handed back, liquidations, banks not lending to providers—what will it take for the government to do something? The Rudd government needs to start taking notice and do something.

No business can exist on wafer-thin margins. The net exodus of providers from the aged-care industry is evidence that the industry is in freefall. Aged-care providers are very clear: there is no business case for setting up new facilities because banks will not lend on the small margins in aged care—on average, a 1.1 per cent rate of return for a high-care bed. Last year, for the first time in my home state of Western Australia, only 67 per cent of available beds were allocated, leaving a shortfall of 362 places.

Insiders in the aged-care sector in Western Australia believe that this current round of licences, which is due to close on 19 December, will again be significantly undersubscribed. I doubt whether many not-for-profit providers will be able to take on additional bed licences in the current environment and in the current policy context. Overall, expectations in Western Australia are that, at best, only half of the available licences will be taken up. As we have heard, large and well-respected providers are already handing back bed licences. There used to be a time when applying for additional bed licences was extremely competitive; providers would chase every single available bed as soon as they became available—not anymore. In the context of significant increases in demand for aged-care services around the corner, with both a growing and an ageing population, this is of great concern. The competitive strength and attractiveness of the sector have been replaced by too great an exodus of operators and insufficient incentives for new providers to enter the industry.

Last week I was contacted by a constituent who works at a senior level within the aged-care sector in Western Australia. He asked the question: ‘Is aged care going to be the next ABC Learning?’ Given the small margins in the aged-care sector, given the impact of the global financial crisis on the aged-care sector—an impact that can be expected to continue for some time, when the sector is already facing a funding crisis—and given the significant wage pressures faced by providers in Western Australia as a secondary effect of the resources boom, how are aged-care operators who are already cash strapped going to weather the storm, particularly those in Western Australia? How many providers are secured against the real estate their facilities are located on? How long will it be before a revaluation causes a provider to end up in serious financial difficulties? If that were to eventuate, the consequences could well be even worse than what we are experiencing with the collapse of ABC Learning. Where would the frail and elderly be able to access the quality care they need and deserve if their aged-care provider were to go broke? Where would somebody who is too frail and too vulnerable to be cared for at home go?

I understand that there are at least two aged-care provider groups doing it very tough in Western Australia at present—good operators who are doing it tough—in the current policy settings and in the context of the global financial crisis. Things were already bleak but, with 362 unallocated bed licences in the last round—with the same scenario likely again in this round—and with providers handing back licences, you do not have to be Einstein to figure out that we are about to hit the wall given the increases in demand at a time when capacity is not keeping up. The Rudd government ought to make some decisions and take action. To date, that is just not happening.

I will speak about the specific provisions in this bill. The bill proposes amendments to streamline assessments by the aged-care assessment teams to allow for more timely and consistent assessments for aged care. The opposition urges the minister to ensure that more timely and consistent assessments do in fact take place. The delays experienced in the reassessment of a resident’s care needs is a serious issue that is continually raised with us by aged-care providers.

Since the introduction of the Aged Care Funding Instrument in March 2008, aged-care providers have found too often that the aged-care assessment team’s assessment of a resident’s care needs do not reflect the resident’s true care needs. This is having an impact on subsidies that providers receive and, given the funding constraints that the industry is under, can only erode the ability of aged-care facilities to provide the level of care that we expect older Australians to receive. We urge the minister to make some quick and sound decisions following the review of the Aged Care Funding Instrument when it takes place. There are numerous concerns and shortfalls with the funding instrument as it currently operates that urgently need to be addressed.

The minister needs to start working with the aged-care industry to work through many of the issues that have been highlighted. The care of older Australians is too important for us not to address the shortcomings in the system. As I said at the outset, the reality is that the aged-care industry is regulated and funded by the Commonwealth, and the obligation falls with the Commonwealth to meet its full obligations. Older Australians will feel the brunt of the government’s inaction when they are unable to find themselves a bed or when services are stretched so thin that they are not able to receive the level and quality of care they need.

The opposition does not oppose the bill, as it strengthens the aged-care regulatory framework. It will provide for greater consistency between the regulatory framework and contemporary business practices, recognising the change in business models over the last 10 years. However, the bill will also increase the compliance obligations and red tape for providers. Those approved providers will face additional financial burdens as a result of having to comply with these new and amended obligations under the act. The increased obligations proposed by the bill will have an impact on investor confidence in the aged-care industry—investor confidence which is already at an all-time low.

Today, the future facing the industry is dire. If the government does not start making decisions soon about how best to ensure that the aged-care sector can get through this difficult period and be positioned well for the long term, it will be older Australians who will suffer. We on this side of the chamber say to the government: ‘Let’s take action; let’s ensure that our older Australians have access to the level and the quality of aged care services that they need and deserve.’