Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Aged Care, Disabilities and Carers) Share this | Link to this | Hansard source

Last night I concluded my comments about this suite of bills—the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005by making the point that this government has missed a number of opportunities. It has been provided with plenty of advice to date about the necessary reforms that need to happen urgently in aged care. I made the point that the Senate Community Affairs References Committee report was received by this government some 10 months ago. In that report, there were a number of recommendations that, finally, after the debacle, after the horrific stories that we have heard in the last few weeks, this government seems to have adopted. But it is too little too late.

I take this opportunity to make the point that the ministerial advisory committee that met was an existing committee. Whilst it had representation of considerable value, it did not have representation from advocates of residents who live in aged care homes or from people with absolute expertise on elder abuse, and that was a huge oversight and a missed opportunity from the Minister for Ageing.

Now we have to wait for a cabinet submission. It has been announced with great fanfare, but let us get on with it, Minister. There is a lot to be done; we have to restore confidence in residential aged care in this country. I concur with the words of Paul Sadler, the well-respected Chief Executive Officer of the Aged and Community Services Association of NSW and ACT. He said in a letter to the editor in the Sydney Morning Herald:

So I believe the minister’s committee made a good start, but much more needs to happen.

He went on to say:

It is imperative that this happens as soon as possible, because we need to protect our older citizens before they and their families lose faith in the aged-care system.

We are very close to that point, and I suggest that the response by the minister to date has fallen well short of restoring confidence in residential aged care.

In the time that I have left, I take the opportunity to remind the Senate that it is this government that has presided over a diminution in the number of aged care beds that are currently provided per 1,000 people over 70 in Australia. In 1995 there were 92 operational aged care beds for every 1,000 people aged over 70 years. In 2005 there were only 85 residential aged care beds. That is a drop of seven beds for every 1,000 people over 70 in Australia, and I am afraid to say that the graph is going downhill. After 10 years, this government has not faced up to the aged care bed crisis in Australia. Every week I hear from families—and I know my colleagues hear from families, because they tell me, and I know that government senators and members hear from families—complaining about the inability to get their loved one the appropriate care they want in residential aged care.

When the Howard government came into office, there was a target of 90 beds for every 1,000 people aged over 70. Labor had exceeded that target. We were up to 92, but what is the case now? We are down to 85. Against the target of 90 beds per 1,000 people over 70, there is a shortage now of 9,275 beds. But, instead of fixing the problem, they quietly lowered the target. Now the target reads at 88 residential aged care beds for every 1,000 people over 70. Even against their own reduced target, there is still a shortage in this country of 5,500 aged care beds. There are thousands of frail, elderly Australians desperate for support and desperate to get into residential aged care so that their care needs can be delivered.

I know that the government will say, ‘We’ve increased the number of community aged care packages.’ Yes, that is good. We accept that. We think that is a great idea, but you cannot deny that people are looking for residential aged care beds, especially high-care beds. That is a truth that the government cannot hide behind. They cannot say that they will continue to increase the number of community aged care packages. That is well received but not enough. The Productivity Commission reported in 2005 that 30 per cent of people needing nursing home care have to wait more than three months to get a bed, which is up from a figure of 15 per cent in 2000. There are significant shortages of beds in Australia and that issue has to be dealt with.

In conclusion, Labor will support this proposal. It goes some way towards protecting the accommodation bonds that are held in Australia. But, as part of my contribution, I will move a second reading amendment that has been circulated in the chamber, which identifies the lack of action of this government. I move:

At the end of the motion add:

“but the Senate:

        (1)    notes:

             (a)    there have been allegations of sexual abuse in five aged care facilities in Australia.

             (b)    the only response, to date, from the Minister for Ageing to call together an existing aged care committee, which whilst contains people with expertise in aged care, did not include advocates of residents in aged care nor people with specific experience in elder abuse.

        (2)    Condemns the Government for failing to:

             (a)    conduct an independent inquiry to determine if there has been an increase in sexual abuse of residents in aged care facilities;

             (b)    respond to, for nearly 10 months since the tabling of the Senate Committee Report of the Community Affairs References Committee, Quality and Equity in Aged Care, which recommended in part:

12: That the Agency ensure that all facilities be subject to a minimum of one annual random or targeted spot check and at least one site visit with notification over its accredited period.

16: That the Commonwealth review the operations of the Aged Care Complaints Resolution Scheme to ensure that the Scheme:

• is accessible and responsive to complainants;
• provides for a relaxation of the strict eligibility criteria for accepting complaints;
• registers all complaints as a complaint, with the complaints being categorised by their degree of severity, such as moderate level of complaint, complaints where mediation is required or where more significant levels of intervention are required; and
• provides that the mediation process is responsive and open and that sufficient support for complainants is provided in this process.

17: That the Commonwealth examine the feasibility of introducing whistleblower legislation to provide protection for people, especially staff of aged care facilities, disclosing allegations of inadequate standards of care or other deficiencies in aged care facilities.

18: That the Commissioner for Complaints conduct an investigation into the nature and extent of retribution and intimidation of residents in aged care facilities and their families, including the need for a national strategy to address this issue.

             (c)    answer, on 2 March 2006, the Senate question on whether there were any other aged care facilities in Australia being investigated for sexual abuse allegations.

        (3)    Calls on the Federal Government to urgently restore community confidence in residential aged care in Australia”.

(Time expired)

Gary Humphries (ACT, Liberal Party) Share this | Link to this | Hansard source

I also want to speak on the Aged Care (Bond Security) Bill 2005 and related bills—but at a little less length than Senator McLucas did, mainly because I will actually address the bills rather than the extraneous issues that Senator McLucas raised. First, I want to make it clear that the government deserves to be commended for a quite extraordinary achievement with this package of legislation.

These bills address the potential for a very serious crisis in aged accommodation in Australia. With hundreds of millions of dollars of accommodation bonds being held by thousands of providers across the country, the potential for those providers to default in their obligations to their residents’ estates is quite significant. There are some providers who operate a large number of homes in this country, and if one of them were to enter into serious financial difficulty—heaven forbid—and a default occurred, there would be a very significant loss to perhaps tens of thousands of people. It is true to say that that has not occurred before. In fact, the Senate Community Affairs Legislation Committee heard that there was no evidence of any default in the obligation to repay accommodation bonds in Australia. Nonetheless, the potential remains.

With these bills, the government has put in place a scheme which will, for the first time, address that potential disaster in the industry. The scheme has obtained more or less unanimous support from the industry, notwithstanding the fact that the proposed regime will potentially place a significant obligation on providers in the industry to foot the bill in the event that there is a default by one or more other providers in the industry. Given the complexity of the arrangements that might have been entered into, to design a scheme which has the support of industry is a major achievement. We should not underplay that in the course of this debate. I congratulate the Minister for Ageing and I congratulate the Department of Health and Ageing for having steered such a major reform through the process of consultation with industry so as to achieve this very significant outcome.

As has been summarised already, these bills put in place an arrangement where, in the event that there is a default by a particular provider in the repayment of accommodation bonds to residents, there is the capacity to levy other providers in the industry—either as a whole or on a selective basis—to recover the costs that the Commonwealth incurs in taking on the responsibility of repaying those bonds to individuals or to their estates. That is a very important piece of security which we confer on residents of aged care facilities in this country. Very often, the product of residents’ life work is in those bonds which are placed in the care of those homes. At the present time there is no protection at all for those bonds. If a home becomes insolvent, for example, there is nothing to prevent those bonds being lost. This package represents a very significant step towards ensuring that those sorts of dangers are averted in the future.

In order to avoid, at all costs, a situation where a provider cannot repay bonds, the industry will need to exercise great vigilance over the standards of accountability and transparency that they use in administering not only the bonds but also the other government funding which those establishments receive. With other developments in the industry in recent years, such as the conditional adjustment payments, which the government has been making in exchange for greater transparency and accountability, these are steps towards ensuring that the likelihood of a default is reduced.

I want to make it clear that the attack that Senator McLucas has made on the government’s general administration of aged care in this country is deeply unwarranted. There is, quite frankly, a distortion of the facts being executed here in order to prove some other broader political point. This does not do anything to enhance the sense of security of people in aged care facilities in this country, and they ought to have a sense of security because Australia does have a high-quality aged care sector. The vast majority of providers do a good job, and the standard of care that they provide is of a high order. People who live in residential aged care facilities in this country can attest to that fact, and most of them do—notwithstanding the fact that there are some conspicuous cases where those standards have not been met.

The suggestion by Senator McLucas that the government is somehow dudding the elderly of Australia by reducing the proportion of aged care beds which are operational is simply without foundation. The fact is that this government has more than doubled expenditure on aged care in the last 10 years, at a time when, clearly, the population of Australia aged over 70 has not doubled. It has doubled that expenditure in real terms because it wants to provide greater opportunity and choice for people in their retirement years.

The government has succeeded in increasing choice by greatly increasing support for home based accommodation packages. That is, people today who wish to remain in their own homes have the option of doing so much more often than was the case under the former Labor government. Those options have been vastly increased, and of course we all know that nine out of 10 Australians—probably 99 out of 100 Australians—would prefer to continue to live in their own homes and to have support in those homes for as long as possible than to move into a residential facility, no matter how attractive those options might ultimately become.

That is what the government has been focusing on and why the number of aged care beds is a less significant factor than the range of choice available to people who are ageing and need assistance to continue to live in their own homes. That is the choice the government has provided with its package and that is what Senator McLucas so comprehensively failed to address.

If you were looking at the situation of aged care provision in this country, the range of choice available to you, the range of support available to you in residential facilities, the quality of those facilities and the support provided by the community to those facilities, you would not exchange for quids the situation that existed 10 or 12 years ago with the situation today. You would be absolutely better off under today’s regime and that is a tribute to this minister and to his predecessors.

I commend the government again on having engineered a quite significant reform in aged care provision in this country with its package. It amounts to a very important set of changes. I do not recall an occasion when as a member of the Community Affairs Legislation Committee I have had the opportunity to be part of a report which has had unanimous support among members. I think that every other bill referred to the legislation committee in this area in the past has had dissenting reports or at least additional comments. This is the first report I can recall which has not had those sorts of comments and it reflects the fact that the government has got it right with its package. I commend the minister on having taken the trouble to ensure that that is the case.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the three bills relating to aged care: the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005. The first two bills are designed to protect accommodation bonds held by residential aged care providers in the case of a provider becoming insolvent. The third bill will serve to amend the Aged Care Act 1997 to establish new prudential regulatory arrangements to improve the management of residents’ accommodation bonds and entry contributions. The trio of bills will together strengthen the protection of residents’ accommodation bonds, enhance requirements of aged care providers and guarantee the repayment of bond balances to residents. The Aged Care Amendment (2005 Measures No. 1) Bill also includes consequential amendments to the act to ensure that all rules relating to the bonds apply to all services holding bonds, whether they are residential care services or flexible care services.

Labor has already indicated that it will support these bills but I would like to reiterate comments that have already been made by several of my colleagues. We are concerned with the way in which the Howard government has managed aged care. Many of us are already familiar with Professor Warren Hogan’s comments about aged care in Australia. He has called for a comprehensive review of the aged care system. But we are still to see the minister make a move towards fixing the problems which are growing by the day and we are still to see any planning for the future.

The sector, the community and Labor are all sick of the government’s quick fixes when it comes to the aged care system. Recently we have seen sickening reports of alleged physical and sexual abuse of elderly women in aged care homes. I am hopeful that these reports relate to isolated incidents, as I am sure that the majority of workers in the sector are respected, totally dedicated to what they do and do a fantastic job in circumstances which, in most situations, are probably not the ideal. However, the Minister for Ageing needs to take further steps to ensure that such abuses are not able to occur.

A meeting the minister held this month with the Aged Care Advisory Committee agreed to several proposals which were, in fact, recommendations from the Senate inquiry into aged care that was tabled in June last year. That the government had failed to respond to those recommendations is barely surprising. It has illustrated again and again the contempt it holds for the parliamentary process in its failure to answer questions on notice until the last minute, or not at all, so it is not surprising that the government failed to respond to the report and is still to do so. The mere fact that it has taken such terrible incidents to spur it to act is shameful. It is time for the minister to stop the talk and take action. The revelations of reported sexual assaults in our aged care homes are unfortunately just the latest in a sector that has been plagued by problems for many years.

The Howard government is still failing when it comes to delivering aged care beds. There is a shortage of almost 10,000 beds across the country. Waiting lists, particularly for high-care places, are growing. When we look at the issue of aged care, what is at the core of the system? Our elderly deserve the right to an efficient, safe, and high-level quality of care should living in their own homes become too much for them. The government has a responsibility to ensure that this service is available to all who need it, while the community has a right to know and be confident that their loved ones are being properly cared for by qualified staff.

The problem facing aged care is not a small one. To put it into perspective, it is projected that spending on aged care will more than double in the next 40 years. It is also projected that the number of Australians requiring high-care residential aged care will increase from fewer than 100,000 in 2003 to 337,000 in those 40 years. The size of the challenge is phenomenal. But is the government doing everything it can to prepare for that challenge? The answer is clearly no.

A testament to the Howard government’s failure in aged care is evident in my home state of Tasmania. It was Kevin Andrews, who was the then Minister for Ageing, way back in 2003, who worked with the Tasmanian Minister for Health and Human Services, David Llewellyn, and the Local Government Association of Tasmania. Mr Andrews was the first to announce a tripartite agreement between the federal, state and local governments in Tasmania to work together to improve aged care services. But, unfortunately, it seems that is about all that the minister did. The tripartite agreement was supposed to promote and further aged care in Tasmania. The Tasmanian government, along with the Local Government Association of Tasmania, has been and remains committed to the tripartite agreement. Both the Tasmanian government and the Local Government Association of Tasmania have signed-off on the agreement and it is presumably now with Senator Santoro awaiting the same treatment.

In his media release announcing the agreement, dated 20 August 2003, Mr Andrews stated:

The aim is to improve aged care services for older Tasmanians by three levels of government working together ... This is a major step forward in cooperation between government for the benefit of older Tasmanians particularly, but the whole Tasmanian community.

The failure so far to progress the agreement sadly seems to sum up the Howard government’s approach to aged care. The advice I have is that, since the recent state election—and I take the opportunity to congratulate Premier Lennon and his team on the wonderful result—the Tasmanian government has contacted the Department of Health and Ageing and remains committed to the agreement. I urge Senator Santoro to expedite the signing of this agreement so that older Tasmanians can begin to benefit from a more streamlined approach to delivery of aged care services across the state.

Coming back to the package of bills that we are looking at today, these bills will ensure that, in the event that a nursing home was to become insolvent, the Commonwealth will step in and ensure that accommodation deposits are refunded to the residents or the families of residents. Of course, this is a welcome change that has been long overdue and it is one which Labor supports. However, the burden is now on Senator Santoro to reverse the years of Howard government neglect of aged care. Senator Santoro faces the challenge of fixing the shortage of beds, cutting waiting times, guaranteeing our aged care centres are safe and efficient, and ensuring that those requiring high care places are not forced to stay in hospital acute care beds. The bills we are currently looking at will serve to assure our elderly that their accommodation bonds are protected. But what reassurance is it for people to know that their money is safe while wondering at the same time whether the same is true of them?

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak to the Aged Care (Bond Security) Bill 2005, the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005. Labor supports these bills but is underwhelmed by the Howard government’s approach to dealing with the very real and growing problems in the aged care sector.

The Aged Care (Bond Security) Bill 2005 and cognate bills, when enacted, will create a process through which, in the unfortunate event that a nursing home were to become insolvent, the Commonwealth would step in and ensure that the accommodation deposits were refunded to residents and their families. While this package of bills will provide greater security for those deposits and picks up one of the recommendations of the Hogan report on aged care, it fails to address the rest. However, the one recommendation these bills do address, recommendation 9, covers an issue that is not the most pressing area of concern. As far as I know, there has not been one single instance of a bond not being repaid due to bankruptcy or insolvency of an aged care service provider. It is prudent that we act to close off the possibility of someone losing a bond at some time in the future, but with these bills the Howard government has shown that it is not serious about addressing more immediate problems, like the shortages of aged care beds, regional distortions in the allocation of aged care beds and growing waiting lists.

You might well ask why the government has ignored the more substantial recommendations of the Hogan review and has chosen instead to solve a problem that does not yet exist. It is because it gives government backbenchers the opportunity to trot out some key lines in a speech to make it appear as though these bills address the real and growing problems in the aged care sector. They do not. On 8 February 2006, Mr Stuart Henry, the marginal member for Hasluck, made a very enthusiastic speech on these bills in the other place. In that speech, Mr Henry describes these bills as ‘a striking example of the Howard government’s commitment to the welfare and dignity of senior Australians’. Mr Henry went on to trot out a range of government key lines—straight from the government media office script—such as:

This new legislation demonstrates the Howard government’s commitment to provide Australians with a world-class aged care system.

He also said:

Providing high quality, affordable and accessible services which meet the individual needs and choices—

and blah blah blah—I am sure you get the idea. You have to give it the member for Hasluck. He is trying his hardest to make these very meagre reforms sound impressive. I suggest that the reason he is being so over the top in his praise of these bills is that he is embarrassed by the Howard government’s continued inaction to address the real problems in the aged care sector.

If government senators will not take my word for it, they might be interested in what their former leader, Mr John Hewson, had to say. In an article in the Australian Financial Review on 20 January 2006, Mr Hewson wrote:

... commonwealth/state financial relations and the division of responsibilities is the single most festering sore on our national aspirations and capacities.

Mr Hewson then went on to list a range of key structural expenditure issues which he believes are consistently ignored by the Howard government before writing:

... aged care is a significantly bigger issue that the government cannot afford to keep avoiding. The Hogan report should not be left on the shelf.

So, according to the Liberal Party’s former leader, Mr John Hewson, aged care is a festering sore on our national aspirations. That might have been a more accurate key line for the member for Hasluck’s speech, but the truth rarely makes for good propaganda.

If we look at the first recommendation of the Hogan report, we can see why Mr Hewson says the Howard government has left it on the shelf. Recommendation 1 calls on the Howard government to come good on its 2001 commitment to provide 108 places for every 1,000 Australians over the age of 70. The failure to provide an adequate number of residential aged care beds is a continuing indictment of the Howard government’s inability to address the problems in the aged care sector.

In the last full year of the Labor government in 1995, there were 92 residential aged care beds for every 1,000 Australians aged over 70 years. The Howard government immediately lowered the standard and set itself a benchmark of providing only 90 residential aged care beds for every 1,000 Australians aged over 70 years. Yet, after 10 long years of Howard government mismanagement, there were only 85 residential aged care beds for every 1,000 Australians aged over 70 years by June 2005. This is a shortfall of over 9,000 beds.

Instead of working to meet its own lowered target, the Howard government is going backwards. On top of that, there are now over 20,000 phantom beds in the system for which residential aged care places have been allocated but no beds have been built. Is this a demonstration of the world-class system the member for Hasluck would have us believe the Howard government is committed to delivering? I think not.

In my home state of Western Australia, there is a shortage of some 787 beds against the Howard government’s lowered benchmark of 90 beds per 1,000. This is unacceptable. But the reason the Howard government thinks it can get away with this continued failure is that the Western Australian state government is forced to pick up the Howard government’s slack. On any given day there are over 100 Western Australians stuck in the state health system’s metropolitan hospitals, with a further 120 Western Australians stuck in rural hospitals who have been assessed as requiring a residential aged care bed but for whom no beds are available. The Western Australian state government has to divert considerable resources to provide care for people who are being forced to wait too long for a Commonwealth funded aged care bed to become available.

In 2005-06, the Western Australian state government budgeted $49 million of state government money to provide its care awaiting placement program in metropolitan hospitals and beds for nursing home type patients in rural hospitals where there is no nursing home in the area. The evidence shows that waiting times are getting worse. When the Howard government came to power in 1996, the average waiting time was less than a month. By 2001, the average waiting time had blown out to 55 days. After 10 years of Howard government mismanagement, the Productivity Commission reported that, by 2005, 30 per cent of people assessed as requiring a residential aged care bed were being forced to wait more than three months for a bed to become available. The cost of these waiting times created by the lack of Commonwealth provided aged care beds in my home state is being borne by the Western Australian taxpayers and, in turn, causing shortages in the number of hospital beds available to Western Australians. Is this a demonstration of the accessible services the member for Hasluck would have us believe the Howard government is committed to delivering? I think not.

While the number of residential aged care beds has decreased under the Howard government, the average cost of a bond has increased dramatically. When the Howard government came to office in 1996, the average cost of a new bond was only $26,000. After 10 years, the average cost of a new bond has increased to over $127,000. That is a massive increase and represents a significant proportion of the life savings of the average Australian. Is this a demonstration of the affordable aged care system the member for Hasluck would have us believe the Howard government is committed to delivering? I think not.

In May 2005, the member for Hasluck, Mr Stuart Henry, published an article in his community newsletter titled ‘Federal minister on visit to Amaroo retirement village’. In the article Mr Henry said that he wanted the minister to visit Amaroo Village because he had been impressed by the sense of community he had found amongst the residents and by the quality of the facilities provided. Senator McLucas, Labor’s shadow minister for ageing, disabilities and carers, and I have also been to Amaroo Village. We were also impressed by the sense of community and quality of care provided there. Amaroo Village is a credit to the dedicated staff and volunteers who work there. All the residents we spoke to were glowing in their praise of the care they received.

Mr Henry’s article did not mention that there is a two-year waiting list for a bed in Amaroo Village. Mr Henry’s article did not mention that, with a turnover of fewer than 10 residents a year, there is little prospect of the waiting list shortening in the near future. Mr Henry also failed to mention that the management of Amaroo Village had estimated that the value of the labour contributed by volunteers is over $750,000 a year, without which the centre would not be able to afford to operate. If Mr Henry’s idea of a world-class aged care system is one with a two-year waiting list kept afloat by the unpaid work of volunteers then he is doing his constituents a disservice. After 10 long years, the legacy of the Howard government has been fewer beds, longer waitlists and higher bonds. The people of Hasluck, the people of Western Australia and the people of Australia deserve better.

Santo Santoro (Queensland, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

First of all, I would like to thank all senators for their support of the Aged Care (Bond Security) Bill 2005 and related legislation. Right from the word go, I would like to say that it is testimony to the hard work of many people that these bills have been going through the Senate and the lower house in such an orderly and bipartisan manner. It is the hard work of many people, not the least being the Hon. Julie Bishop MP, who preceded me in this role and is now the Minister for Education, Science and Training.

I am also very pleased to have this opportunity to acknowledge the efforts of many others that have been involved in the development of this important legislation. Yesterday, you may recall, Mr Acting Deputy President Watson, that the Senate Community Affairs Legislation Committee, chaired by Senator Gary Humphries, tabled its report on these three bills. I am very pleased to note that, following the committee’s deliberations and consideration of expert evidence, the unanimous committee report recommended the bills be passed without amendment. I think that that is a tribute to the very good orderly and bipartisan processes in this place that are not recognised often enough.

I will also take the opportunity to comment on a few matters that have been raised by senators in this debate. In particular, I want to respond to Senator McLucas, who acts as the shadow minister for my area of portfolio responsibility in this place. I have not yet seen Senator McLucas’s proposed amendment in terms of the abuse issue but I hope that it is coming—it has not been circulated yet. I will not talk about the issues in relation to abuse, but I want to talk at length in response to some of the more political points that she made and which were unrelated to this bill. I will refrain from taking up too much of my 20 minutes, which I intend to use, in replying to Senator McLucas, other opposition senators and Senator Humphries.

First of all, Senator McLucas—through you, Mr Acting Deputy President—I would like to welcome the Labor Party’s support for the bills. Unfortunately, that support has been marred by some of the political comments that have been made by senators opposite. I wish that sometimes people could be gracious in their support for something like this. Let us have questions without notice and questions on notice. I notice that yesterday I was not asked a question. That is how front of mind this issue was yesterday. I hope that I get two or three questions from you today on all the issues that you have expressed concern about. I would like to invite Senator McLucas to ask me questions without notice, particularly the political questions which have marred the debate that we are having.

Senator McLucas expressed some concern relating to my department’s response to her queries during the Senate committee hearing. In particular, she asked who was liable to pay a levy in the event of a default. I am sorry that Senator McLucas considered that there was some inconsistency in the advice provided by the department. However, it is my firm belief that the Hansard and my department’s submissions reflect a very consistent position. When appearing before the Senate inquiry, my department made it clear that newcomers to the industry are not liable—I stress that they are not liable—for a levy for an event that occurred before they began operating in the sector.

This is also the position that was explained in the department’s supplementary submission to the inquiry. The submission makes it clear that only those providers who hold bond balances 10 days before the default event declaration and who are still operational when the levy is imposed will be liable to pay. It was made clear that it is not the government’s intent that new entrants will have to pay as a result of an event that occurred prior to their entering the sector. The key principle of the new guarantee system is that providers holding bonds at the time of the default event share the risk and the cost of that event, as they have benefited from the guarantee of their bond liabilities up to that point. The department’s submission provided further clarification of who was considered to be a newcomer to the industry. I believe that this information has provided some reassurance to Senator McLucas, and for that I am grateful to Senator McLucas.

The submission makes it clear that when the ownership of a corporation that is an approved provider changes hands there is no change to the legal entity. As such, a corporation is not a newcomer to the industry. If a corporation holds bonds 10 days before the day on which a default event declaration is made and continues to be an approved provider on the day a levy is imposed, the corporation will be liable to pay the levy, even if in the intervening period the corporation changes hands. The corporation in this situation would not escape any eventual liability to pay a levy. I believe this approach is entirely reasonable and, based on Senator McLucas’s comments last night, I understand that she has accepted the appropriateness of this approach as reflected in the legislation.

Contrary to Senator McLucas’s and Senator Polley’s comments on aged care places, the government has every right to be proud of its aged care achievements over the last 10 years and expects to meet its 2001 commitment to provide 200,000 operational—200,000 operational—aged care places by June 2006. I repeated that for the sake of Hansard because I wish to have recorded my emphasis of that achievement. At the end of 2005 there were over 197,000 residential aged care places, with more coming online all the time. In partnership with the sector, the government has created and planned for the release of a record number of new aged care places—over 95,200 new places since 1996. That is a matter of technical and historical record.

We are also on track with our ratio of places to people. In 2004 the Australian government made a commitment to increase the ratio from 100 aged care places per 100,000 people aged 70 or over to 108 aged care places per 1,000 people aged 70 or older. I respectfully submit to Senator McLucas that we are on track with this. In 2005, 12,093 places were made available, and there will be a further 14,559 places in 2006 and 2007. The 2005 increment alone required an additional public commitment of $296 million, which is certainly not an insubstantial amount. This is designed to address diverse demand in the aged care marketplace. Consequently, this funding is directed towards 5,274 residential care places, 4,352 community aged care packages, 915 extended aged care at home packages and 667 new specialist dementia places. The government have allocated a further 885 places for multipurpose services, innovative pilots and transition care, which will assist the integration between health and aged care services. These will be further augmented by over 1,400 places over the next two years.

The allocation of places is a critical thing to get right. Places must be positioned where they are needed and allocated to those best able to provide sustainable quality care into the future. There must be confidence across the sector that we will get this process right. I have already signalled to the sector that I am willing to listen to any concerns they have about transparency or accountability for the allocation of places and to act to address legitimate deficiencies. In many of the industry forums that I have already addressed and taken feedback from I am on the record as saying that I am aware of some complaints from individual providers and from the sector generally. I have asked them to provide me with specific details on where they think the system may have lapsed. I have promised them that we will get specific debriefings in relation to their concerns. I have told them that if they are not happy I will take a personal interest. If Senator McLucas or any other senator has any specific instances of where dissatisfaction exists with the allocation process, I am very—

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Aged Care, Disabilities and Carers) Share this | Link to this | Hansard source

Just make it more transparent.

Santo Santoro (Queensland, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

I hear what Senator McLucas says. She is aware, through you, Mr Acting Deputy President, that commercial-in-confidence situations apply to the process. To the maximum possible extent that the process can be transparent, of course this government is committed to that principle.

Around the country, people have told me that they would like support to live in their own homes for as long as practically possible, and the government has listened and responded. We have increased funding to home and community care services—up 103 per cent since 1995-96—and community aged care packages, which are up more than 1,012 per cent since 1995-96, as well as introducing the extended aged care at home packages, equivalent to residential nursing home care, to deliver high care to older Australians in their own homes.

As members opposite have alluded to, on 14 March 2006 I convened a meeting of the Aged Care Advisory Committee, which included representatives from across the industry. As I said, I will speak a lot more about the political points that Senator McLucas and others have raised when we debate their amendment in the committee stage. Basically, the legislation that we are debating focuses on the three principles that guide my activities and those of the government in terms of the provision of aged care. Those three principles are choice, quality and financial sustainability.

Choice means three things: focusing on individual needs and providing the care when and where it is needed; giving residents’ families, friends and carers a greater voice in the system; and adopting a flexible approach to meeting personal needs—in other words, to continue the transition away from a system in which the government pays providers for the kinds of services that they want to provide to one in which the government pays providers for the kinds of services that individual service users want.

The bills before parliament reflect this principle. By establishing a cast-iron guarantee that every resident that pays an accommodation bond will have the bond returned to them in the event that their provider becomes bankrupt or insolvent, the government is clearly focusing on the needs of the resident. The timely repayment of what may be a person’s life savings without question or unnecessary delay will remove worry from residents and their families. Without this new government guarantee, a resident would continue to rank as an unsecured creditor to an insolvent or bankrupt provider. People may have to wait months or even years to have their bond balance repaid and still not be sure of recovering all of the money owed to them.

The new system set out in the bills also gives residents and their families a greater voice in the system. New prudential standards to be established under the measures bill will give residents and their representatives access to up-to-date information relevant to the financial standing of the home in which the resident lives. Access to information empowers residents and their families to ask questions and make informed choices. I am proud that these new measures will enable residents to make better judgments about the financial viability of the provider.

Quality of care is the second of the three principles that I just mentioned. Quality is an essential aspect of aged care provision. In my view, the high road to improved quality is the road of competition and innovation, with regulation playing a very important supporting role. One of my predecessors, the Hon. Bronwyn Bishop MP, was passionate about improving the quality of care given to residents in aged care services. Mrs Bishop, as minister for aged care, oversaw the improvements to the responsiveness of the aged care accreditation agency and expanded the complaints resolution scheme.

The new regulatory arrangements set out in these three bills will further improve quality by assisting homes to manage their financial affairs and their ability to provide care into the future. We have worked very closely with industry to ensure the nature and degree of regulation is reasonable. I would like to acknowledge the residential aged care industry groups for their cooperation and assistance in the development of this legislation. In particular, Greg Mundy from Aged and Community Services Australia, Rod Young from the Aged Care Association of Australia and Mr Richard Gray from Catholic Health Australia have worked closely with government to ensure that this legislation meets the needs of both residents and industry.

Returning to the three principles for aged care, the third principle—financial sustainability—is closely linked to the principle of quality. The residential care system in Australia must be affordable to taxpayers, to service users and to providers. This requires a focus on productivity and efficiency so that the cost of providing world-class and innovative care to our elderly can be met. As Minister for Ageing, the Hon. Kevin Andrews MP understood this implicitly and instigated a number of strategic reviews of the system. I commend Minister Andrews particularly for his foresight in initiating the paperwork review, which has so well informed our current work on developing a more streamlined and efficient funding model.

I just want to particularly mention my predecessors Julie Bishop, Bronwyn Bishop and Kevin Andrews, because they did so much pioneering work in this area for which these days I have the privilege of enjoying ministerial responsibility. I heard those ministers invariably criticised in contributions by senators opposite, but they did much work to bring the aged care system of this country into the 21st century, which it certainly was not in when the Labor Party relinquished office in 1996.

The new prudential regulations to be made under the measures bill before the Senate also support the objective of financial sustainability by minimising the cost of industry and by focusing on improving the efficiency and viability of industry. I am acutely aware that the ongoing delivery of quality care is dependent on a financial, robust and vibrant industry. While the care and welfare of residents is paramount in every provider’s mind, each provider must also be conscious of the importance of running their business in a financially sustainable way. Good accounting practices, strong governance, risk assessment and management processes, and clear and up-to-date records and systems should be the backbone of any soundly run business. This point was strongly made by Professor Hogan in his excellent report Review of pricing arrangements in residential aged care, which has contributed significantly to the policy underpinning this new legislation for government thinking on longer term aged care reform. I am grateful to Professor Hogan for his significant contribution.

Jan McLucas (Queensland, Australian Labor Party, Shadow Minister for Aged Care, Disabilities and Carers) Share this | Link to this | Hansard source

Senator McLucas interjecting—

Santo Santoro (Queensland, Liberal Party, Minister for Ageing) Share this | Link to this | Hansard source

While good business practices are critical, it is not, however, the government’s intention that the government run the business of each provider for them. Nor will the government bear the risk of or responsibility for market success or failure. It is my philosophy that each provider must understand and manage their business themselves. The government will provide the appropriate support and guidance to assist providers, but providers must at the end of the day be responsible for the market success or failure of their own venture. This point was very effectively championed by my predecessor, the Hon. Julie Bishop MP, and was a recurring theme of the government’s response to Professor Hogan’s review. Ms Bishop, through successive federal budgets, secured over $3 billion additional funding for aged care programs, much of which were designed to improve the sustainability and quality of residential aged care in this country and answers very substantially the interjection that was made very quietly by senators opposite a minute or so ago.

The philosophical approach of financial sustainability is an important context for the new prudential standards that will be set by the measures bill before parliament. The liquidity standard, for example, will require providers to develop their own mechanisms to ensure that they have sufficient liquidity to repay bonds as they fall due. Providers will each be required to develop their own liquidity management strategy, cognisant of their individual business risks and operation. The new standard will not abrogate their responsibilities to the government. The strength of prudential arrangements will also reduce the risk of failure and activation of the guarantee scheme, another central component of the legislation before parliament.

My approach to financial sustainability is also reflected in the levy bill. This enables the government to levy all aged care providers who hold bonds to recover any amount paid out to residents by the government which are not recovered from the defaulting provider. The government will have the flexibility to ensure that the structure of the levy does not impact on the financial sustainability of approved providers nor, more importantly, compromise the quality of care being delivered.

Existing protections under the Aged Care Act 1997 have worked well to date, as shown by the fact that there has not been an incident where a resident’s bond balance has not been repaid because of the bankruptcy or insolvency of a provider. The government believes however that these additional protections are timely. The average new bond has increased in value from $26,000 in 1996-96 to $127,600 in 2004-05. Bonds can represent a significant proportion of a resident’s life savings and understandably residents and their families expect secure arrangements for their bonds and the reassurance that their bond balances will be repaid when the resident leaves home.

This legislation strikes a balance between the added security for residents that is provided by the strengthening of the arrangements and the financial impact of the new arrangements on the sector’s viability and its standing with the capital markets, including its ability to construct and maintain aged care homes. The new arrangements complement the $877.8 million conditional adjustment payment which was implemented in 2004. These government initiatives will assist the aged care industry to become more financially mature and more sustainable. The introduction of these precedents or these protections into the act demonstrates the coalition government’s commitment to a world-class system of aged care that provides high-quality, affordable and accessible services to meet the individual needs and choices of older Australians.

In closing, I want to acknowledge the individual approved providers operating aged care services across the country. I know that they share my commitment to choice, quality and financial sustainability. They have told me that repeatedly during the months I have been minister. I know that many services have made substantial financial commitments to upgrading their existing buildings, a serious investment in the future of the aged care industry in this country. The diversification that many providers are embarking upon, such as branching into community services, is an example of preparedness to provide consumers with greater choice and flexibility in their care options. In terms of quality, I acknowledge the continued high level of compliance across the sector with our accreditation standards.

I believe in the sector’s clear commitment to continuous improvement and its dedication to provide high standards of care now and into the future for the good of the Australian community. I thank all of those who have been involved in the development of this legislation and acknowledge the broad support of senators within this chamber, including the support of the opposition.

Question negatived.

Original question agreed to.

Bills read a second time.