David Johnston (WA, Liberal Party, Minister for Justice and Customs) Share this | Link to this | Hansard source

I table a revised explanatory memorandum relating to the bill and move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Aged Care Amendment (Residential Care) Bill 2007 proposes to amend the Aged Care Act 1997 (the Act) to implement the Government’s decision to reduce the number of funding levels in residential aged care and provide supplements for residents with complex health care needs, including palliative care, and for residents who have mental or behavioural conditions, including dementia.

Since coming to office in 1996, the Howard government has worked consistently to ensure that older Australians needing long-term care have access to a high-quality and affordable aged care system capable of meeting their needs and preferences.

The Government’s continuing commitment to aged care reform and investment has been demonstrated by substantially increased outlays on residential care, by the very significant growth in care places, and by its recognition of the complex care needs of residents of aged care facilities.

In 2005-06, the Government’s total expenditure on ageing and aged care was $7.1 billion, of which $5.3 billion was paid for residential care subsidies—an average subsidy per utilised place of $34,000. The budgeted amount for the subsidy in 2006-07 is another $300 million more than that.

In 2003, the Government commissioned a review of pricing arrangements in residential aged care. The Government immediately addressed the main recommendations raised in Professor Warren Hogan’s report by providing $2.2 billion as part of its 2004-05 budget package Investing in Australia’s Aged Care: More Places, Better Care the largest single investment in aged care by any Australian Government. The total investment by the Government for the care of older Australians between 1996 and 2008 is $67 billion.

As part of the 2004-05 Budget package the Government committed to introducing new funding arrangements for residential aged care. Aged care homes may claim government subsidy for providing care to a particular resident based upon their funding classification. The Resident Classification Scale has been the instrument used to assess the overall level of dependency of an aged care resident. The resident’s funding classification has been determined on the basis of this assessment.

Over the last two years, the Howard government has consulted and worked with the residential aged care industry, including nursing and care staff, to develop a more effective assessment and funding instrument, which will reduce administrative effort and costs for aged care providers.

The amendments proposed in this Bill will streamline the administration of the current system and free up nurses and other residential care staff to deliver higher quality care. This will occur through a number of measures to ensure that care needs are assessed more effectively, and that paperwork is required only where it serves a clear purpose.

Specifically, the Bill seeks to replace the Resident Classification Scale with the Aged Care Funding Instrument as the means of allocating basic subsidy in residential aged care. The Bill will introduce changes necessary to reduce the number of funding levels for basic care, as well as provide payments for residents with complex health care needs, including palliative care, and for residents who have mental or behavioural conditions, including dementia. Subsequent amendments to the Aged Care Principles will detail the manner in which specific levels of funding are calculated for residents with different care needs. To support the introduction of this Bill, I am tabling a policy paper today which outlines these changes.

The Aged Care Funding Instrument will remove unnecessary ‘red tape’ by reducing the amount of documentation and record-keeping which aged care staff generate and maintain in order to justify the funding received for each resident. Appraisal procedures using the Resident Classification Scale can sometimes be too subjective and very time consuming. In addition, many aged care homes currently invest considerable staff time in ongoing documentation to ensure that their residents’ care plans and progress notes are found to be consistent with their appraisals for funding purposes when the homes’ appraisals are reviewed for audit purposes. This process is known by industry as “validation”.

The Aged Care Funding Instrument is specifically designed to address these problems. The Aged Care Funding Instrument has fewer questions than the Resident Classification Scale and is targeted to assess an aged care resident’s need for care more objectively. The validation process will also be streamlined so that single questions, or specific groups of questions, can be reviewed rather than every aspect of the appraisal.

The Government and the aged care industry have worked together to develop the proposed funding model. A national trial was undertaken in 2005 in which nearly a quarter of all aged care homes participated. The trial found that aged care assessors and government review staff can achieve a much higher level of agreement on classification levels using the new instrument—over 90%. Another trial has been undertaken to refine the validation method and to clearly define the record-keeping requirements for funding.

A resident’s classification for funding purposes currently expires after twelve months. The Bill amends the Act to remove the requirement for providers to annually reappraise residents. This change will eliminate over 60,000 annual reappraisals completed by providers which result in no change in the amount of funding. It is also proposed that residents who enter aged care homes from hospital be reappraised after six months in recognition that their care needs can change more quickly than other residents’ care needs.

Approximately 12,000 residents move from one aged care home to another each year. The Bill will amend the Act to allow providers the choice either to accept the classification based on the appraisal by the previous home or to submit a new appraisal. Additionally, the integration of the new funding model into the proposed e-commerce platform for transactions between the Department of Health and Ageing, Medicare Australia and approved providers will reduce paperwork and improve efficiency in the longer term.

Maintaining the Resident Classification Scale and associated processes costs over $142 million involving a loss of 5.8 million hours. Within the $142 million, a cost of $116 million is attributed to the Resident Classification Scale appraisal process alone—this can be compared to the Aged Care Funding Instrument impact of $5.21 million.

The Howard government will continue to work closely with the aged care industry to implement the new system to make sure that it reduces unnecessary ‘red tape’ for funding purposes, and more efficiently directs funding towards the care of residents according to their needs. To ensure a smooth transition, a national training program for residential aged care is being developed and will be delivered to up to 10,000 aged care facility staff and managers right across Australia prior to the Aged Care Funding Instrument commencement.

Providers have a responsibility to appraise the level of care needed by residents accurately when claiming Australian Government subsidies. Currently, the Act allows the Departmental Secretary to suspend providers from making such appraisals in the small number of cases where providers have repeatedly failed to appraise accurately. The Bill proposes to amend the Act so that, in such cases, the Secretary may put a stay on a suspension from making appraisals or reappraisals subject to a provider entering into an agreement with the Secretary. The agreement may include additional training of management and care staff or the appointment of an advisor for a specified period of time to assist a provider to conduct proper appraisals.

The introduction of the Aged Care Funding Instrument will not change the responsibilities under the Act for aged care homes to provide quality care. Failing to provide the care required to meet the individual needs of residents constitutes a breach of the Act and this will continue to be the case.

The transition arrangements proposed in this Bill will ensure continuity of subsidy levels for all residents classified on the basis of an appraisal using the Resident Classification Scale before the Aged Care Funding Instrument start date until they require a higher level of care. In addition, this Bill will ensure the continuity of entitlement to specified care and services provided to high care residents who were eligible for these services before the Aged Care Funding Instrument start date.

Ruth Webber (WA, Australian Labor Party) Share this | Link to this | Hansard source

I seek leave to have the speeches of Senator McLucas, Senator Stephens, Senator Sterle and Senator Carol Brown incorporated in Hansard.

Leave granted.

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

The speech read as follows—

Introduction

I rise today to speak on the Aged Care Amendment (Residential Care) Bill 2007. This Bill is to amend the Aged Care Act 1997 to introduce a new arrangement for the assessment of allocation of subsidies in residential aged care, called the Aged Care Funding Instrument (ACFI).

Government subsidies are provided according to the different levels of needs of residents in aged care facilities.

The Bill also changes the current arrangements in which classifications expire after 12 months. It removes the requirement for providers to submit reappraisals, but gives providers the option to reappraise a resident after 12 months.

The amendments also allow a provider to accept a resident’s current classification when a resident moves from one home to another, rather than being required to submit a new appraisal.

The Aged Care Act 1997 as it currently stands allows the Secretary to suspend a Provider from appraising residents for funding purposes if the provider repeatedly fails to conduct appraisals or reappraisals in a proper manner.

This Amendment allows the Secretary to stay the suspension, subject to the provider meeting certain obligations. These obligations may include appointing an adviser at the provider’s cost, or undertaking training. This is aimed to encourage providers to conduct appraisals and reappraisals properly to avoid a suspension coming into effect.

The ACFI was designed to reduce the amount of documentation generated in aged care facilities which is required by the Commonwealth to justify the funding classification for each resident.

The reduction of paperwork for aged care staff is welcome and trials indicate it will allow care staff spend more time on resident care rather than filling in forms.

Refer to a committee

As a number of concerns were been raised by the aged care sector, Labor referred the Bill to the Community Affairs Committee for Inquiry. Following the inquiry, the recommendations have led to three proposed amendments to the Bill. Two from the Government and one from Labor.

Recommendation 1

The Committee noted that the provision allowing more than one residential care service to be paid a subsidy for the same resident will be repealed.

The payment of two subsidies is an unusual situation which is rarely used. It is required when a resident has to relocate on a temporary basis to another facility—usually a facility that can provide a higher level of care and the place at the original facility needs to be retained for the resident.

The Department has indicated that only a small number of aged care facilities use this provision and in some cases it was not applicable in the circumstances.

However, the Committee considered that circumstances may arise particularly in regional and remote areas where it is appropriate that a subsidy be paid temporarily in both aged care facilities and therefore recommended the omission of Item 27 of the Bill.

Recommendation 2

The Committee noted submissions from witnesses on the lack of detail on Items 28, 29, 31 which allow the Minister to determine a lower basic subsidy level where a resident is receiving extended care in hospital and also Item 32 which removes the existing provision in section 44-4 outlining the possible reduction in a classification level under the RCS.

Questions were raised by the aged care sector about the quantum of the minimum amount of the new basic subsidy level and the basis for these determinations. The Committee recommended that the Minister ensure that the lower basic subsidy level is reasonable.

The Government has sensibly proposed amendments to the Aged Care Amendment (Residential Care) Bill 2007 that will deal with Recommendations one and two which Labor will be supporting.

Recommendation 4

The Committee noted that this Bill represents major change to the aged care sector and has the potential to impact on the funding available to aged care facilities so recommended a full and robust review of the ACFI eighteen months post implementation.

The Government has put forward amendments that deal with Recommendation 1 and 2, but omitted to put forward an amendment that deals with Recommendation 4.

Labor has put forward an amendment that deals with this issue and we will deal with the issues around the review in Committee.

History of RCS and excessive documentation

As the NSW Nurses’ Association has pointed out, the Federal Government’s aged care “reforms” in 1997 and the introduction of the Aged Care Act 1997 resulted in increased regulation of the aged care industry and the introduction of a complex funding instrument called the Resident Classification Scale (RCS) which made Commonwealth funding contingent on the completion of extensive documentation for each resident.

The burden of completing this paperwork fell largely to registered nurses in aged care facilities, which increased their workload and reduced their ability to provide direct care for residents and provide support for other care workers in aged care facilities.

The Government has known that the issue around the burden of paperwork for nearly 10 years yet it has taken till 2007 to do anything about it.

History of the ACFI

The ACFI was initially proposed to be introduced on 1 July 2007 which would not have allowed for training on the new instrument to have occurred.

The former Minister for Ageing announced that the new Aged Care Funding Instrument would be delayed from 1 July 2007 and will now be introduced on 20 March 2008 as part of the “Securing the Future” aged care funding package.

A review into the operation of the Resident Classification Scale (RCS) was announced on 9 May 2002. The review was commissioned to address industry concerns about excessive RCS documentation, and new funding instruments were proposed and trialled.

The aim of the new funding instrument was to have fewer basic funding categories than in the current RCS and to include two new supplements to better target available funding towards the highest care needs—in particular residents with dementia and challenging behaviours and residents who have complex health and care needs, including palliative care. The new supplements are to be implemented from within the basic subsidy funding which is currently allocated by the RCS.

Since the 2004 announcement, several project and trials have been commissioned by the Government to identify and test a new funding model. These trials were completed in October 2005.

After further adjustment, the ACFI was originally announced for introduction on 1 July 2007 but has now been deferred for introduction on 20 March 2008.

Securing the Future

This deferral is in response the Government’s February aged care funding announcement “Securing the Future” where the subsidies will be assessed according to the new funding instrument.

While the Government’s “Securing the Future” funding package was welcomed at the time of the announcement by providers.

With more information and with further analysis the aged care sector has become increasingly concerned about the potential loss of funding and impact on care provision, particularly in Low Care facilities.

The Aged Care Association Australia has called on the Government to resolve the flaws in its package as a matter of urgency.

“ACAA initially supported the package.” said Mr Rod Young the CEO of ACAA. He went on to say “However, an examination of the detail of the package has revealed that the Government has removed two supplements that will be worth nearly $300 million in capital and care to providers over the life of the package.”

He said: “The removal of the supplements significantly undercuts the apparent merits of the package. The removal of these supplements will have immediate impacts on the viability of may providers and the capacity of many to continue to provide existing levels of care.”

“As it now stands, this is not the package the Government has been promising to deliver to the industry and older Australians for the past two or three years following the Hogan Report.”

Aged and Community Services Australia stated: “Changes are required to the Australian Government’s package of aged care funding measures… if they are to achieve their stated objectives without unforseen consequences.”

Greg Mundy, CEO of ACSA went on to say “We were initially very pleased with the package but as more detail became available on the various offsets and trade offs contained within it, it became clear the gains were modest and that there were significant negative impacts.”

He also said that “Worse than this, many Low Care homes may actually be worse off under the proposed measures”.

The Chief Executive of Churches of Christ Homes in Western Australia, Wayne Belcher, has undertaken economic modelling on his aged care services and has said the Government’s Securing the Future funding package “fails the test of reasonableness”.

“Upon reviewing the detail of the announcements, there is little average additional accommodation revenue gained. Indeed for our current mix of clients we anticipate losing approximately $860,000 over the next five years based on the full content of the package provided by the Department of Health and Ageing.

“We are in a position where we may no longer be able support the cost of building a nursing home for Grandma”.

Mr Belcher went on to say: “The Australian Government has failed to meet its reasonable commitments to residential aged care funding through these recent announcements.”

As we see, yet again with another Government announcement where the devil is in the detail.

Labor has called on the Government to publically release their financial modelling so providers can assess their financial position and the public can determine if the Government has hoodwinked them over this $1.5 billion funding announcement—to no avail.

The May Budget did provide a patch-up for the flawed “Securing the Future” funding package, but only after intense pressure from the aged care sector.

The former Minister used the term “unintended consequences” to describe the problems the aged care sector was discovering with the “Securing the Future” package.

I’m sorry, but with the resources of the Government; with the information facility by facility provided by the sector; with the millions spent firstly on the Hogan Review and the never-to-be-seen Government response to Hogan to describe failings in the package as “unintended consequences” is offensive.

The Minister and the Government knew exactly what would happen, especially in smaller facilities with a higher proportion of low care residents.

As a result of sectoral activism through aged care representative organisations we then saw the “patch”, the “band-aid”, the Transitional Assistance Subsidy in the Budget.

So here we are four years since the Government announced that future financial sustainability in residential aged care was a problem, in a position very much like where we were in 2003.

The Howard Government has had a short term view when it comes to aged care. It has failed to provide certainty into the future, especially with Australia facing an increasingly ageing population.

The provision of aged care needs honest engagement with the sector and considered vision.

Conclusion

Australia’s frail older citizens and their families need certainty that aged care will be available to them, when they need it and where they need it, near their families and friends.

Labor is prepared to support the Bill, but will put forward its own amendment to undertake a review of the Bill after 18 months to ensure there are no unintended consequences after it has been in operation.

Ursula Stephens (NSW, Australian Labor Party, Shadow Parliamentary Secretary to the Leader of the Opposition (Social and Community Affairs)) Share this | Link to this | Hansard source

The incorporated speech read as follows—

I rise to speak on the Aged Care Amendment (Residential Care) Bill 2007. The bill will amend the Aged Care Act 1997 to introduce a new arrangement for allocating subsidies in residential aged care. The aged-care funding instrument is designed to reduce the amount of documentation generated in aged-care facilities which is used to justify the funding classification for each resident.

Aged care is an important issue that needs to be addressed, of course. A reduction in paperwork for aged-care staff is welcome, as it will allow for the already stretched resources in aged-care facilities to be concentrated on looking after residents. At many of the aged-care facilities that I have had the privilege to visit, one thing that I have heard time and time again from the providers of aged care is that too much time is spent on paperwork and not enough time on the actual care of the aged. So this bill is welcome in that it will ensure that providers can spend more resources and time on looking after the people in those aged-care premises and will relieve providers of the mountains of paperwork.

Despite this bill’s attempts to address a more flexible funding regime, there are big problems in the aged-care sector in my home state of New South Wales, and this bill gives me an opportunity to speak more broadly on the issues that the bill is attempting to address. We have many aged and frail patients inappropriately languishing in public hospital beds, causing blockages in the public health system. Funding for the aged-care facilities continues to fall, leaving many families with few, if any, appropriate options for the care of an elderly relative and, therefore, restricting access to nursing homes that would normally be glad to take them.

Some 3,000 nursing homes across Australia are at this time catering for over 160,000 people, with the demand for care increasing dramatically. It has been estimated that by 2019 there will be a need to provide care for some 970,000 people. This is a factor that the Howard government continues to refuse to recognise. Where do they think these people will be placed? They cannot stay at home, as the funding for home based care is insufficient to allow that to continue safely. Home based care programs and services are continually suffering from a severe lack of funding and an inability to get quality staff to carry out the care—though many people would rather stay at home under that sort of care.

In many cases, families cannot care for their elderly parents or relatives because of other commitments on their time—for example, work and caring for children or a partner. In 1997, the Howard government made some pretty significant changes to the aged-care system which it predicted would guarantee positive outcomes for elderly Australians.

Those changes have never happened. The reforms never actually came into being, leaving a very large sector of the community still waiting to hear how their loved ones could be cared for.

Provision of adequate funding of aged care is high on the agenda for all providers. Maybe it is time to move to a funding model based on an accommodation component and a care component. It is suggested that there should be separation of these two cost drivers in residential aged care. This could possibly offer the public more flexibility, transparency and community understanding in this service delivery area.

There are myths and incorrect assumptions about working in aged care. The allocation of additional undergraduate nursing places in the budget is of course welcome, but it is now our responsibility to ensure the recruitment of more nurses for the aged-care sector. There needs to be more encouragement of personal carers to adopt careers in aged care.

The involvement of the medical and allied health professions in aged care is a goal that we all seem to want to achieve, but the barriers remain. There are access, funding and availability questions that must be addressed. Pay equity is an issue relative to not only nurses but also all aged-care workers. This should be addressed immediately. The conditional adjustment payment to 2007 is not of itself a sustainable solution.

Community expectations are growing very quickly. Families of residents of aged-care facilities and receivers of community care increasingly want to understand the type of care being provided. There will increasingly be an expectation that the staffing level and mix be known and understood by families of people who receive care.

Workforce issues present a challenge that can only be achieved through government and sectoral collaboration around funding, consumer education, training and education, career path development and national leadership. Labor will continue to hold the Howard government accountable for its failure to plan ahead and provide the type of detailed policies that are needed in aged care in particular. Planning for our built communities needs to take into account the overall ageing of the population. This needs to be kept in mind, with clever design and innovative ideas. This brings challenges to the building industry, town planners and governments, particularly local government, in delivering homes and communities that are suitable for the needs of an ageing population.

The emergence of Australia’s ageing population is not a surprise. The Australian National University Research School of Social Sciences reports three principle causes for this occurring. Firstly that the fertility rate has fallen to unprecedentedly low levels with no indication that it will increase again in the future. The fertility rate for population replacement is 2.1 births on average per woman since the mid 1970’s and is currently at 1.75 and declining. The second reason is that mortality rates of older Australians has fallen and the third cause is that from 2010 the large post war baby boom cohort begin to turn 65. These baby boomers will continue to exert significant influence on the size of Australia’s aged population—and its proportion of the total population—until around 2050.

Policy makers, aged care providers, designers and planners are required to take a proactive approach to promote innovative ideas to help older residents to age in their local community in a productive, healthy and active way. Every individual, family, community, business and each level of government is aware of, and will feel the impact of Australia’s ageing population.

Growing numbers of older Australians are demanding—and are entitled to—more choice in when, where and how services are delivered to enable them to enjoy quality of life throughout their whole life. We need to create positive environments for healthy ageing, including ones that can cater for transitional care, rehabilitation and ageing-in-place from low to high-level care.

Some people are likely to choose lifestyle villages, whereas others may choose to stay in their own homes that have been modified with, for example, wider doorways and ramps, and some may need greater care. We know that the best solution for people when they reach those twilight years is to remain in their own homes, with adequate care, if they are able to. For those who choose to stay in their homes, there is the significant issue of social isolation. It is here that policy needs to be developed to prevent this isolation from becoming an epidemic in Australia. This isolation often develops because the person may have a disability or may have lost a partner or may have few transport options.

Planning must take all of these circumstances into consideration in order to achieve cohesive communities. The importance of older Australians remaining involved in community life and remaining socially connected cannot be underestimated in their maintaining good health, both physically and mentally.

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

The incorporated speech read as follows—

The purpose of the Aged Care Amendment (Residential Care) Bill 2007 is to amend the Aged Care Act 1997 to support the proposed amendments to the Classification Principles 1997 to replace the Resident Classification Scale (RCS) with the Aged Care Funding Instrument (ACFI) as the means for allocating subsidy to providers of residential aged care.

This change was foreshadowed in the ‘Securing the Future of Aged Care for Australians’ package announced by the Prime Minister on the 11th of Feb 2007.

This Bill also proposes a number of amendments to do with the operational parameters of the Government’s residential aged care program and improvements to the administrative efficiency of the program.

Part II of the Bill provides for application and transitional arrangements to implement the amendments to this Bill and to ensure a smooth transition for approved providers.

Mr President, it has been well documented that Australia over recent decades has experienced significant ageing of its population. This is partly due to a progressive decline over time in Australia’s crude birth rate and partly because, on average, Australians are living significantly longer.

We live in an era where most people can expect to live an active healthy life many years after they move into retirement. It needs to be acknowledged that continuing improvements in the health status and the longevity of Australians is due in no small part to Australia’s Government funded universal health and aged care systems.

Medicare saves lives without discrimination.

Medicare improves health without discrimination.

The pay-off from Australia’s universal health and aged care systems is a healthier and longer living population.

Medicare is complimented by Australia’s aged care system which ensures older Australians received high quality aged care regardless of their financial means.

Because of our changing demographic there has been a substantial increase in the need for Government to ensure the provision of adequate aged care services, particularly for the growing numbers of people living well into their eighties.

The tragedy is that not all Australians are sharing equally in the improvement in longevity and health status.

I refer of course, in particular, to Indigenous Australians. The poor average health status of Indigenous Australians is unfinished business that is still not getting the priority it requires from the Howard Government.

The lower average standard of living of Indigenous Australians and their significantly lower health status demonstrates that where a Government doesn’t govern for all Australians there can be a devastating effect on the lives of individuals

It is essential that Government accepts it has a responsibility to ensure that there are no barriers to accessing Government funded universal health and aged care services.

Barriers to these services can result in lower individual health status and at worse can shorten lives.

In respect to aged care the Federal Government has a responsibility to ensure that changes to its aged care funding arrangements do not create unfair access barriers to required aged care services because of declining affordability for individuals.

In this regard Australian Institute for Health and Welfare (AIHW) figures show that in the period of 1999/00 to 2004/05 the total cost of high level residential care rose by 44%. In the same period the direct cost to individuals of high level aged care rose by 75%. These figures suggest that there has been a significant shift of a cost of high level aged care from Government to the individual over the past 5 to 7 years.

This follows the same pattern that is emerging in other key areas of the Government’s aged care and health responsibilities.

As I made note of in the debate on changes to the Pharmaceutical Benefits Scheme arrangements, the Government has lessened its cost burden in the delivery of affordable medicines.

The result is that under this Government it’s the users of health services, who in many circumstances are not well-placed to afford the cost of required treatments, who are having to foot the bill.

When it is considered that 88% of permanent residents of Government subsidised aged care facilities are pensioners, it is of concern that the cost to individuals of their residential care has been rising significantly faster than the Government’s share of these costs.

On top of this, many residents of aged care facilities are being asked to provide bonds often well in excess of $200,000 to get in the door.

Aged care services, particularly residential care services, are becoming big business—Mr President I will have more to say about this in a moment.

I want now to raise the matter of the availability of residential aged care places under the Howard Government.

The Howard Government’s handling of its aged care portfolio has been far from outstanding.

In its 11 years of Government there have been 7 ministers responsible for aged care policy.

No wonder the Howard Government has mucked up things so badly.

In its first 5 years the Howard Government increased the number of residential care places by only 5%. Over the same period Australia’s 70 years plus population grew by 16%.

The result has been a major block to access to residential care beds from which the Howard Government is still a long way from resolving.

To make matters worse the Howard Government ignored the extent of the growth needed in additional high care or nursing home beds. The result of this neglect has been that people needing to be admitted to a high care bed have often found that there are long waiting lists or that they have had to accept a nursing home bed a long distance from family and friends.

Entering a nursing home at the age of 80 or even older is a traumatic enough experience in itself without the stress of knowing that you’re going to be almost completely isolated from your previous life and friends.

This is something that does not get a guernsey in performance report card of the Department of Health and Ageing or the Minister for Ageing.

Having watched my own grandparents experience the trauma associated with losing their independence and moving into residential care, I can assure you that this is something very real to real people.

Between the year 2000 and 2006 Australia’s 70 plus population grew by 17.8% compared to total population growth of 7.7%. More importantly the number of persons over the age of 80 years grew by 34.8%. It is the 80 plus age group that are highly dependent of the availability of high care beds. Over 60% of high care beds are occupied by people over the age of 80 years.

A major problem with the Howard Government’s management of residential aged care services is that it has constantly been running several years behind the need for additional beds. It needs to be borne in mind that the process of bed allocation and the building of new beds takes several years to complete.

It is simply no good waiting for the aged care population to grow and then decide to allocate additional beds.

It has taken over 10 years for the Howard Government to properly acknowledge that it has let thousands of older people down by not supporting an adequate increase in high care beds.

It has only been in this election year that the Howard Government has made real effort to address this shortfall by pledging that two thirds of 2007 new aged care bed allocations will be high care.

In effect the Government has admitted that it has got the number of high care beds terribly wrong.

The Minister has recently announced that the Government has increased its high care bed target from 40 beds to 44 beds per 1000 persons 70 years and over

The fact that the Howard Government has admitted that its planning ratio for high care beds was 10% below requirement indicates that it has been running a residential aged care policy 6000 high care beds below requirement.

Inevitably, a substantial proportion of this bed requirement has had to be covered by the public hospital system. This has been done without any compensation by the Commonwealth

This situation has also been a significant contributor to longer wait times for elective surgery in public hospitals which the Howard Government has been quick to blame the State Governments for.

The annual cost to the public hospital system from the lack of high care nursing home beds is phenomenal.

A public hospital acute bed costs on average $350,000 to Government annually. This is 10 times the annual cost to Government of a high care aged care bed.

Every 1000 public hospital acute beds occupied unnecessarily by older people waiting for access to a nursing home, costs Australia’s public hospital system approximately $300-$400 million annually.

During the 11 years of the Howard Government, billions of tax-payer dollars have been thrown away by incompetence in aged care alone.

The indications are that at any one time there are hundreds if not thousands of older people waiting in a public hospital acute bed for access to a high care nursing home bed.

In my home state of Western Australia the State Government has had to take the step of purchasing access to high care beds in the aged care sector in order to discharge people in the State’s public acute care hospitals who have been waiting weeks if not longer for an available aged care bed.

The Howard Government’s approach has been bad aged care policy and bad economics.

Mr President, included in this Bill are legislative changes that it is hoped will decrease the administrative burden on aged person residential care operators from unnecessary form filling

This is an important issue as much of the complex form filling required by the Commonwealth falls on the shoulders of the small number of registered nurses which individual care facilities employ.

Today’s nursing shortage is a particular problem for aged care facilities who continue to point out that they experience real difficulties in competing with the higher salaries that the hospital sector can afford to offer nurses.

The aged care sector has been pressing the Howard Government for years on the issue of labour costs in their sector.

The reduction in nursing home paperwork will go at least a small way in assisting nurses in aged care facilities to cope with their high demand work loads.

Also, the changes in the Resident Classification System will give better recognition to the care needs of people with severe behavioural disorders, particularly the large proportion of people in high care beds who have advanced dementia.

Mr President this Bill may improve the Resident Classification System and may reduce paperwork, however, it does nothing for the fundamental issues affecting the long term viability of aged person residential care accommodation.

There continues to be too many nursing home facilities which are below acceptable building standards for the 21st century.

There remain too many older style buildings with poor physical amenity including multi-person bedrooms. These facilities still exist because of an overall lack of high care beds and because operators of these facilities claim that they cannot afford to fund the major renovations required or to build replacement facilities.

While this stand-off between the Government and aged care facility operators continues, significant numbers of older people are going in to nursing homes that are below what most people would regard as acceptable standard of residential accommodation.

This is a matter that the Howard Government has been unable or unwilling to tackle head on and is to the detriment of older people.

In addition, residential aged care provider peak bodies have for several years pointed out to the Howard Government that their funding formulas and policies mean that the building of new nursing home facilities is becoming uneconomic.

This situation has not been addressed in the funding changes that are included in this Bill. The result of the Howard Government’s failure to address this issue rationally is creating significant distortions in the way the capital requirements of residential aged care provision are being met.

In the absence of viable alternatives to generate the necessary capital required to upgrade existing aged care facilities and to build additional beds, aged care providers have adopted two main strategies.

It is now not unusual for people entering low care facilities or extra service facilities to be asked to provide a bond of several hundred thousand dollars.

In other words, people are being asked to pay a bond that is substantially higher in value than the cost of their share of the physical facilities in which they are to be accommodated.

New entrants to residential aged care facilities who pay a bond are cross subsidising other residents who previously paid a very low bond or who have not paid a bond at all.

To my mind this is unfair even if it has to be done to allow nursing home operators to build additional nursing home beds that are desperately needed.

Because a nursing home that offers extra service beds is able to demand a bond prior to entry, nursing home operators have a strong incentive to seek to have substantial proportions of their nursing home beds classified as “extra service” places.

The effect of inflated bonds and the growth in extra service nursing home beds attracting substantial bonds, is likely to make it much more difficult for a person that doesn’t have the financial means to pay a large bond or pay for extra services.

Mr President, it is difficult not to conclude on current trends, that future access to affordable aged residential care is under a distinct cloud.

Reputable private for-profit and church and charitable not-for-profit aged care service operators are all voicing their concerns.

On the 11th of February 2007 the Prime Minister released “Securing the Future of Aged Care for Australians.”

On the same day the church and charitable aged care provider peak body, Aged and Community Services Australia (ACSA) issued a media release praising the package. Also at the time the private for-profit aged care provider peak body, the Aged Care Association Australia (ACAA) welcomed the announcement of the package.

Just 15 days later ACSA announced that on closer consideration it was far less enamoured with the Prime Minister’s announcement than it first indicated.

Mr Greg Mundy, the CEO of ACSA, on the 26th of February 2007 had this to say, and I quote:

“ we were initially very pleased with the package but as more detail became available on the various offsets and trade offs contained within it, it became clear that the gains were modest and that there were significant negative impacts.”

In other words the “Securing the Future of Aged Care for Australians” aged care policy and funding package had on closer examination turned out to be another Howard Government dud. This sort of performance has become typical of this lazy tricky Government.

By late May this year the Aged Care Industry Council (ACIC), a new peak council of Australia’s aged care providers, had this to say and I quote:

“the prospects of a long term crisis in aged care are so real and so dire that Australia’s two peak aged care bodies Aged and Community Services Australia and the Aged Care Association of Australia have joined forces to form the ACIC to actively campaign for major industry reforms.”

A spokesman for ACIC went on to say:

“The aged care sector is facing an impending crisis as an army of ageing people is marching towards a system that will be incapable with coping with the increasing level of demand.”

So much for the Prime Minister’s “Securing the Future of Aged Care for Australians” package.

Mr President, these criticisms are not coming from fly-by-night opportunistic sources. They are coming from trusted and reputable aged care service providers who have been stand out performers in meeting the aged care needs for Australians for many decades and longer.

ACSA alone represents over 12,000 church, charitable and community-based organisations providing aged care services to over 750,000 Australians.

On the 8th of May 2007, Mr Greg Mundy, CEO of ACSA, had this to say about the Howard Government’s aged care measures in the 2007/08 budget:

“The budget does some useful things but does not secure the future of aged care services, as the government claims.”

In referring to the Government’s “Securing the Future of Aged Care for Australians” package Mr Mundy went on to say:

“The government’s package was never a complete solution to the problems facing aged care…”

Mr President, the “Securing the Future of Aged Care for Australians” package was a dud when it was announced in February this year and as far as the aged care sector is concerned, it is still a dud. The measures in this Bill will not change that fact.

Mr President it has become evident that big business has noticed that the residential care sector is experiencing a capital crisis.

Furthermore, there is a real sign that the big money players have worked out that many aged care facilities are located on valuable real estate.

For asset rich and cash poor aged care operators the potential windfall from the sale of their facilities may understandably be very attractive. It may in fact be their only financial option.

For example, the Macquarie Bank Group has commenced targeting asset rich aged care accommodation services providers as a future hight profit area of business. We know the Macquarie Bank people do not get out of bed unless they see the prospect of platinum grade investment returns.

Since 2005 the Macquarie Bank Group through one of its investments arms, Macquarie Capital Alliance Group (MCAG), has used a subsidiary company—Retirement Care Australia to become Australia’s third largest residential aged care service provider operating in five of the six states of Australia and the both territories. Currently the company operates in the order of 26 aged care facilities with over 2400 beds.

In 2005 MCAG funded the acquisition of aged care facilities previously owned by the Salvation Army. One of the facilities acquired was the Salvation Army Aged Care and Nursing Home and Hostel in the highly sort after residential suburb of Nedlands close to the Perth CBD and on the Swan River.

Already the residents of a dementia hostel on the site, which was partly built with Commonwealth money have been told that they will have to move to enable the company to demolish the hostel to make way for planned higher return redevelopment of the site.

An MCAG briefing to investors in March this year announced that within 2 years Retirement Care Australia had already achieved a 29% return on MCAG initial equity investment. In information for investors MCAG lists the positives of its aged care facilities investments as:

Long term growth driven by population;

Strong barriers to entry and substantial government funding; and

Highly fragmented market with continued sector consolidation opportunities.

What we are seeing is a classic financial play commencing. Macquarie Bank and trust me, there will be others, has recognised that there is an opportunity to acquire valuable aged care residential accommodation assets under distressed circumstances

Once acquired, assets can then be consolidated into high return and low return groups with the low return assets divested.

The ultimate result will be the evolution of a two tiered aged care residential care system. While the system will be still be largely funded by Federal Government aged care subsidies, it will leave many aged care facility operators in an even more perilous financial situation. Not to mention what it will do to those who actually need affordable and accessible care in their older years.

This will see Australia’s universal aged care system disappear.

Once again we will have the Howard Government to thank for this disgraceful legacy.

Carol Brown (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

The incorporated speech read as follows

As the Shadow Minister pointed out in her second reading speech, the Aged Care Amendment (Residential Care) Bill 2007 seeks to amend the Aged Care Act 1997 by introducing a new arrangement for the allocation of subsidies in residential aged care called the Aged Care Funding Instrument or ACFI.

This Bill also removes the current requirement for classifications to expire after 12 months and instead gives providers the option to reappraise residents after 12 months.

The proposed amendments also make it easier for residents to move between aged care homes, by removing the requirement that providers submit a new appraisal.

These amendments are part of broader reforms due to take place in the Aged Care sector in Australia.

They come in the wake of the recommendations resulting from reviews conducted into the pricing arrangements in residential aged care and the resident classification scale.

They are designed to reduce the administrative burden on staff in Aged Care facilities.

The Aged Care Act 1997 saw the introduction of the complex resident classification scale, and increased regulation of the aged care sector.

Aged care providers were required to complete excessive amounts of paperwork for each resident to justify their funding classification.

Generally, these requirements significantly increased the workload of registered nurses working in aged care facilities across Australia, who were responsible for completing all the requisite paperwork.

And of course, with Government funding contingent on the completion of such paperwork, administration became a necessary priority and, sadly, reduced the amount of time available to them to actually care for the aged.

The introduction of the ACFI, which will POTENTIALLY reduce the amount of required paperwork, is a positive step forward for alleviating some of the pressure on staff in aged care facilities around the country.

Any measure that is aimed at providing staff with more time to focus on the needs of residents is, of course, most welcome.

The Bill was referred to the Community Affairs Committee on 29 March this year for review. The Committee tabled its report on the 16 May, and recommended three possible amendments to the bill.

They included:

Recommendation 1.41

“That the bill be amended to omit item 27 repealing the subsection 42-1(4) of the Aged Care Act 1997 and the Department of Health and Ageing monitor the use of this subsection by aged care facilities to ensure that it is used appropriately.”

The bill repeals a provision entitled “High Dependency Care Leave” that allowed more than one residential care subsidy when a resident had to move to another service temporarily, usually a high care facility.

However for a few smaller, often rural facilities, the removal of this provision may have a significant financial impact.

Such facilities should not be forced to unduly suffer simply because other facilities have attempted use this provision inappropriately.

The Government has adopted this recommendation of the Committee, and is moving an amendment which Labor will support. If the Government hadn’t made this amendment, Labor would have done so.

Recommendation 1.44

“That the bill be amended to ensure that determinations made by the Minister under items 28,29 and 31 of the bill are reasonable and a safeguard similar to that in section 44-4, which item 32 repeals, be implemented under the new ACFI to determine the minimum subsidy level.”

The bill proposes that the Minister will be able to determine the lower basic subsidy when a resident is receiving extended care in hospital.

As with any areas that rely on ministerial discretion, providers are nervous that the determination could possibly result in the significant loss of funds.

The Government has also adopted this recommendation of the Committee, and is moving an amendment which Labor will support.

And Finally, Recommendation 1.48

“That a review of the ACFI be undertaken eighteen months after its implementation to assess the implications to all aged care providers and ensure that the stated benefits are achieved”

Labor will amend the bill to require a formal review 18 months after implementation.

This review will be essential in determining the effectiveness or otherwise of the ACFI and its real impact on aged care providers around Australia.

If the Government is serious about getting aged care services right such a review is vital.

Securing the Future

In February this year the Prime Minister launched the Government’s revised aged care package, Securing the Future of Aged Care.

Getting it right in terms of the provision of Aged Care services in Australia has never been so vital.

The Prime Minister himself has acknowledged that the number of people relying on such services is set to rapidly increase.

The number of Australians aged 70 and over will double in the next twenty years.

My home state of Tasmania will most likely become the ‘oldest’ in terms of the population ageing from around the end of the decade onwards.

Indeed, the challenge of ensuring the effective provision of care for our rapidly ageing population is most likely to continue to grow over the next decade and into the future.

As lifestyle changes, and improved health care treatments, and their availability see Australians living well into their 70’s and even 80s more and more Australians will require access to aged care services and in many cases enter into an aged care facilities.

Community expectation is that a wide range of quality services will be available across the country in urban and rural and regional areas, and that our older Australians needs are met—which is only right

After all older Australians have worked hard, paid their taxes and made valuable contributions to their communities and our way of life.

While the Governments new funding package was initially welcomed by aged care service providers, many in the sector became increasingly sceptical as the details of the package emerged.

Indeed many providers became increasingly concerned about the potential to lose funding under the proposed package and the impact it would have particularly on the low-care facilities

Despite a funding “patch” of $92 million over four years in the Budget to fix “unintended consequences” in the Securing the Future package, providers remain concerned about sustainability into the future.

These concerns have been voiced with increasing urgency in my home state of Tasmania, where insufficiencies in the Government’s funding model have already forced the closure of two aged care facilities in southern Tasmania in the last few months.

The funding provided to these facilities by the Federal government barely covered the cost of wages, and ever increasing cost of providing quality care let alone the services that are provided.

These closures come despite the fact that there is a significant waiting list for residential care places in the region.

Many more aged care providers around the state may too face the threat of closure.

And from all accounts things are only likely to get worse for providers in Tasmania under the Governments Securing the Future of Aged Care package.

The President of Aged and Community Services Tasmania (ACST), Ms Susan Parr has said that while the increases in funding under the new package are welcome, she believes that it is still inadequate to deal with the emerging pressures on the aged care system, especially in low-care.

In particular, Ms Parr is most concerned that the Federal Government’s funding levels are “not keeping pace with the cost of care and providers are continually being asked by the Government to do more with less and it’s falling to families and care providers to make up the shortfall.”

There is more and more pressure on aged care providers. You only have to talk to some of the people who work in the industry to understand the level of pressure they are under. Not being able to provide residents with the level of care and attention that they deserve causes considerable stress to nurses, families and others

The nature of the Federal Government funding model for low-care facilities, simply does not makes it harder for smaller facilities with fewer residents financially viable.

Sadly, this proposed package does nothing to address this problem.

Tasmania at around 17% has a comparatively large proportion of small services with 20 or fewer places.

Until this is addressed properly, smaller homes in Tasmania may continue to close, forcing residents to relocate to bigger facilities away from their families, support networks and local communities.

It simply does not make any sense. How can this ensure, as the Prime Minister claims ‘that the increasing number of older Australians now and in the future will be able to access the right level of care, when they need it?’

A recent survey conducted by Taspoll on behalf of the Aged and Community Services Tasmania found that 76.4% of those surveyed in Tasmania did not think that services for the aged were adequately funded.

This finding demonstrates the level of community concern about Aged care services and the significant level of discontent with the Federal Government’s current approach to aged care.

The Government may well say, as it did when announcing in February that it will allocate an additional $1.5 billion in to the aged care sector over the next five years. What really matters though is how that money is going to be spent.

If homes such as the two I have referred to in Tasmania must close their doors, the question must be asked whether the Government has its priorities right or whether it is simply focused on the almighty dollar.

I completely understand the need for efficiencies in the provision of sustainable aged care services in Australia. Like any other business, the continuation of such services depends, in part, on them running efficiently.

But aged care services have many unique features which must also be factored into the Government’s funding model and broader policy on aged care

We must not simply aim to provide an efficient service; we must also ensure that we are providing high quality, caring services that provide for the diverse and complex needs of older Australians.

Part of providing adequate services is taking into account factors such as whether a resident will be forced to move a considerable distance away from their local community and family

If the Government views residents needs and value simply in terms of their funding classification it is likely that that is all that they will become.

Our lives today have become so busy that few of us can care for our aged relatives on a full time basis

This is why many of us are forced to put our trust in residential aged care providers to take care of our family member’s day to day needs.

The Government must play its part in ensuring that older Australians are not only part of an efficient-running sector but that they continue to receive top quality care.

I recommend that the bill with the amendments I outlined earlier be passed but the chamber take note that much more needs to be done by the federal government to ensure the provision of adequate aged care services into the future.

The federal government needs to address the concerns of the aged and community care sector.

Particularly the concerns expressed, by the ACST and the Tasmanian division of the Aged Care Association of Tasmania who together represent over 95% of the sector, in their current campaign.

The ACST, President Ms Susan Parr has noted that, “a system under strain [as our aged care system is] will become a system in collapse”.

We must do more to ensure the provision of quality care for our aged, and go further than the government is willing to with this bill.

Brett Mason (Queensland, Liberal Party, Parliamentary Secretary to the Minister for Health and Ageing) Share this | Link to this | Hansard source

I commend the bill to the Senate.

Question agreed to.

Bill read a second time.