Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

A letter has been received from Senator Fifield:

Pursuant to standing order 75, I propose that the following matter of public importance be submitted to the Senate for discussion:

The crisis in the aged care sector and the impact of the Government's recent funding changes

Is the proposal supported?

More than the number of senators required by the standing orders having risen in their places—

I understand that informal arrangements have been made to allocate specific times to each of the speakers in today’s debate. With the concurrence of the Senate, I shall ask the clerks to set the clock accordingly.

Concetta Fierravanti-Wells (NSW, Liberal Party, Shadow Minister for Ageing) Share this | Link to this | Hansard source

In the 2011-12 federal budget submission the Aged Care Industry Council stated:

A snapshot of the industry at the start of 2011 does not depict a sustainable system: only 40% of residential aged care services are operating in the black ...

Regrettably, in recent years this has been the story of ageing and the aged care sector—a sector that is well and truly in crisis. This is a sector that, despite five years of reviews and inquiries into it, has had broken promises from those on the opposite side. Not only has Labor failed on some of its promises; but it has also failed to take the hard decisions. It has not undertaken the vital structural reform that is necessary for the aged care sector to ensure its sustainability and viability in the future.

I would like to focus my comments today on the Productivity Commission report entitled Caring for older Australians. This is a report that the government sought. This is a report that received 500 submissions and then, when the draft came out, another 500 submissions were provided to the Productivity Commission. Indeed, it was very much awaited with great anticipation by the sector in the hope that the government would actually undertake some reform. We welcome this report. At the time of its referral, we were critical not because of the Productivity Commission but because so many reviews of the sector had already been undertaken, and the sector was very much suffering from review fatigue.

The coalition have been calling for reform in the sector for a long, long time, and we did so at the last federal election. Indeed, we set out our framework for real reform through the first ever four-year aged care provider agreement with the sector, including consideration of the Productivity Commission's report. After the Productivity Commission released its report, it took the government some eight months before it made its announcements. And when those announcements came, they were made with typical fanfare—yes, the spin doctors were well and truly hard at work. Whilst the announcements on 20 April this year, with the headline figure of the $3.7 billion, sounded impressive, the net spend was only $577 million. There were major gaps in the government's response—notably, the huge administrative burden under which the aged care sector currently suffers. Nothing has been done to address the vital changes that are necessary in that area.

But like many of Labor's announcements, the devil is in the detail. Our response has been cautious because we knew that, when we looked at the fine print, that would be where the real problems would be. And of course, there they were—$1.6 billion will be ripped out of the Aged Care Funding Instrument over the next four years. We also have the establishment of another bureaucracy, more bureaucracy, in a sector that is already wallowing in red tape and bureaucracy. We have Labor ignoring the bulk of the Productivity Commission's recommendations. Indeed, we will be lucky if five to eight per cent of what the Productivity Commission recommended will be picked up by the government. There is also the $1.2 billion workforce compact. And, of course, I have traversed the issue of the ACFI changes that are supposedly being made because of allegations of rorting.

We still have not seen those assertions about the sector substantiated by the minister. Only 40 per cent of residential aged-care providers are operating in the black, and now the world's biggest carbon tax providers are justifiably feeling that they have been kicked further. This was a problem of the government's own making. The government, as usual, failed to properly consult with the sector. The minister is hiding behind this confidential process, allegedly saying that these changes were discussed as part of the ACFI monitoring process—but of course that is a confidential process and, as this came out of the blue, aged-care providers were caught very much on the hop.

Taking $1.6 billion out of aged-care funding is going to have a massive impact. This was seen in the report by Leading Aged Services Australia, which says that aged-care providers will face a $750 million revenue shortfall over the next 2½ years, with statistics such as 89 per cent of aged-care facilities facing unrecoverable losses, the average reduction in care funding from between $20,000 and $23,000 per resident and average loss to facilities of around $125,000.

Then we have the establishment of the Aged Care Funding Authority—another bureaucracy which is going to dictate prices, bonds and a whole range of measures which are totally inconsistent with what the Productivity Commission was indicating, although typical of this government: trying to infer that providers were charging the big $2 million bonds. There is only one $2 million bond in this country, and we know because we have been informed about that by the sector in Western Australia.

I would like to make some comments on this workforce compact. The minister says that $1.6 billion will be taken out of ACFI but $1.2 billion is going to be redirected to a so-called workforce compact. Despite the protestations of the minister, these two things are inextricably linked. Currently, providers receive a conditional adjustment payment of 8.75 per cent of their subsidy to meet certain workforce obligations. Under the proposed compact, unless providers have an enterprise-bargaining agreement with their workers they cannot access the funding under the compact.

The providers will still be required to meet the same workforce obligations, but unless they enter into an EBA they will be unable to access the funds. And who, or what, is the default agent for aged-care workers? It is the union. There are three key unions in aged care: United Voice, the Australian Nursing Federation and—of course—the HSU. As a result of the Thomson scandal and the problems with the HSU union membership has clearly suffered considerably, with a dramatic reduction in membership numbers.

Therefore, we are seeing that forcing providers to enter into enterprise-bargaining agreements means that more aged-care workers will be forced to join the union. To me, this looks very much like a dirty little backdoor deal at the expense of aged-care workers to get more people to join the HSU—another backroom deal.

I call on the minister to respond. I have said this publicly on a number of occasions, and Minister Butler has still not said anything. He has not responded to this. It is obvious what he is doing. This is supporting the non-Kathy Jackson side of the HSU equation. For Minister Butler, who obviously has his own ambitions, this is what it is all about.

I say to the minister: this is at the expense of aged-care workers who have already gone through the scandal and who have already seen their precious contributions abused in the way that Mr Thomson, Mr Williamson and others have used them. Now they have you cynically using this as a backdoor way of propping up the union and basically saying to providers: 'If you don't get your workers into the union, then you are not going to access funds.' If the minister really wants to help the sector, why doesn't he give them back the money as a conditional adjustment subsidy like under the system that is already established? No! He is putting conditions on it because that is the real object of this compact. It has nothing to do helping providers; it has everything to do with helping the HSU. It is little wonder that the aged-care sector has absolutely no faith whatsoever in this government and in this minister.

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

I have to say, I give it to Senator Fierravanti-Wells. I said to Senator Collins that I did not think she would be able to tie Craig Thomson to this one, but I was wrong! She drew a bow so long—to think that the workforce compact is there to support workers in the aged-care sector, and all Senator Fierravanti-Wells wants to talk about is some conspiracy theory that she has concocted in her own little world. So what we will see—

Senator Fierravanti-Wells interjecting—

I went—supported by the HACSU actually—and did a Walk A Day in My Shoes day down at an aged-care facility in Tasmania. It is a facility that is very well run; Tasmania has some of the best facilities in Australia, in my view, and I am sure the Deputy President would agree with me. I did a Walk A Day in My Shoes day down there, and it was clear that what the workers really needed was support in terms of their wages and in terms of their conditions. They were on quite low wages, which you often see in this sector—particularly with carers, the majority of whom are female. Sectors that are worked in by a majority of women tend to be on the lower side of the wages equation. As I said, I did not think Senator Fierravanti-Wells would be able to do it, but I take my hat off to her! Conspiracy theories at large!

I rise proudly in today's MPI debate to put on record the Gillard Labor government's strong commitment to aged care. Earlier in the year the Gillard Labor government announced landmark changes to the aged care system which will mean that more people will be able to keep their home, and more people will be able to stay in their home as they receive aged care support. The $3.7 billion Living Longer Living Better aged care package will provide more choice, easier access and better care for older Australians.

Before I go into detail about the Living Longer Living Better package, I want to go back to where this reform agenda for the aged care sector began. The Gillard Labor government knew that after 11 long years of neglect under a coalition government the aged care sector needed reform. That is why in 2010 the government asked the Productivity Commission to develop detailed options for redesigning Australia's aged care system. The government released the final Productivity Commission report Caring for older Australians in August 2011 and since that time, through the Minister for Mental Health and Ageing, Mr Mark Butler, we have been consulting and meeting with the community, with consumer organisations and with the aged care sector. The minister met with over 4,000 older Australians, their families and their carers as well as with industry stakeholders through their peak organisations, the National Aged Care Alliance and the Ageing Consultative Committee. I had the pleasure of hosting a consultation forum in Hobart with Minister Butler. It was extremely well attended, with over 100 people in attendance. They were very impressed by the minister's commitment to reforming the aged care sector.

The consultations found that after 11 years of neglect from those opposite the aged care sector was in need of urgent reform. So, after the Productivity Commission report and the consultation process, we set about building a sustainable aged care system that would stand the test of time. In putting together an aged care package it is vitally important that the sector, unions, carers, consumers and importantly the opposition all jump aboard and support the push for reform. Prior to the Productivity Commission report, there was an inquiry by the Community Affairs References Committee that supported the need for reform, and out of that inquiry came evidence that the sector was under severe pressure and had enormous challenges to meet in the long term. This had come about during the coalition's term in government.

The only way we will deliver long-term, lasting aged care reform is through political goodwill and everyone working together; that is why it is so disappointing to be presented with this motion today. The last thing anyone in the aged care sector wants is for this issue to become a political football—the aged care sector wants its elected representatives to work together and deliver sustainable long-term aged care reform. I would urge those opposite to put away their attempts to score cheap political points and join with the government on working to deliver a sustainable aged care sector. That is what the sector wants. As I said, consumers expect this and providers expect this; they do not want to see their elected representatives playing politics with such a vitally important issue. But that is what the opposition are doing today with their MPI on aged care.

To go to the crux of the opposition's MPI, I am happy to report that since the introduction of the Aged Care Funding Instrument—ACFI—in 2008, government funding per resident has been growing at a rate that is significantly higher than occurred under the previous funding classification scale. Let us look at some of the figures that back up that statement. Between 2006-07 and 2011-12 the growth in aged care subsidies was an average 6.5 per cent per annum above indexation compared with being 2.8 per cent above indexation per annum between 2002-3 and 2006-07 under the previous classification scale. The ACFI changes that came into effect on 1 July 2012 were made to bring the rate of future growth in funding back to the long term trend rate, and it is also worth noting that these changes were made after a period of intense consultation. These changes are not designed to reduce funding for aged care subsidies; in fact, average daily subsidies will increase from $131 to $149 per resident in today's dollars between 2011-12 and 2016-17.

This is such an important issue because our population is ageing. Over the next 40 years the number of Australians over 65 will increase from one in six to one in four and the over-85 population will grow from one in 200 to about one in 20. This will obviously result in increased demand and pressure on our aged care system—that is why we need to ensure the reforms we put in place now are well considered and are sustainable in the long term. That means, whilst it is important we address the challenges currently facing the aged care system, it is also important that the changes be sustainable for the next 20 years. That is why earlier this year the Gillard Labor government announced the $3.7 billion Living Longer Living Better aged care plan to deliver more choice, easier access and better care for older Australians and their families. Our landmark reforms to Australia's aged care system will begin to reshape the system from 1 July this year, and these changes will begin to lay the foundation for longer term reform—the first such reforms in 30 years.

A major part of our aged care reform package is to make it easier for Australians to stay in their homes longer through a major expansion in home care packages. This will be delivered through a $955 million funding investment to expand the number of home care packages from 59,000 to almost 100,000. There will be two new types of home care packages—one for people with intermediate care needs and one for those with more basic care needs, allowing for a flexible response as an individual's needs change. We will also implement new fee arrangements for home care packages to ensure a consistent approach to the way older Australians contribute to the cost of care they receive in their own home.

We want to deliver a long-term sustainable aged care system that can best support our ageing population, so I urge those opposite to stop trying to score political points on the issue of aged care and support the government on the implementation of the Living Longer Living Better package. (Time expired)

Rachel Siewert (WA, Australian Greens) Share this | Link to this | Hansard source

The provision of aged-care services in Australia has been in a steadily expanding crisis in that it has been getting worse for a significant period of time. That is nowhere more so than in my home state of Western Australia, where we have been at the leading edge of that crisis, with plain evidence of the consistent failure of providers to take up the beds offered in the aged-care approvals rounds over the last couple of financial years. The providers in Western Australia are also probably the most vocal around Australia about their concerns with the changes to the Aged Care Financial Instrument.

Along with a number of other people, the Greens cautiously welcomed the reforms that were announced on 20 April this year, I think it was, and we supported them in principle. However, the devil is of course in the detail, and once you start looking through them you see that there are some issues. While changes to the ACFI were mooted at the time, I really do disagree with Senator Brown that there was a lot of consultation around the changes. There was not. They came as a shock. The actual changes were announced very shortly before the beginning of the current financial year, which is one of the many things that providers are very critical of.

I have heard from a number of my constituents in Western Australia who work in aged care and—because I also hold the aged-care portfolio for the Greens—from providers all around Australia, expressing their concerns. They are particularly concerned about the potential impacts on the providers of services for supported and concessional places, Indigenous services, regional services and services to members of the CALD community.

We have asked a series of questions on notice about the ACFI changes, because at the moment we simply do not know. While I can sort of understand where Senator Fierravanti-Wells is coming from on this, it is too early to know, and that is the point. We know there are a lot of changes being made as part of aged-care reform. They are very necessary changes but, in my opinion, they do not go far enough, and we are going to have to go further if we want to have a system that provides high-quality, affordable care. However, today I will focus on the Aged Care Financial Instrument changes.

What the government have said but are not able to significantly back up is that there has been a lot of rorting of the system, with lots of fallacious claims, and the funding for the Aged Care Financial Instrument is being spent too quickly. When the changes to the ACFI were made, the number of claims went up considerably. One of the questions I asked was: what evidence is there of the increase in claims? The government came back with the response that in 2010-11, of the services that were reviewed—because there is an ACFI review program—66 per cent were subject to one or more downgrades of their ACFI claims under section 29-1 of the Aged Care Act; and, in the financial year 2011-12, which had not yet ended when I asked the question, 61 per cent of the program had been subject to one or more downgrades. In that instance, the government are not claiming that there was rorting but that there may have been mistakes made in calculations and so on. When I asked how much those downgrades were worth in terms of savings, the government were not able to tell me. They said:

Residential aged care subsidy funding is calculated on a daily basis and this rate can change a number of times. Attempts to calculate savings would place an unreasonably high demand on resources.

They are saying that there is overclaiming going on under ACFI, so what I want to know is how much they are saving from having addressed that process. If they did the assessment process properly, do they actually need to change the instrument or simply make sure that the claims are accurate? Because that money is being used to provide care to people.

The bottom line here is the standard of care that is being provided in our aged-care facilities—and we know that our aged-care providers are not being paid enough to look after their residents. Talk to any provider in this country; they will all tell you that there needs to more funding provided to support those receiving care, particularly at the high-care end. What is happening because of the changes that were made by the previous government is that people are no longer going into low care but staying in their own homes, which is in fact what they prefer, and only going into high care at the end-of-care stage. That means they are there for shorter periods but the demands on the high-care services are much higher. So it seems to me that we are in the situation where the government cannot say how much is being saved following the downgrading of those claims. What we need to know is: are the items that are being claimed in fact the items that the government changed?

I understand that the government, in response to concerns raised by providers, have said that they are monitoring this. Isn't that the key point? That is why I am saying that this debate has been brought on too early: we do not know what impact the changes to the Aged Care Funding Instrument items are going to have on the provision of care. I know there is a lot of concern that one effect will be less time spent with people on day-to-day living activities. One of the criticisms you constantly hear from providers is that they just do not have enough resources or time to put into helping residents with day-to-day living activities, when those activities are what give their days meaning and joy.

We believe there are a number of principles by which we should be measuring the funding model and for which the government needs to have regard when it is monitoring the changes to ACFI: that is, the time staff can spend with an older person under their care has to be maintained—it cannot go down; that support for daily living activities is retained to enable a life of dignity and maximum independence; and, that the changes which target inefficiencies or rorting—and there is a difference there, a very clear difference—are consistent with the original intent of the ACFI tool and in fact do not create new barriers to delivery of quality care. We also need to make sure that the changes balance up saving for long-term reform against the risk of sustainability of services during the reform transition process.

Some providers are saying that we are in danger of going under because these changes are having such an impact on our services. I understand quite tight monitoring is going on and it needs to be happening rapidly because there is a potential that we will start losing some of the providers out of the system, the very thing the government has acted to address, so that residents in our ageing population are getting high-quality and accessible care. Also, one of the major criticisms of the system is that providers are not building beds and are becoming increasingly non-viable. We need to make sure that aged care providers have confidence in the minimum level of funding they are going to get, so that they can plan properly and participate in the reform process. Also, if they are not confident, they are not going to participate in subsequent rounds of ACAR funding.

It is absolutely critical that we get this process right. The Greens are watching this process very carefully, in particular the changes to ACFI. If the government have made a mistake and have not finessed the ACFI carefully enough, they will need to be big enough to acknowledge that adjustments will need to be made or people will be missing out on care and providers will be going out the back door. My state will be leading that withdrawal because Western Australian providers are the most likely to be non-viable in the near future. This needs to be fixed and careful monitoring needs to be in place so that we will have an aged care system into the future. (Time expired)

Helen Kroger (Victoria, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on this important matter, the crisis in the aged care sector and the impact of the government's recent funding changes, largely because many people in Victoria have raised it with me. Not only is it a matter of concern in Western Australia, as Senator Siewert has just pointed out, but also it is significant in Victoria. I know millions in Australia are focused on the aged care sector and on how they are going to be affected by what is available for their families over the coming years. I would like to support and endorse the comments of Senator Fierravanti-Wells, who has been representing most effectively and speaking out on behalf of the coalition. Also, I would like to acknowledge the despair we feel on this side of the chamber when we know that the aged care sector requires such a big injection of capital funding yet we see such significant financial incompetence and mismanagement of the Treasury coffers. Only in the last few weeks, and indeed over the last couple of months, we have seen the Prime Minister hell-bent on going on a spending spree, knowing full well that she has no capacity to a fulfil her promises.

We know that facts do not get in the way of this Prime Minister, so long as she can influence her own electoral support on the basis of pledges which she knows in her heart she cannot deliver. We have seen her promise billions, for instance in the disability sector with the NDIS, which has bipartisan support. We all support the need for an NDIS, yet we know that the government has not demonstrated how they are going to fund that program.

Likewise, more recently we have seen big statements made about commitments over the next three years and about education funding which will not start until 2014. We know that this government has no capacity to deliver on that education funding. That is why it is with great despair that I rise to talk about the aged care sector today—because so much money has been thrown up against the wall, money which could have been invested more wisely, certainly in the aged care sector.

We know this sector is going to require greater resources because most of us visit aged care residential facilities. We know that, with the ageing of the population and improved medical procedures, technology and advances, we are all living longer and this ultimately will strain the aged care sector.

I note Senator Brown's observations about the reprioritising of the aged-care sector, with greater emphasis on home care packages, which are also important. But there is one fact that you cannot get away from, and that is, when people finally go into aged-care residential service facilities, they require a greater level of support. It is that greater level of support that is of critical concern to those in the aged-care sector.

Only a couple of weeks ago, I was visited by and had a meeting with Ms Kate Hough, who is the Victorian CEO of Leading Age Services Australia. In that discussion, she clearly demonstrated why they have such concerns with this new funding model, because it will lead, without doubt, to a $750 million black hole in the provision of aged-care services. This is not me using this as a political football. This is me referring to independent financial analysis that clearly demonstrates this. The financial analysis of the federal government's Aged Care Funding Instrument, ACFI, shows that losses associated with these changes will rise to over $350 million by the year 2014. Whilst it is reasonable to say, 'Crikey, that sounds a lot,' what does that mean for every resident? What does it equate to on an individual basis? When you work out the numbers, it works out to between $20,000 and $23,000 per year per resident, which amounts to some $56 to $63 per day per resident. So we are talking about a significant amount of money that will affect the on-the-ground delivery of service and support to these people.

This really points out just how out of touch the Prime Minister is in thinking that this will not effectively hurt those on the ground. According to this independent analysis, the average loss per aged-care facility will amount to some $125,000 per year. Some facilities in Melbourne could face losses of up to $560,000 per year. Those facilities that are on a smaller scale, which do not have the opportunity to explore and exploit economies of scale, where they may not be a provider of more than one residential facility, will face greater losses, particularly those in rural and regional Australia.

Noting the time, I will just quote one thing from a media release that was issued by Mr Gerard Mansour, of Leading Age Services Australia:

To ensure a viable aged care industry, we’re strongly advocating a move away from a funding model which is artificially constrained by the Federal Government’s budgetary limitations, to one which genuinely matches care funds to people’s needs.

(Time expired)

Ursula Stephens (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I rise to make a contribution in this matter of public importance discussion about aged care. When my dad was alive and was living here in Canberra, he was able to live in his home because of the dedication and care of the staff at Goodwin Aged Care Services. They supported him through an aged-care package. I was a bit concerned, when Senator Kroger was just speaking, that there seemed to be a presumption that people inevitably will have to move into an aged-care facility. That is not true. The dilemma facing most of us baby boomers is how we ensure responsible, compassionate, even reliable care for our ageing parents at home. Our expectation—and I think it is a growing expectation—is that our aged-care providers will work to improve the quality of life of our elderly folk who, just like Paddy Clarke, want to remain living in their homes, even though they require some assistance.

The community aged-care packages are a great way to do professional assessment of our elderly, who may require just simple services, or they may require a quite complex range of services and levels of support to be living independently, or they may need to have some respite care. But those kinds of issues are so important for the dignity of our ageing population. All of us will confront this, some of us sooner than others. We are a growing ageing population who will be much healthier in our old age than our parents or grandparents ever were. We are also living longer, meaning we will be challenged by a range of illnesses that affect the elderly much more.

The fundamental problem that we have is the fundamental problem that the Productivity Commission addressed in its report released in 2011, and that is that the major components of aged care need to have very separate policy settings—community aged-care packages; support for our carers; support for our aged-care providers, to make sure that there is an investment in the aged-care industry; and support for our aged-care workers, who are caring for the most frail and the most vulnerable in our society and being paid a pittance. There is a huge commitment to increasing the training and support and remuneration for our aged-care workers.

It was a little bit disingenuous for Senator Fierravanti-Wells to come in today and suggest that the changes to the Aged Care Funding Instrument were all about trying to support union numbers. It seemed a little beneath Senator Fierravanti-Wells, who, as the shadow spokesperson for ageing, knows much more than that. But we in the government are very aware of the issues and we have all heard the stories. Senator Siewert and Senator Kroger mentioned that aged-care providers have raised concerns about the Aged Care Funding Instrument, ACFI.

Those changes that were announced in June 2012 were quite important but there were two specific issues, ones that had been raised with many of us, that really needed to be addressed. The first one is about the issue of returning the ACFI subsidy growth to long-term trends and the second is the ACFI redirection changes that are being made as part of the Living Longer. Living Better aged-care reform package. If you have not actually had the opportunity to read this document, which I am holding, and to read about the comprehensive nature and approach that is provided in this response to the recommendations of the Productivity Commission, then I really do commend it to you because it lays out in black and white — and in colour — what the challenges are for us all and the way in which we, as responsible governments over a 10-year period, can actually build a robust and sustainable aged-care system.

Going to the real issues that Senator Fierravanti-Wells and Senator Kroger raised, first of all there is a bit of a myth about the fact that aged-care funding has been cut. That in itself is a nonsense. In late 2011 the government actually increased its residential care estimates by $2.3 billion for the period between 2011-12 and 2014-15 and that was actually reflecting the anticipated growth in aged-care services demand. Since that time the department has actually been working with the aged-care sector very closely on options about how to bring that future growth back to trend. So the notion that there should be exponential growth of investment in the system, which would then be absolutely unsustainable, is being moderated by a conversation with the aged-care industry that asks: how best do we manage the aged-care industry to manage the growth that is confronting us? I think that is a very important issue. In fact, the ACFI monitoring group has been meeting quite regularly. That group comprises representatives of the aged-care sector as well as consumer representatives, gerontologists and clinicians working in this space, and peak bodies being challenged by the practicalities of our ageing population. So the changes that were announced in June are addressing that fundamental issue of trying to bring the rate of future growth in funding back to the long-term trend rate and to redirect funding into other aged-care reforms. Those reforms are not intended to reduce funding for aged-care subsidies. They are being used to fund the shifting nature of comprehensive aged-care reform.

I was a bit perplexed about some concerns that have been raised here, that some people in aged care might lose some services that they currently have and that some people in the same circumstances might be treated differently. That would be a horrific scenario, one that we would not want people to believe could actually be happening, so let me put this on the record very clearly. Under this very comprehensive package—and, as I said, this document is amazing and a great read and outlines the challenges and the policy responses with great case studies that help to actually articulate what is going on—different people in aged-care services definitely are not going to be treated differently and the changes will not reduce the services or care for those residents. Providers are actually going to be required to continue to deliver services based on the care needs of the residents and they will need to maintain a standard of care which is expected under the aged-care standards.

Much, much more can be said about what is going on. This changing environment is very challenging. It is quite difficult to navigate the aged-care system and that is one of the challenges for people who are trying to organise the best aged-care packages for their elderly relatives or family. But let me say about the issue that we have here, about what is included in ACFI—and I know that is something that has been raised with me—that ACFI funding is provided to support the care needs of residents. It is not the only source of funding that aged-care providers have, and let us not forget that. Providers also receive revenue for accommodation from the resident, either as a bond or through charges, and from the government accommodation supplement and from revenue from hostel services, which go to the basic daily fee. The government is not reducing funding for residential care. In fact, the government is increasing funding for residential care from $8.86 billion in 2011-12 to $10.9 billion in 2015-16. Under those reforms aged-care subsidies are projected to grow by 2.7 per cent, which is above indexation.

Let us consider the issue of the changes in our aged-care sector. I acknowledge what Senator Siewert said: aged-care providers, particularly those smaller aged-care providers who cannot deliver economies of scale, will be quite challenged in the overall environment of caring for our elderly in our community. But that is not to do with the ACFI formula; it is to do with economies of scale. It is the communities that are going to have to respond. If we want our elderly to age in our communities, then we have to find the ways to support them. It is not a result of the ACFI formula.

Dean Smith (WA, Liberal Party) Share this | Link to this | Hansard source

I rise this afternoon to also make a contribution to the very strong suggestions that we have heard here today that Australia's aged--care system is in fact undergoing—and I would like to quote Senator Siewert—a steadily increasing state of crisis. From one of the earlier speakers we heard the suggestion that what this government is seeking to correct is 11 years of neglect under the former Howard coalition government. That is a comment that is simply not true. As many senators would know, I was fortunate to work in this specific policy area during the Howard government and I know its record is a proud one. The Howard government provided more money, more beds and a much greater degree of transparency in relation to aged--care services. The Howard government introduced legislative standards to make sure elderly Australians were receiving quality care.

It is all very well for the Labor Party to pick and sneer, but the fact remains that enshrining standards of care in legislation was something John Howard did. It did not occur to Gough Whitlam, Bob Hawke or Paul Keating. Future reform will not take place under the Julia Gillard Labor government.

I would also like to reflect on the comments made by my Western Australian colleague Senator Siewert, who was quite correct in saying that the devil is in fact in the detail in regard to this government's aged care reforms. She went on to say that the aged care industry has been in a steadily rising state of crisis, and that is a fact that has been shared with me by many Western Australian aged care providers. She also quite revealingly made the suggestion that the earlier cautious endorsement by the Australian Greens of the government's aged care package may well have been misplaced. I do, however, disagree with Senator Siewert when she suggests that this debate taking place today may be happening too prematurely. That is simply not the case. Providers are telling me and other coalition senators that action must be taken now, that they want the focus of this government to be on ensuring that a high quality standard of care is provided to older Australians.

We are agreed, though, as a Senate on a number of important things—the importance of aged care in our country as the population ages. We are agreed that we need to have a sustainable system for delivering aged care. We also agree that the opportunity to provide care for older Australians in their homes is a good one. We also agree that dignity of ageing people should be at the centre of all of our policy considerations. We also agree that aged care should be above politics. But on each of these points I am afraid to say that Labor is failing us and failing older Australians.

This government's aged care reforms are among the most cynical actions this government has taken to date. This is really quite a statement given its performance across many other policy areas. I have spoken in this place before about the sneaky way that the Living Longer, Living Better packages were sold to aged care providers and to older Australians. The government simply hoped that everyone would be fooled by the press releases and glossy brochures, laid out in black and white and in colour, and not notice what the Gillard government was doing: taking $500 million out of an industry that takes care of some of our most vulnerable fellow Australians. Those working in the aged care sector, I am confident, were probably too busy emptying bedpans, helping elderly patients shower and preparing meals to read and pay attention to the fine print. That is something this Labor government wilfully and shamefully took full advantage of. The knowledge that this is the case simply compounds the feeling of betrayal that many aged care providers with whom I have spoken feel about what this government has done and continues to do.

It is worth noting the comments of the Aged Care Industry Council in its 2011-12 budget submission. It is a quite revealing and unfortunately accurate statement. It said:

A snapshot of the industry at the start of 2011 does not depict a sustainable system: only 40% of residential aged care services are operating in the black …

What a powerful and accurate assessment of the state of Australia's aged care industry.

The nature of Australia's ageing population means that demand for aged care services will grow exponentially in the coming decades. Over one million older Australians currently receive aged care services, so it is already a significant challenge. However, according to the Productivity Commission, come 2050 over 3.5 million Australians are expected to require aged care services each year. The means we need to be building more facilities and attracting greater numbers of aged care staff. This is a time when we need to be doing more, not less, to support ageing Australians. Yet what the government has announced it will do is just the opposite. It will stall investment so that new facilities are not built and do nothing to remove disincentives for people to work in aged care.

Ten days ago I visited Craigcare, an aged care facility in Albany, Western Australia. I went there with the shadow minister for seniors, the Hon. Bronwyn Bishop, and the hardworking Rick Wilson, the Liberal Party candidate in the seat of O'Connor. We went there because Craigcare, its management and staff are deeply concerned about what the government's funding cuts will mean for them. Let me use this opportunity to pay tribute to John Gillett and the fantastic staff that I met at the Craigcare aged care home. It was great to see young people choosing a career in aged care and great to see the dedication and professionalism of people working in the aged care system.

Albany is not a wealthy community. The residents at Craigcare, a facility which contains a mix of low- and high-level care residents along with a secure dementia facility, are not wealthy. They demand nothing more than that which all Australians have a right to expect: the chance to live out their autumn years in relative comfort and with dignity. Yet at a time of life when people need more certainty than ever, the Gillard government is giving them the opposite. Residents are concerned about being able to pay their way and the cuts now being imposed are making aged care unviable. The Labor senator who spoke before me is quite right: the viability of small regional aged care homes is at risk because of the government's policy.

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

I think there is a degree of unanimity among all participants in this debate, and that is that the longevity tsunami that was referred to earlier is coming towards the Australian community. We are all living longer. We all live much longer in retirement. In fact, some of us will live as long in retirement as we do in the workforce. So it is very, very clear that there is an issue. It is also very clear that whilst we may be living a lot longer there is no real evidence that we are living any longer without disability. In fact we are probably living a lot longer with disability than we have in the past.

I really need to take issue with Senator Fierravanti-Wells's comment that it could all be solved if we did not have an EBA. The reality is that this is a growing sector of the economy. It employs many thousands of short-term casual employees and will employ many thousands more. They do incredibly difficult work in circumstances where they may visit people in a house and work for two hours giving a shower or they may work casual hours in a nursing home on a weekend delivering showers or critical needs for someone in that facility.

It is absolutely disgraceful to say that they should not have the minimum protections of the industrial relations regime that we operate under. What sort of an employer seeks to have short-term casual employees on less than the minimum award provisions? I think Senator Fierravanti-Wells's ideological bent was well to the fore in her diatribe about Minister Butler attempting to put in place some sort of protective regime for unions. The simple fact is that workers in Australia are best suited to collective bargaining and best protected by an EBA. Most reputable employers recognise that and pursue that as a fundamentally efficient way of delivering the outcomes that they seek—that is, good quality care by committed, caring people delivering an excellent result for the recipients, our aged care people.

The reality is that a number of changes have been made. As Senator Stephen said, that is not to diminish the amount of funding in the area but it is actually to return the rate of growth of funding to trend. It is important to realise that research by the leading body for aged care services, Aged and Community Services Australia, shows that providers are facing a revenue reduction of several million dollars over the next 2½ years. Points made in rebuttal of that by the minister's office are: (1) this research is based on some assumptions which are disputable in that residents would be replaced by others with exactly the same needs whereas data consistently shows that new residents may have different needs; (2) the small sample is representative of the entire sector which is questionable; and (3) nearly 25 per cent of residents will be reappraised each year whereas the figure is under two per cent. There is some dispute about the report which has been widely quoted by members of the opposition to say Labor is doing a terrible thing in respect of this sector.

The reality is that we are about putting in place a stronger aged care system with a $3.7 billion package entitled Living Longer. Living Better to look at more choice, easier access and better care for older Australians and their families. What aged care recipient would not want that? I finish on the issue with which I started. The opposition always goes back to industrial relations. But if one in 20 are going to work in aged care then why wouldn't those one in 20 Australian workers be entitled to a fair and reasonable return on their investment in looking after some of the most valuable people in our community, aged care recipients?

Mark Bishop (WA, Australian Labor Party) Share this | Link to this | Hansard source

Order! The time for the discussion has expired.