Bills Digest no. 85 2005–06
Aged Care Amendment (2005 Measures No.
1) Bill 2005
This Digest was prepared for debate. It reflects the legislation as
introduced and does not canvass subsequent amendments. This Digest
does not have any official legal status. Other sources should be
consulted to determine the subsequent official status of the
Contact Officer & Copyright Details
Aged Care Amendment
(2005 Measures No. 1) Bill
Date introduced: 8 December 2005
House: House of
Commencement: The Bill s formal provisions commence on Royal
Assent. The substantive provisions commence six months after Royal
Assent unless commenced earlier by proclamation.
The Aged Care Amendment (2005 Measures No. 1) Bill 2005 (the No.
1 Bill) will enable the strengthening of existing prudential
requirements related to accommodation bonds especially in relation
to liquidity, record keeping and disclosure. These new prudential
requirements will be developed over time and will be subject to
The No. 1 Bill is part of a suite of three Bills. The other
Bills are the Aged Care (Bond Security) Bill 2005 (the Bond
Security Bill) and the Aged Care (Bond Security) Levy Bill 2005
(the Levy Bill). An overview the purpose of the package of Bills is
found in the Bills Digest for the Bond Security Bill.
This Digest should be read in conjunction with Bills Digests
Nos. 83 and 84 of 2005 06.
For background information on aged care in Australia and a
summary of the Bills financial implications, see the Digest for the
Bond Security Bill (Bills Digest No. 83, 2005 06).
Flexible care services are those that are provided outside the
normal residential and community care system. One example of this
is that in some rural/regional areas there are Multipurpose
Services that provide care more 'flexibly' because some aged and
health care services may not be viable in small communities if
provided separately. Economies of scale can often be achieved in
this way. Residential aged care services are essentially beds (and
care) in residential aged care facilities, formerly called nursing
homes and hostels.
The purpose of much of Schedule 1 is to ensure
that residents of flexible care services are afforded the same
protections as residents in residential aged care services.
Item 1 requires approved providers of flexible
care services to comply with not only with the User Rights
Principles(1) (the current requirement) but also with
Division 57 of the Aged Care Act 1997 ( the Aged Care Act
). Division 57 deals with rules about accommodation bonds that must
be complied with by approved providers.
Items 2-49 amend specific provisions in
Division 57 so that particular rules about accommodation bonds
apply to approved providers of flexible care services residents in
as well as to approved providers of residential aged care services.
For instance, items 13-17 apply rules about the
content of accommodation bond agreements to approved providers of
flexible care services (currently these rules only apply to
approved providers of residential aged care). Items
40-43 apply the rules about refunding accommodation bond
balances to approved providers of flexible care services.
Item 50 amends existing section 66-1 of the
Aged Care Act so that the charging of accommodation bonds or the
accrual of accommodation charges by either a provider of
residential aged care services or a provider of flexible care
services is prohibited if that provider has not complied with its
responsibilities under Parts 4.1, 4.2 or 4.3 of the Act. These
Parts of the Act relate to quality of care, user rights and
The amendments in Schedule 2 mean that rules
applying to approved providers of residential care services and
flexible care services that hold accommodation bonds will also
apply to approved providers that hold entry contributions paid
before 1 October 1997. The Explanatory Memorandum explains:
This is because entry contributions paid prior to
1 October 1997 are akin to accommodation bonds and should be
subject to the same prudential regulation. Residents who have paid
entry contributions should also be afforded the same protections as
residents who have paid accommodation bonds.(2)
Item 1 of Schedule 3 provides
that approved providers will comply with prudential requirements if
they comply with new Prudential Standards that will be made under
proposed new section 57-4. Proposed new
subsection 57-4(1) provides that the User Rights
Principles may set out Prudential Standards. It then defines
prudential standards as standards providing for the protection of
accommodation bond balances and entry contribution balances of care
recipients, sound financial management of approved providers and
the provision of financial management information. Examples of
matters that may be dealt with by the Prudential Standards include
corporate governance requirements, financial reporting
requirements, insurance requirements and information retention and
provision requirements (proposed new subsection
It is intended that initially there will be three standards; a
liquidity standard, records standards and information standards.
The implementation of the last two standards will assist the
operation of the guarantee and recoupment schemes provided for
under the Bond Security and Levy Bills. For instance, the records
standard will mean that approved providers holding bonds will
establish and maintain independently audited accommodation bond
Items 2 and 3 repeal
provisions that will become redundant with the enactment of the
amendments made by item 1.
Items 1-6 of Schedule 4 deal
with timeframes and notice periods for the refund of accommodation
bond balances when, for example, care recipients die or move to
other care. For instance, at present if a care recipient dies an
approved provider must refund any bond balance within 60 days of
being shown a grant of probate or letters of administration. The
amendments will reduce the period to 14 days (item
1). In some other circumstances the notice period will be
extended. For example, at present if a care recipient moves from
one residential care service to another, they must be refunded
their bond balance on the date they leave the first service if they
have given their provider at least seven days notice. Item
2 stipulates that at least 14 days notice be given.
Item 7 provides that where an approved provider
refunds an accommodation bond balance, they must calculate the
interest to be paid in accordance with the User Rights Principles.
Further, payment must be made to the person specified in those
Principles. The Explanatory Memorandum explains that:
This proposed amendment enables a current inequity
to be addressed. Currently residents can be charged interest on the
accommodation bond to be paid to an approved provider from the day
the resident enters a service until the day that the bond is paid,
yet approved providers are not required to pay interest to a
resident from the day the resident leaves the service until the day
the bond balance is repaid.(3)
Item 1 of Schedule 5 inserts
proposed new section 9-3A into the Aged Care Act.
This new section will enable the Secretary of the Department to
require an approved provider to provide information including
information relating to accommodation bonds, accommodation bond
balances, and entry contributions. This information must be
provided within 28 days after the request is made or such shorter
time as is specified in the request. A note alerts the reader to
the fact that sanctions are available under Part 4.4 of the Act if
an approved provider fails to comply. Further, if the approved
provider is a corporation, failure to comply with the request
within the specified period is an offence subject to a maximum
penalty of 30 penalty units ($3300).
Item 2 adds an additional exception to the
general prohibition on approved providers disclosing personal
information (4) relating to a person for whom they
provide aged care services. This will enable approved providers to
provide personal information relating to accommodation bonds and
entry contributions etc to the Secretary.
The amendments in Schedule 5 are an integral
part of the proposed scheme for guaranteeing payment of all
outstanding bond balances to aged care recipients and enabling the
Commonwealth to recoup its costs as provided for in the Bond
Security Bill and the Levy Bill. They enable the Commonwealth to
require defaulting approved providers to provide information about
outstanding bond balances so that affected aged care recipients can
be recompensed by the Commonwealth. They also provide a basis on
which the Commonwealth can recoup this money via a levy or
Item 1 of Schedule 6 changes
the latest date for tabling the annual report on the operation of
the Aged Care Act from 30 September to 30 November.
The Explanatory Memorandum explains that:
As part of the proposed new Prudential Standards
to be made under the User Rights Principles, approved providers
will be required to report certain information about compliance
with the new Standards to the Secretary by 31 October each year. By
changing the date for tabling of the annual report from 30
September to 30 November this will enable analysis of information
provided by approved providers to be undertaken and for relevant
results to be included in the annual report.(5)
Item 1 of Schedule 7 contains
the standard regulation-making provision and also specifically
allows regulations to be made governing transitional
- The User Rights Principles are part of the general
legislative framework that covers the Commonwealth's role in aged
care. That framework includes the Aged Care Act
1997 and the Aged Care Principles that are made
under that Act. There are various sets of principles including
those relating to User Rights ie the rights of older people using
services provided under the Aged Care Act. For more detail
see the following link -
- Explanatory Memorandum, p. 5.
- Explanatory Memorandum, p. 8.
- The Aged Care Act defines personal information as information
or an opinion (including information or an opinion forming part of
a database), whether true or not, and whether recorded in a
material form or not, about an individual whose identity is
apparent, or can reasonably be ascertained, from the information or
- Explanatory Memorandum, p. 10.
Law and Bills Digest Section
Social Policy Section
31 January 2006
Bills Digest Service
Information and Research Services
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Australian Parliament using information available at the time of
production. The views expressed do not reflect an official position
of the Information and Research Service, nor do they constitute
professional legal opinion.
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members of the public.
© Commonwealth of Australia 2005
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Published by the Parliamentary Library, 2005.
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