Bills Digest no. 56 2008–09
Aged Care Amendment (2008 Measures No. 2) Bill 2008
WARNING:
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
Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date introduced:
16 October 2008
House: House of Representatives
Portfolio: Health and Ageing
Commencement:
1 January
2009
Links: The
relevant links to the Bill, Explanatory Memorandum and second
reading speech can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/.
When Bills have been passed they can be found at ComLaw, which is
at http://www.comlaw.gov.au/.
The Bill seeks
to amend the Aged Care Act 1997 (the Act) and the Bond
Security Act 2006 (the Bond Security Act) to
strengthen the aged care regulatory framework so that it reflects
the current structure and nature of the aged care industry.[1]
Aged care in Australia is largely regulated by
the Commonwealth government, which funds the provision of aged care
services through subsidies of the costs of residential care, as
well as capital grants.[2]
However, State, Territory and local government
regulation also affect the provision of aged care services through
regulations about matters including:
- building planning and design
- occupational health and safety
- food preparation, and
- consumer protection.[3]
This Digest focuses on the Commonwealth
Government s role in regulating aged care.[4]
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The Act is the main legislation relating to
the regulation of aged care in Australia.[5]
The Act replaced provisions in the
National Health Act 1953 and the Aged or Disabled
Persons Care Act 1954, which had previously provided for the
administration of hostels and nursing homes. The Act changed the
regulatory framework, as well as some financial arrangements.
The purpose of the Act was to:
- enable the Commonwealth government to reduce its capital
funding involvement in the aged care industry
- align the classification and funding arrangements for nursing
homes and hostels with a view to improving the standard of
accommodation and care, particularly in respect of nursing
homes
- place a greater onus on older people with higher income and
assets to make a greater contribution to the cost of their care.
This is achieved, at least to a large extent, by:
- imposing income testing on all people who receive residential
care, and
- allowing residential care services to negotiate with care
recipients for the payment of accommodation bonds by
recipients
- establish an accreditation system for residential care
facilities.[6]
The Act s objectives are also reflected in its
23
Aged Care Principles, which include:
- Approved Provider Principles
- User Rights Principles
- Accountability Principles, and
- Sanctions Principles.[7]
The main areas of regulation by the Government
are:
- allocation of aged care places to approved providers of aged
care (approved providers)
- assessing client eligibility to access those places
- funding services
- setting prices, and
- quality control.[8]
Every year, the Government allocates new
places to broadly match the target population,[9] attempting to balance the
provision of aged care between:
- metropolitan, regional, rural and remote areas within each
State and Territory, and
- needs for different levels of aged care.[10]
Once places are allocated, the Government has
an open tender to allocate those places to approved providers, who
then have two years to make those places operational. According to
the Productivity Commission, approved providers are also expected
to ensure that a certain percentage of the places allocated to them
are accessible to residents who cannot afford to pay an
accommodation bond.[11]
The Government funds State and Territory
governments to operate Aged Care Assessment Teams (ACATs),[12] staffed by health
professionals, to assess the aged care needs of frail aged people
and determine most appropriate care based on legislation and
guidelines.[13]
Residential aged care is largely publicly
funded.[14]
In other words, the Government provides most
of the recurrent funding (with State and Territory governments
contributing to the overall costs) and user contributions (by way
of residents fees and charges) providing the rest of the
revenue.[15]
Government funding of residential aged care is
mainly determined by residents assessed care needs, using the Aged
Care Funding Instrument (ACFI).[16]
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The Government regulates the amount that aged
care recipients pay for subsidised aged care.[17]
According to the Productivity Commission:
As of 1 July 2008, the three main daily user
fees and charges for new non-pensioner residents receiving
standard care in residential facilities that are 2008 compliant are
the:
- basic daily care fee, up to $32.05 a day
- asset tested accommodation charge, for high care residents with
assets worth more than $34 500, the rate increasing from zero to
$26.88 a day when assets exceed $90 410.40
- income tested fee, with residents being charged up to $56.57 a
day or the cost of their care, whichever is the lesser.[18]
Aged care recipients may also have to pay
accommodation bonds to enter low care or extra service residential
facilities.[19]
Although accommodation bond amounts are not capped, approved
providers cannot levy an amount leaving an aged care recipient with
assets worth less than the threshold amount.[20] When an aged care recipient leaves an
aged care facility, the balance of the bond amount is refundable to
that recipient.[21]
The
Quality of Care Principles 1997[22] set out
standards relating to the quality of care in aged care facilities,
the compliance with which is assessed by the Aged Care Standards
and Accreditation Agency (the Agency).[23]
Non-compliance with standards results in
sanctions imposed on the non-complying approved provider, which may
include suspension of funding and revocation of approval.[24]
The Office of Aged Care Quality and Compliance
(OACQC) investigates aged care services funded by the Government
under the Act and oversees the following:[25]
- the Aged Care Complaints Investigation Scheme;
- police checks for relevant aged care staff and volunteers in
Australian Government-subsidised aged care services;[26]
- compulsory reporting of sexual and serious physical assault in
residential aged care, with protections for approved providers and
staff who report;
- compliance and sanctions action; and
- prudential regulation.
In 2007, there were around 2872 residential
aged care providers in Australia.[27] Of these, approximately 61.4 per cent are private
not-for-profit, 26.9 per cent are private for-profit and the
remaining are government providers (11.75 per cent).[28]
The aged care industry has undergone
significant change since the Act was enacted. A recent report has
noted that the number of people receiving subsidised care has
doubled in that time.[29] In addition, the nature of the aged care industry has
changed significantly.
The current legislative framework reflects the
cottage industry nature of the aged care industry that was present
when the Act was introduced.[30] Since then, the trend in the industry has been a
separation between the owner and operator of aged care
venues.[31] In
addition, the industry is moving towards a campus model of care,
whereby a broad range of services are being provided on the one
site or by the one facility.[32]
The Australian population is ageing.[33] Currently, older
Australians (aged 65 years and over) make up 13.4 per cent of the
population (2.8 million) or one in seven Australians.[34] By 2050, the
Productivity Commission estimates that one in four Australians will
be aged 65 years or over.[35]
As individuals age, some form of assistance
with personal and everyday activities is usually required.[36] The latest available
data indicates that 32 per cent of those aged between 65-74 years
and 86 per cent of those aged 85 years and over require some form
of assistance.[37]
Consequently, there has been an increase in the numbers of people
seeking to access aged care.
A further trend relating to an increase in
numbers of people seeking to access aged care is that family
structures have changed, whereby the family unit may no longer be a
primary source of aged care for increasing numbers of people, as it
has been in the past.
Another emerging trend is that people are
entering residential aged care requiring a higher level of
care.[38]
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Many of the provisions contained in the Bill
were announced by the Minister for Ageing on 22 March 2008 as part
of the
Better protection for frail aged Australians package (the
reform package).[39] The reform package, to be administered by the
Department of Health and Ageing (DOHA), sets out a range of
measures to improve quality and to protect frail aged people. These
measures include:
- increased visits of aged care facilities by the Agency,[40] an independent
watchdog
- increasing the powers of the Agency
- expanding the requirement for all aged care employees to
undergo police checks, irrespective of whether they have supervised
or unsupervised access to residents[41]
- requiring investigation staff to check on both residents and
paperwork in a facility, and
- reviewing the Act to fill in gaps in the legislation, as well
as improve quality of aged care.[42]
The reform package is consistent with the
Government s pre-election commitment in relation to aged
care.[43]
The Bill has been referred to the
Senate Community Affairs Committee (the Committee) for inquiry
and report by 20 November 2008.[44]
The Committee has called for submissions by 5
November 2008.
Although
the Government has stated that it did consult with stakeholders in
relation to the Bill,[45] there has been limited public commentary on the Bill
which perhaps reflects the relatively uncontroversial nature of the
Bill.
However,
it is noted that the Bill has been criticised for focusing too much
on compliance, as opposed to alleviating the already overburdened
regulatory system on the aged care industry , which continues to be
insufficiently funded.[46]
Similar
sentiments about the current aged care industry have been reflected
in research showing that many aged care providers have been
incurring unsustainable operating losses and could hardly afford to
keep existing facilities running.[47] Such research indicates that high consumer demand
for aged care facilities is not being matched by investor interest
due to low returns, with recommendations for a review of funding
and regulatory arrangements so as to boost investment:
The regulatory and pricing framework now
threatens the viability of the aged care sector by suppressing
incentives to invest in modern aged care infrastructure. This
decline in investment severely limits choice for consumers of aged
care services.[48]
Although there has been little public comment
on the Bill, it had been previously noted that there was a need for
consistent regulation of the sector as well as the capacity to be
flexible and responsive.[49]
In a recent survey of the aged care sector,
Professor Hogan (who completed a review of the aged care sector in
2004) noted that:
it is imperative that the review of our aged
care regulatory and funding arrangements are revisited. In
particular, careful scrutiny must be given to those aspects of
regulation which limit consumer choice and investment in modern
infrastructure.[50]
It could be argued that this Bill does
increase the regulation of the aged care industry, however, the
proposed amendments do not appear to limit consumer choice.
Equally, it could be argued that the proposed amendments are
necessary for accountability of the aged care sector as the current
corporate structures do not reflect what is articulated in the
Act.
Although outside the scope of the Bills
Digest, the over-regulation of the aged care sector has been a
concern for some time. The case for less regulation was made in the
Hogan Review in 2004 and most recently in the Productivity
Commission s report on aged care services (2008). The Grant
Thornton Aged Care Survey (2008) found that the regulatory and
pricing framework decreased the viability of the sector. Although
this Bill addresses some of the inconsistencies in the Act, it does
nothing to address the fundamental concern of over-regulation and
the need for regulatory reform.
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According to the Government, there would be no
financial implications on the Budget.[51] However, it is expected that there
would be additional financial burdens on approved providers in
complying with their new and amended obligations under the Act.
Additional and amended obligations proposed by the Bill may also
affect investor confidence in the aged care industry.[52]
It is expected that there would be some
additional regulatory burdens on current approved providers,
especially in relation to matters such as additional police checks
and additional lump sum payment[53] obligations.
Until now, those approved providers, whose
approved provider status cease (former approved providers), have
been excluded from the regulatory regime. Proposed amendments in
the Bill would include those former approved providers in the aged
care regulatory regime, in so far as their former provision of aged
care services has ongoing implications, for example, obligations
under the Bond Security Act.
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As the Explanatory Memorandum provides a
comprehensive explanation of the proposed amendments, this Digest
will focus on the major themes rather than the detail of individual
provisions in Schedule 1 Part 1 of the Bill.[54]
As mentioned earlier, when the Act was
initially enacted, the typical business structure was one where the
owner of the aged care facility was also the operator of those
facilities and the regulatory regime in the Act reflects that type
of structure.[55]
On the other hand, the owner and operator of a facility now have
distinct and, at times, separate roles and responsibilities. In
addition, there has reportedly been an increase in:
- the level of investment into aged care services by large
corporate entities, and
- aged care services being combined with other kinds of services
within the same facility.[56]
Consequently, the aged care regulatory regime
provided for in the Act does not adequately address these
changes.
The Bill proposes amendments to the Act to
address the different business structures currently involved in
providing aged care services, to improve and extend the regulation
of aged care providers.
First, the Bill proposes to amend the Act to
clarify that the Act regulates aged care services and that approved
provider status relates to:
- approval given for the type of aged care and specific services
provided, and
- the allocation of places.
For example, item 1 proposes
to amend section 7-1 of the Act, to the effect
that subsidy payments under Chapter 3 of the Act can only be made
to a person for providing aged care if:
- that person is an approved aged care provider under Part 2.1,
and
- the approval is in force with respect to:
- the type of aged care provided, and
- the aged care service through which aged care is provided
at the time in which such care is
provided.
In addition, item
2 proposes to amend subsections
8-1(2) and (3) of the Act to ensure that
approved provider status does not become effective until the
successful applicant has an allocation of places, and then, only in
relation to the type of aged care and aged care service(s) for
which an allocation has been granted.
Other proposed amendments reflect those
proposed in items 1 and 2.
Second, the Bill proposes to amend the Act by
expanding the entities involved in providing aged care which are
subject to scrutiny and regulation, thereby trying to address:
- the current limitations on the Secretary[57] to consider the record of:
- related entities, and
- those who influence executive decision making of the aged care
facility
- the current situation where obligations under the Act cease
when approval status is no longer in force, thereby excluding
former approved providers from the regulation regime, and
- the inclusion of an entity whose approved provider status is
not yet in force because the entity has not yet been allocated any
places, into the regulatory regime.
- For example, item 3 proposes to insert
new paragraph 8-3(1)(ga) into the Act to
the effect that where:
- the Secretary is deciding whether an applicant is suitable to
provide aged care, and
- the applicant has relevant key personnel in common with another
current or former approved provider (see item
6),
the Secretary would have to consider the
financial and managerial performance, and criminal records of that
other current or former approved provider.
In addition, item 6 proposes
to insert new subsection 8-3(6) into the Act,
defining the term relevant key personnel in common with a current
or former approved provider as follows:
- at the time the current or former approved provider provided
aged care as approved, another person was one of its key personnel
(see item 7), and
- that other person is a key personnel of the applicant.
Item 7 proposes to
insert new section 8-3A into the Act defining key
personnel of an entity, which would include those persons who, at
the relevant time, are:
- responsible for the entity s executive decision making
- authorised or responsible for (or having significant influence
over) the entity s planning, directing or controlling
activities
- either:
- responsible for the nursing services provided by, as well as
the day to day operations of, the aged care service conducted by
the entity (irrespective of whether that person is employed by the
entity), or
- likely to be responsible for the nursing services provided by,
as well as the day to day operations of, the aged care service
proposed to be conducted by the entity (irrespective of whether
that person is employed by the entity).
The reference to persons responsible for the
entity s executive decision making would include:
- if the entity is a corporation under the Corporations Act
2001 the director of that corporation, and
- in any other case a member of the entity s governing body.
Under proposed subsection
8-3A(3), people who are, or are likely to be, responsible
for nursing services in an entity s aged care service, would have
to hold recognised nursing qualifications.
The proposed definition in item
7, applying throughout the Act, would effectively increase
the number of people involved, or likely to become involved, in
providing aged care who are regulated and monitored.
Other proposed amendments reflect those
proposed in items 3, 6 and
7.
Third, consistent with the aim to extend the
regulatory regime to reflect the increasingly diverse business
structures involved in providing aged care, the Bill proposes
amendments relating to notifying the Secretary of material changes
related to the ongoing suitability of an approved provider to
provide aged care.
For example, item 11 proposes
to insert new subsections 8-5(3)-(5) into the Act
to ensure that the Secretary may, when notifying an applicant of
approval of the applicant s aged care provider status, also notify
the applicant of any circumstances that the Secretary is satisfied
materially affects the applicant s suitability to provide aged
care. An example of such circumstances is the applicant s
engagement of a management company to manage the delivery of aged
care services.
Such proposed amendment is related to
item 114, which proposes to insert new
section 63-1C into the Act, directly related to situations
where approved aged care providers engage a management company to
manage the delivery of aged care services. If an applicant for
approved provider status relies on the management company to
demonstrate skills and experience in providing aged care, the use
of that management company should be an ongoing requirement and any
change should be approved by the Secretary.
In addition, entities that have applied for
approved provider status but have not yet been allocated any places
would also be regulated.
For example, item 15 proposes
to insert new subsection 9-1(3B) into the Act, to
ensure that where an entity has been approved as an aged care
provider under section 8-1 but has not yet been allocated any
places, that entity would have to comply with the obligations under
section 9-1. This means that during the two year period in which an
applicant may acquire an allocation of places, thereby bringing
their approved provider status into effect, the applicant would
have to notify the Secretary of those changes that could affect
their suitability to be an aged care provider if they acquire
allocation of places.
In addition, item 25 proposes
to amend subsection 10-3(1) of the Act by changing
the reference to approved provider with a reference to person in
relation to when the Secretary must revoke an approval. This
proposed amendment means that an entity whose approved provider
status is not yet in force because that entity has not yet been
allocated places, would be covered by the subsection. Note that a
revocation of an approval would be reviewable under Part 6.1 and
may also occur as a sanction under Part 4.4 of the Act.
There has been an increase in the value of
accommodation bonds that are held by aged care providers.[58]
In addition, it has been reported that
situations have arisen in which there have been negative outcomes
for aged care recipients, reflecting gaps in the current protection
regime.[59] An
example is that the Accommodation Bond Guarantee Scheme does not
apply to lump sum payments made by aged care residents, for entry
into care, to an entity that is not an approved provider at the
time of payment but subsequently becomes an approved provider. One
problem arising from that situation is that if the approved
provider becomes insolvent, the Government cannot pay those lump
sums through the Accommodation Bond Guarantee Scheme.[60]
The Government states that it is committed to
improving consumer confidence, and increasing corporate investment
in aged care services[61] and that the proposed amendments aim to ensure that
accommodation bonds would be better protected under the
Accommodation Bond Guarantee Scheme (accommodation bonds must be
refunded if the approved provider becomes insolvent).[62]
Examples of such proposed provisions are as
follows.
Items 17 to
19 propose to amend subsection
9-3A(1) of the Act. These proposed amendments have the
effect that the requirement to provide the Secretary with specific
information under section 9-3A, about such matters as accommodation
bonds and entry contributions, would apply to both current and
former approved aged care providers. In addition, the list of
information that the Secretary may request from the provider would
be extended to:
- unregulated lump sums paid to the current or former provider,
and
- the amount of one or more unregulated lump sum balances at a
particular time.
Item 21 proposes to
amend subsection 9-3A(3) of the Act, to the effect
that where the approved provider is a corporation, failure to
comply with the Secretary s request for such information within the
specified time, would be an offence with a penalty of an amount
ranging from $3 300 to $16 500.[63]
These proposed amendments are consistent with
attempts to bring former approved providers into the regulatory
regime (see above).
Subsection 14-5(4) lists
examples of the matters that conditions, under which allocations
are made, may relate to and item 42 expands that
list to include treatment of pre-allocation lump sum (or part
thereof) paid or payable to the person to whom a place is
allocated, by a recipient of care in particular circumstances
specified by proposed subsection 14-5(6). This
means that the Secretary may impose the following additional
conditions on allocation that:
- the entity, to whom places are allocated, refund any
pre-allocation lump sum to residents, and
- if, as a consequence of such refund, an accommodation bond
agreement is entered into, the conditions and entry into force of
such agreement, or
- the forgiveness of any obligation in relation to the
pre-allocation lump sum (or part thereof).
Proposed subsection 14-5(5)
provides that if the above condition(s) applies and the recipient
of care remains in care with the same residential care service from
the date the allocation was made, then both the aged care recipient
and provider may enter into an arrangement for payment of an
accommodation bond or charge under the Act. In such circumstances,
both recipient and provider would have the same rights, duties and
obligations in relation to the accommodation bond or charge as if
the recipient entered the service on the day that the allocation
was made.
Item 96 proposes to
amend subsection 57-14(1) of the Act, enabling the
Secretary to determine that, in accord with User Rights
Principles,[64] a
person must not be charged an accommodation bond, or an
accommodation bond of more than a certain amount, if payment would
cause that person financial hardship.
Refusal by the Secretary to make such a
determination of financial hardship is reviewable under Part 6.1 of
the Act.
A similar amendment is proposed by
item 108 in relation to accommodation charges.
The Bill also proposes amendments to the Act
to ensure that obligations with respect to bond repayments (and
interest thereof) would also apply to former approved providers who
have outstanding bonds.
Item 102 proposes to
insert a new section 57-21AA into the Act,
requiring an approved provider, who ceases to be approved for a
particular residential or flexible care service, to refund any
accommodation bonds paid to that provider by aged care recipients
for entry to that residential or flexible care service to the
respective aged care recipients, within a time specified by
proposed subsection 57-21AA(2).
Under proposed subsection
57-21AA(3), if the former aged care provider is a
corporation, failure to comply with proposed subsections
57-21AA(1) and (2) would be an offence
with a penalty of an amount ranging from $3 300 to $16 500.[65]
According to the Government, this amendment
would address the current gap in protection of bonds under the Act
as statutory obligations on aged care providers cease when
providers cease to be approved under the Act.[66]
In addition, items 103 and
104 propose to insert new subsections
57-21A(1A) and 57-21B(1A) into the Act,
which would have the effect of requiring aged care providers
(current and former), who would be subject to refunding
accommodation bond amounts or entry contributions, to pay interest
on those amounts.
The Bill also proposes amendments expressly
focused on the protection of the needs of the aged care community,
as well as aged care recipients health, welfare and interests.
Examples of such proposed provisions are as
follows.
Item 66 proposes to
insert new section 16-13, which
would provide for specific conditions to be met before the
Secretary can approve the transfer of provisionally allocated
places. These include conditions that the Secretary must consider
under proposed section 16-16, when deciding
whether the needs of the aged care community in the particular
region would best be met by the transfer.[67]
Item 112 proposes to
amend subparagraph 62-1(b)(iv) to allow for
personal information about an aged care recipient to be released
for the purpose of complying with obligations under the Act or any
Principle made under section 96-1. Proposed amended
subparagraph 62-1(b)(iv) would mean that in the event of a
situation occurring where an aged care provider had to inform the
Secretary that a resident is absent from the aged care facility
without explanation, the aged care provider would not be in breach
of non-disclosure provisions in the Act.[68]
Items 115 to
118 propose to amend section 65-2
of the Act in relation to matters that the Secretary must consider
when deciding the appropriateness of sanctions on approved
providers for non-compliance with responsibilities under Parts 4.1
to 4.3 of the Act.
In particular, items 116 and
117 propose two additional matters that the
Secretary would have to consider under new subsection
65-2(1):
- whether the non-compliance would threaten future recipients
health, welfare or interests, and
- the desirability of deterring future non-compliance.
Item 18 proposes to
insert new subsection 65-2(2) into the Act to
clarify that the Secretary s paramount consideration, when deciding
the appropriateness of imposing sanctions under subsection
65-2(1) of the Act, must be whether non-compliance
threatens or would threaten current and future aged care recipients
health, welfare or interests.
Within the context of increasing numbers of
people seeking to access aged care, the Bill proposes amendments to
streamline assessments by the ACATs, allowing for more timely and
consistent assessments for aged care.
Examples of proposed provisions are as
follows.
Items 69 and
70 propose to amend section 23-3
of the Act to address the situation where aged care recipients
assessments are reviewed unnecessarily or too often for
administrative reasons rather than because of a change of the
recipients aged care needs. Section 23-3 currently provides for the
lapsing of approvals for certain types of care if care is not
received within a certain time.
Item 70 proposes to
insert new subsection 23-3(1A) into the Act,
whereby approval would not lapse under the following types of aged
care:
- residential care provided as respite care. or
- residential care not limited to low level of residential care,
or
- flexible care (specified in the Approval of Care Recipients
Principles).
These proposed provisions may improve the
costs of the ACAT system, a concern which appears to be consistent
with the Government s announcement that it will also provide $72.16
million to the States and Territories for the Aged Care Assessment
Program for 2008-09, as part of its commitment to streamline and
improve the aged care assessment process.[69]
Items 120 to
129 propose amendments to section
85-1 of the Act (which includes a table setting out what
decisions are reviewable by the Administrative Appeals Tribunal
(AAT)), many of which are consequential to other proposed
amendments in the Bill. In particular, items 124,
125, 127 and 129
propose that particular decisions would be reviewable by the AAT,
such as decisions to:
- reject an application for transfer of provisionally allocated
places, as well as those allocated places other than provisionally
allocated places
- approve (or to reject an application to approve) a day as being
a transfer day for transfer of provisionally allocated places, as
well as those allocated places other than provisionally allocated
places, and refuse to make a financial hardship determination under
proposed paragraphs 57-14(1)(b) and
57A-9(1)(b) (see items 96 and
108).
The Bill proposes amendments to the Bond
Security Act to ensure that the Bond Guarantee Scheme would apply
in relation to both current approved providers, as well as former
approved aged care providers who continue to have outstanding
bonds.[70]
Other proposed amendments relate to provision
for unregulated lump sums and unregulated lump sum balances.
Item 157 proposes to
insert a new definition unregulated lump sum
balance into subsection 6(1) of the Bond Security
Act. Unregulated lump sum balance would be defined as an amount, at
a particular point in time, which is equal to the difference
between:
- the unregulated lump sum amount, and
- any amounts that had been, or was permitted to be, deducted at
that particular point in time, under the Agreement under which the
lump sum was paid.
Item 161 proposes to
insert new subsection 6(3) into the Bond Security
Act, explaining the meaning of unregulated lump sum as an amount of
money paid by an aged care recipient to a person called the
unregulated lump sum holder (the amount), in circumstances
specified in proposed subsection 6(3). These
circumstances include:
- the amount is paid under a written Agreement for the aged care
recipient s entry into either:
- a residential care service, through which residential care that
is not respite care is or will be provided by the unregulated lump
sum holder, or
- a flexible care service through which flexible care is or will
be provided by the unregulated lump sum holder
- the amount does not accrue on a daily basis
- under the Agreement, if the unregulated lump sum holder ceases
to provide the relevant aged care to the aged care recipient, the
amount must be refunded to the aged care recipient
- the unregulated lump sum holder is an approved provider
immediately before 1 January 2009
- the amount was paid to the unregulated lump sum holder before:
- 1 January 2009, and
- unregulated lump sum holder became an approved provider
- the amount is not an entry contribution, and
- the aged care recipient continued to be provided with the
relevant aged care after the amount had been paid and before the
unregulated lump sum holder became an approved provider.[71]
Other examples of proposed amendments that
include unregulated lump sum and unregulated lump sum balances
being given into protections under the Bond Security Act include
items 144, 145, and
156.
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Items 162 to
185 propose amendments to the Bond Security Act
specifically in relation to insolvency events.
Item 162 proposes to
insert new section 6A into the Bond Security Act,
dealing with transitional issues. Proposed section
6A exempts certain people for a certain period of time,
from the operation of the Bond Security Act in relation to certain
insolvency events.[72]
The Government states that this proposed
provision would ensure that the Commonwealth Government will not be
responsible for bonds held by aged care services that never held an
allocation of Commonwealth funded places.[73] It is noted that the Government
offers an assurance that:
Current approved providers whose approval will
lapse as a result of the requirement to have an allocation of
places (which occurs on 1 July 2009), will be covered by the
Guarantee Scheme for a period of 12 months from 1 July 2009. The
period of coverage of the Guarantee Scheme will cease on 1 July
2010. This will provide care providers and their residents with
time to make any necessary adjustments to their contractual
arrangements.[74]
However, this does raise the question of what
would happen to bonds held by aged care providers that do not
receive Commonwealth funding, although it is expected that the
number of such providers would be relatively low.
Item 169 proposes to
substitute section 9 of the Bond Security Act, to
the effect that former approved providers would have the same
obligation under proposed section 9 to notify the
Secretary of first occurrences of insolvency events, which are set
out in the definition of insolvency event in section 6 of the Bond
Security Act.
Item 176 proposes to
amend paragraph 12(2)(b) of the Bond Security Act,
to the effect that the Secretary would be able to consider any
amount that may have been refunded up till the time the refund
amount is determined and that should be considered in determining
that refund amount.
Item 181 proposes to
insert new section 13A into the Bond Security Act,
providing for the Secretary to make an additional amended refund
declaration in circumstances where:
- a current or former approved provider refunds part of a bond
balance (the initial refund)
- after that initial refund, the Secretary determines the amount
considered equal to the outstanding amount of bond balance as at
the time of that determination
- the Secretary makes a refund declaration under section 13 of
the Bond Security Act, and
- the current or former approved provider s initial refund is
void or voidable under the Corporations Act 2001 or the
Bankruptcy Act 1966 (depending on whether the current or
former approved provider is a corporation) to the effect that the
person, to whom the initial refund of the bond balance was made,
does not retain the value of that refund.
The formal requirements for the additional
refund declaration would be similar to the requirements for current
refund declarations under section 13 of the Bond Security Act.
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Concluding comments
This Bill
is largely uncontroversial and seeks to ensure the provisions of
Act accord with changes in the aged care industry, as well as
addressing certain gaps in the current aged care regulation
framework.
However,
Parliament may wish to consider the extent to which additional and
amended obligations proposed by the Bill would affect investor
confidence in the aged care industry, especially in the context of
increasing demand for aged care services.
[71]. Note that the Bill proposes that the following terms
have meaning given by the Dictionary in Schedule 1 to the Act:
entry in relation to a person and an aged care service
(item 146); aged care service (item
143); residential care service (item
154); flexible care service (item 148);
respite care (item 155); residential care
(item 153); and flexible care (item
147).
Rebecca de Boer and Sharon Scully
11 November 2008
Bills Digest Service
Parliamentary Library
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