Bills Digest no. 47 2014–15
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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.
Social Policy Section
30 October 2014
Purposes of the Bills
Policy position of non-government parties/independents
Position of major interest groups
Statement of Compatibility with Human Rights
Key issues and provisions
Date introduced: 25 September 2014
House: House of Representatives
Portfolio: Social Services
Commencement: Amendments in Schedules 1 and 3 to the Aged Care and Other Legislation Amendment Bill 2014 commence on the day after the Act receives Royal Assent. Amendments in Schedule 2 to that Bill commence on 1 July 2015. Amendments in Schedule 1 to the Health and Other Services (Compensation) Care Charges (Amendment) Bill 2014 commence on 1 July 2015.
Links: The links to the Bills, their Explanatory Memoranda and second reading speeches can be found on the Bills’ home pages for the Aged Care and Other Legislation Amendment Bill 2014 and the Health and Other Services (Compensation) Care Charges (Amendment) Bill 2014, or through the Australian Parliament website.
When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website.
Purposes of the Bills
Aged Care and Other Legislation Bill 2014
The purpose of the Aged Care and Other Legislation Amendment Bill 2014 is to amend the:
- Aged Care Act 1997 (the Act) to repeal various provisions relating to the Aged Care Workforce Supplement
- Aged Care (Transitional Provisions) Act 1997 to repeal various spent provisions and to allow for the determination and payment of certain supplements for care recipients who were in care before 1 July 2014
- Health and Other Services (Compensation) Act 1995 (Schedule 2 to the Bill). Together with the Health and Other Services (Compensation) Care Charges (Amendment) Bill 2014 (outlined below), these amendments allow the Government to recover past home care subsidy amounts from recipients for whom an injury compensation judgment or settlement has been made, if the subsidised home care was provided ‘in the course of treatment of, or as a result of, the injury’ and
- Healthcare Identifiers Act 2010 (Schedule 3 to the Bill) to help implement stage 2 of the My Aged Care gateway website from 1 January 2015. These amendments will allow an individual’s Medicare identifier to be used to authenticate their registration on My Aged Care.
Health and Other Services (Compensation) Care Charges (Amendment) Bill 2014
The purpose of the Health and Other Services (Compensation) Care Charges (Amendment) Bill 2014 is to amend the Health and Other Services (Compensation) Care Charges Act 1995 to complement amendments in Schedule 2 to the Aged Care and Other Legislation Amendment Bill 2014 (described above).
There is a common Explanatory Memorandum for the Bills.
Repeal of Aged Care Workforce Supplement
The Aged Care and Other Legislation Amendment Bill 2014 (Schedule 1) repeals provisions in the Act which underpinned the previous Labor Government’s program for an Aged Care Workforce Supplement. The intention was to reallocate $1.2 billion from the basic aged care subsidy to a supplement to be used specifically to enhance the wages and conditions of aged care workers. The program was intended to assist in addressing workforce shortages in the aged care sector. The shortages were thought to be partly attributable to wages and conditions in aged care facilities having fallen behind those in the hospital sector, which competes for similar workers.
The Aged Care Financing Authority has reported that:
Nurses working in aged care generally tend to be paid less than those working in hospitals. The [Australian Nursing and Midwifery Federation] ANMF’s latest (December 2013 to February 2014) quarterly sector comparison based on 785 agreements operating in the residential aged care sector estimates that at the Registered Nurse Level 1 there is a difference on average of almost $210 per week or 17 per cent nationally. The Department also monitors the wage rates of the aged care workforce on an ongoing basis, currently analysing 73 agreements that apply to 57 Commonwealth funded aged care providers. The Department’s comparative analysis results in a smaller difference of approximately $136 per week or about 10 per cent nationally.
Workforce shortages are expected to worsen due to substantial increases in demand for aged care. The Productivity Commission’s Caring for Older Australians report suggested that workforce increases of 300 per cent for residential aged care and 800 per cent for community aged care are needed by 2050 to meet demand with maintenance of staff to client ratios.
Currently, the Act provides that an eligible recipient of an aged care subsidy is entitled to the Workforce Supplement in accordance with relevant Subsidy Principles made by the Minister.  The amount of the supplement was determined by the previous Government on 1 July 2013 to be one per cent of the basic subsidy. Under Labor’s program, aged care providers were expected to spend the Workforce Supplement on wages and conditions for care workers, as well as training, education and career development.
Soon after coming to power, the current Government made a legislative instrument to prevent further applications being made for the Workforce Supplement after 26 September 2013. The policy reasons were explained by Senator Mitch Fifield (Assistant Minister for Social Services) during debate on a successful Opposition motion in the Senate (supported by the Greens) to disallow the instrument on 12 December 2013. The reasons included:
- applications by aged care providers for the supplement were subject to a condition that providers were party to an enterprise bargaining agreement with unions:
Our issue is that we do not believe that individuals should in any way be compelled, nor do we believe, for that matter, that employers should be placed in a position where they will be penalised or coerced through financial incentives to have a workplace that may do other than represent the free will of employees as expressed.
- the Government had announced before the election that if elected it would seek to suspend the workforce supplement:
That is what we did when we came into government—Minister Andrews created a legislative instrument that would suspend further applications for that supplement.
Also on 12 December 2013, the legislative instruments made by the previous Government to implement the Workforce Supplement were repealed pursuant to a Government disallowance motion in the House of Representatives.
The Supplement had been available for less than three months and only 18 applications had been approved by the Department, representing about $100,000 of the $1.2 billion set aside by the previous Government for the Workforce Supplement. Senator Mitch Fifield explained that these applications were to be honoured. In the 2014–15 Budget, the Government announced the measure, ‘Reprioritising the Aged Care Workforce Supplement’ to allocate the remaining $1.1 billion of funds previously budgeted for the Aged Care Workforce Supplement to the general Aged Care subsidy.
At the time of ceasing the Aged Care Workforce Supplement, the Government had not published an alternative strategy to address workforce shortages in the aged care sector, which has attracted criticism. The Minister for Social Services, Kevin Andrews, MP and the Assistant Minister for Social Services, Senator Mitch Fifield, expressed concern at a roundtable discussion with stakeholders on 3 February 2014 that the range of currently funded measures may not deliver a cohesive approach to aged care workforce funding. Stakeholders supported an audit of Commonwealth-funded aged care workforce activities to ensure efficient and effective use of available resources.
Senator Fifield has since publicly discussed:
- an audit of Government funds currently available for expenditure on aged care workforce matters
- encouragement for the aged care providers to apply for migration labour agreements, to facilitate visas for foreign workers.
Any program to reply on foreign workers as a solution to shortages in the aged care workforce may be inconsistent with the view of the Aged Care Funding Authority that:
… the growth in workers born outside Australia does not align with the language requirements of the current CALD [Culturally and Linguistically Diverse] consumer profile and poses some difficulties with language barriers.
Furthermore, the Australian Nursing and Midwifery Federation reported:
… a consistent and chronic underemployment of Australian nursing and midwifery graduates despite the employment of large numbers from off-shore. And sadly it is the case that an increasing number of new graduate nurses and midwives struggle to find employment in their chosen profession, in many instances rejected by the same employers who use temporary skilled nursing labour from overseas.
The ANMF estimates that:
- In 2013 60% of the Tasmanian nursing and midwifery graduates could not find work;
- In Queensland only around 28% of new nursing graduates secured positions with Queensland Health;
- In 2013 800 graduates in Victoria, 400 in Western Australia and 200 in South Australia could not secure positions.
In our view, the failure of our economy to provide work for our new graduates at a time when employers continue to access large numbers of off-shore nurses and midwives demonstrates a disconnect between the current policy environment that makes possible access to off-shore labour when an Australian worker is not available to fill the position and the available supply of new graduates to our health, aged and community service industries.
Another factor that may warrant consideration in any strategy to address shortages in the aged care workforce and quality of care is the trend of privatisation of state aged care facilities and stock-market floats for private aged care providers. This may increase pressures within the industry to generate returns for investors, rather than improve workforce conditions.
The Bills have not been referred to a committee for inquiry.
Senate Standing Committee for the Scrutiny of Bills
No comment was made on either of the Bills by the Senate Standing Committee for the Scrutiny of Bills.
Parliamentary Joint Committee on Human Rights
No comment was made by the Parliamentary Joint Committee on Human Rights on either of the Bills other than to conclude compatibility with human rights.
The Bills were debated in the House of Representatives on 23 and 27 October 2014.
Labor opposed the repeal of provision for the Aged Care Workforce Supplement. The leading speaker for Labor, Shayne Neumann, moved the following amendment (which was not agreed):
“whilst not declining to give the bill a second reading the House notes that the government has failed to:
(1) provide alternative assistance in meeting the demands of the aged care workforce;
(2) ensure repurposed funds be utilised for workforce pay, conditions and development;
(3) consult with or inform the aged care sector of Budget cuts including the axing of the $653 million Aged Care Payroll Tax Supplement;
(4) consult with or inform the aged care sector of the axing of the Dementia and Severe Behaviours Supplement until after the 2014 Budget; and
(5) oversee the management of aged care funding as evidenced by the over-subscription of the Dementia and Severe Behaviours Supplement and under-subscription of the Dementia and Cognition and Veterans’ Supplements.”
Key policy issues raised by Labor during debate included:
- workers in the aged care sector are among the lowest paid workers in the country. Nurses in the aged care sector are paid significantly less than nurses in the competing hospital sector. The needs of aged care clients are becoming more complex, with increasing levels of dementia and chronic illness
- reprioritisation of funds previously earmarked for the workforce supplement, combined with the Government’s ceasing of the Aged Care Payroll Tax Supplement from 1 January 2015, would undermine the sector’s ability to invest in the aged care workforce and
- when the Government suspended applications for the Workforce Supplement in September 2013, it had not announced an alternative strategy to address workforce shortages and associated issues with quality of care in the aged care sector.
While the Greens did not speak to the Bills during debate in the House of Representatives, their recognition of the need to address workforce issues in the aged care sector was indicated during the Senate debate on the disallowance of the Government’s instrument to suspend applications for the Aged Care Workforce Supplement. Senator Siewert made the following remarks:
This issue of better wages for aged-care workers has been very high on the agenda for a significant period of time and, although promises have been made in the past to address the poor wages of workers that work very hard in this sector, they have not been effectively delivered.
What has happened is that in the past when there has been additional funding put into aged care, it has not actually been delivered to those that are doing the hard work at the coalface, and they are the aged-care workers. They are some of the lowest paid in the sector. In the previous aged-care inquiries in Perth and the subsequent one about the Living Longer Living Better legislation, we heard some horrendous stories about the low wages and the things that people had to do. We consulted a lot during that process. We will be supporting this disallowance motion because we believe that the Living Longer Living Better package was amended to address the issues of concern and this is the best way to ensure that increased wages are delivered to aged-care workers.
In September 2013, the Australian Nursing and Midwifery Federation (ANMF) accused the current Government of turning its back on aged care workers when it confirmed its commitment to cease the Aged Care Workforce Supplement. The ANMF had been involved in negotiations with the previous Government for the Workforce Compact which was associated with the Supplement.
Soon after the commencement of the Aged Care Workforce supplement, peak bodies representing aged care providers expressed concern over the complexity of the application process.
After the Government suspended applications in September 2013, the industry body, Aged and Community Services Australia, published the following statement:
ACSA, LASA, CHA and the Aged care Guild have written a joint letter to Minister for Social Services Kevin Andrews and Assistant Minister Mitch Fifield regarding the suspension of the Workforce Supplement, and have outlined a proposal on how the Supplement’s funds might be better administered.
The shared proposal has been informed by the views of the Residential and Home Care aged care services that comprise the four memberships and networks, which when tallied together comprise about 97% of all aged care providers in Australia.
The previous Government announced $1.2 billion to fund the Supplement, mostly by way of a redirection of funds from the Aged Care Funding Instrument (ACFI). It is our proposal that the $1.2 billion, less the amount required to meet contractual arrangements of those providers who have already contracted with the then Department of Health and Ageing to access the Supplement, could be made available by way of its addition to the existing Conditional Adjustment Payment (CAP) that is accessible to non-State and Territory Government residential providers. For non-State and Territory Government providers of Home Care and Multi-Purpose Services, the portion of the Supplement intended to be directed to Home Care services could be made available as an addition to their annual indexation payment. The current contractual arrangements that underpin the CAP and receipt of Home Care funding would ideally satisfy fulfilment of Supplement funding obligations.
Those providers who may already have contracted to receive the Supplement should be provided with the option of either continuing with that contract or being released and able to access the additional CAP or Home Care subsidy payment.
After the stakeholder roundtable discussion hosted by the Government’s Aged Care Reform Implementation Council on 3 February 2014, Australian Ageing Agenda (AAA) reported that the ANMF:
- urged the Government to guarantee that the remaining $1.1 billion of funds for the Workforce Supplement would flow directly to wages
- would not be concerned if an industrial instrument were not used, as long as an alternative mechanism was transparent and accountable and
- did not support the funds being returned to the general aged care subsidy without clear accountability requirements.
AAA also reported that Glenn Rees, CEO of Alzheimer’s Australia, said:
- he agreed with the union position that the $1.1 billion should not be returned to the sector without clear accountability requirements on how the funding will meet wage parity objectives and
- the possible conditions raised by providers during discussions did not go far enough to achieve the level of accountability and transparency consumers and unions were seeking.
According to the AAA’s report, all aged care stakeholders at the roundtable agreed that a cohesive aged care workforce development strategy was needed and that this should be informed by a review of the effectiveness of government expenditure on aged care workforce development programs.
The repeal of provisions for the Workforce Supplement is associated with implementation of the 2014–15 Budget measure Reprioritising the Aged Care Workforce Supplement:
The Government will reprioritise funding of $1.5 billion over five years from the Aged Care Workforce Supplement (Supplement) by increasing aged care subsidies for home and residential care providers and relevant community programmes by 2.4 per cent on 1 July 2014 and by providing an ongoing 20 per cent increase in the Viability Supplement to eligible residential aged care providers. The Government will also provide non‑ongoing funding of $0.8 million to meet commitments to those providers that signed onto the Supplement.
This measure delivers on the Government's election commitment.
Reprioritising the Aged Care Workforce Supplement
|Department of Social Services
|Department of Veterans' Affairs
|Department of Human Services
|Total — Expense
Source: Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no. 2: 2014–15: Social Services Portfolio, ‘Reprioritising the Aged Care Workforce Supplement’, accessed 24 October 2014.
According to the Explanatory Memorandum for the Bills:
- amendments relating to the My Aged Care measure are cost neutral and
- amendments relating to recovery of past care costs for compensable home care will provide savings in the order of $0.5 million to $1.0 million per year.
No regulation impact statement has been published for the Bills.
The Statements of Compatibility with Human Rights for each Bill can be found after page 16 of the Explanatory Memorandum to the Bills. As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bills are compatible.
The key provisions of the Bills are adequately explained in the common Explanatory Memorandum for the Bills. The amendments are largely minor and non-controversial, with the exception of the repeal of the Aged Care Workforce Supplement. Issues relating to that amendment are outlined above under the heading ‘Background’. The provisions to be repealed are currently impotent due to the repeal of supporting legislative instruments.
While the Bills did not attract debate from the cross bench members or the Palmer United Party in the House of Representatives, wider debate may be expected in the Senate. As mentioned above, the Senate disallowed the Government’s instrument to suspend applications for the Aged Care Workforce Supplement. The Aged Care and Other Legislation Amendment Bill 2014 repeals a related provision.
Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.
. A separate Bill is required to ensure constitutional validity. The Bill introduces amendments that expand the existing charges on compensation as described above. A separate Bill is required for imposition of the charge as a charge could be construed as imposing a tax and section 55 of the Constitution requires in part that 'Laws imposing taxation shall deal only with the imposition of taxation and any provision therein dealing with any other material shall be of no effect.’
. Productivity Commission (PC), Caring for older Australians, PC inquiry report, 53, June 2011, chapter 14.2 and appendix E, E.4 Workforce projections through to 2050, p. E38, accessed 29 October 2014.
. Residential Care Subsidy Principles 1997 [F2013C00648], version registered 16 August 2013, started 1 July 2013 and ceased 1 July 2014, section 21.26JC (Determination that approved provider is eligible for workforce supplement). Also, Australian Government Department of Health and Ageing, Aged Care Workforce Supplement Guidelines, version 1 as at 1 July 2013, Eligibility Criteria, pp. 19–23.
. L Hartsuyker (Assistant Minister for Employment), ‘Residential Care Subsidy Amendment (Workforce Supplement) Principle 2013 - Motion for Disallowance’, House of Representatives, Votes and proceedings, HVP 15, 12 December 2013, pp. 239–246, accessed 29 October 2014. The following items below were disallowed: Residential Care Subsidy Amendment (Workforce Supplement) Principle 2013 made under the Aged Care Act 1997 [F2013L01225]; Aged Care (Residential Care Subsidy – Workforce Supplement Amount) Determination 2013 made under the Aged Care Act 1997 [F2013L01251]; Division 2.4 of the Aged Care (Home Care Subsidy Amount) Determination 2013 made under the Aged Care Act 1997 [F2013L01339]; Division 2.5 of the Aged Care (Flexible Care Subsidy Amount – Multi-Purpose Services) Determination 2013 (No. 2) made under the Aged Care Act 1997 [F2013L01347].
. Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no. 2: 2014–15: Social Services Portfolio, ‘Reprioritising the Aged Care Workforce Supplement’, accessed 24 October 2014.
. Pers. comm., Australian Government Department of Social Services, 28 October 2014.
. J Morrison, ‘Interview with Mitch Fifield’, ABC New South Wales - Statewide Drive, transcript, Australian Broadcasting Corporation (ABC), 3 July 2014; and M Fifield, Address to the ACSA Conference, Adelaide Convention Centre, speech, 10 September 2014, accessed 29 October 2014.
. See for example, P Manning, ‘Meet the men cashing in on Australia’s aged care crisis’, Crikey, 24 April 2014; S Thompson, A MacDonald and J Mitchell, ‘Regis healthcare sets pricing for billion-dollar float’, The Sydney Morning Herald (online edition), 10 September 2014; ASX, Regis Healthcare Limited, ‘ASX notice’, ASX website, 7 October 2014, accessed 29 October 2014.
. S Neumann, ‘Second reading speech: Aged Care and Other Legislation Amendment Bill 2014, Health and Other Services (Compensation) Care Charges (Amendment) Bill 2014’, House of Representatives, Debates, 23 October 2014, pp. 16–30; T Zappia, ‘Second reading speech: Aged Care and Other Legislation Amendment Bill 2014, Health and Other Services (Compensation) Care Charges (Amendment) Bill 2014’, House of Representatives, Debates, 27 October 2014, p. 35; P Dutton, ‘Second reading speech: Aged Care and Other Legislation Amendment Bill 2014, Health and Other Services (Compensation) Care Charges (Amendment) Bill 2014’, House of Representatives, Debates, 27 October 2014, p. 37, accessed 27 October 2014.
. Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no: 2: 2014–15, ‘Aged Care Payroll Tax Supplement — cessation’, accessed 28 October 2014.
. Australian Government, ‘Part 2: expense measures’, Budget measures: budget paper no. 2: 2014–15: Social Services Portfolio, ‘Reprioritising the Aged Care Workforce Supplement’, op. cit.
. Confirmed by personal communication with the Office of Best Practice Regulation, 24 October 2014.
. Explanatory Memorandum, op. cit.
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