Navigation: Previous Page | Index | Next Page
Implications of possible transfer of aged care to the states and territories
Rationale for devolution of aged care to the States/Territories
6.1 At its June 1996 meeting, the Council of Australian Governments (COAG) agreed that there was an urgent need to shift the focus of health and community services from programs to people, through a partnership between the Commonwealth and the States. COAG suggested that this would involve building a system that:
- provides quality care responsive to peoples' needs;
- provides incentives for preventive health and cost effective care;
- gives better value for taxpayers' dollars;
- provides more clearly defines roles and responsibilities; and
- retains the benefit of universal access to basic health services through Medicare.
6.2 Specifically, in respect of aged care, COAG agreed that interim steps to consolidate and rationalise a number of existing arrangements, including consideration of the transfer of responsibility for managing aged care programs to the States, are to be developed in parallel with work on the longer term approach. 
6.3 COAG further stated that the specific measures proposed as interim steps were:
Developing new aged care agreements under which States would have responsibility for managing aged care programs, including nursing homes, hostels and the aged care component of HACC, and with the Commonwealth's interests being met by the agreements having a greater focus on outcomes for consumers. 
6.4 An increased potential for States to achieve flexibility between related programs, with flow-ons in efficiency and tailoring to individual need was cited as an advantage of this measure.
6.5 In its submission to the Committee, the Department of Health and Family Services (DHFS) outlined the proposal as follows:
The approach envisages a realignment of roles and responsibilities with the States taking responsibility for the management of aged care programs. The Commonwealth would have a continuing role in jointly setting objectives, priorities and strategic directions as well as defining outcomes and monitoring performance.
Administrative arrangements, including in relation to funding, access and quality assurance measures would be addressed in bilateral agreements. The agreements would be predicated on a National Aged Care Strategy that would guide the national development of aged care into the next century. 
6.6 COAG was to consider a draft public discussion paper at its November 1996 meeting. However, it was subsequently agreed not to release this paper and instead develop further proposals for reform. The further proposals are to focus on options for achieving flexibility which do not involve a major transfer of funding and do not impinge on current concerns on broader CommonwealthState financial arrangements.  Specifically, the reforms would include addressing duplication and overlap, improving co-operation and creating more consistent management between levels of government.
6.7 The Department claims that the reforms will potentially offer more flexibility for providers, improved outcomes for clients and greater efficiencies and improved effectiveness.  The Government's view is that there is considerable scope for development and improvement in the aged care sector but it would only agree to reforms if it was confident that:
- frail older people will get better services,
- the Government's Medicare commitments are upheld, and
- Australian taxpayers will get a fairer deal. 
6.8 The Aged Care Bill 1997 makes provision in clauses 4-2 and 4-3 for the transfer of the responsibility for aged care to the States. The stated aims behind the transfer of responsibility have been supported by various organisations. Potential advantages were seen with the responsibility of aged and community care resting with one level of government. Duplication of effort by State and Federal governments could be reduced and the capacity to provide a flexible mix of services to suit particular situations would be assisted by a clearer delineation of responsibilities between the Commonwealth and the States and Territories.  While these potential advantages were recognised, there were significant concerns and reservations expressed over the proposed transfer of responsibility.
Access to services and national standards for service delivery
6.9 A number of submissions expressed the concern that a transfer of responsibility could result in differing standards for the provision of aged care services across Australia.  The Australian Council of Social Service (ACOSS) summarised this concern submitting that past experience has indicated that, in practice, it is extremely difficult following the devolution of programs for the Commonwealth to retain a strong role in the establishment and maintenance of enforceable national standards. ACOSS believes:
This is one reason why there is widespread scepticism in the community services sector that such a devolution of responsibilities (especially in the context of reduced public monies) will actually lead to better outcomes for consumers. 
6.10 Many organisations identified a number of issues and problems that could arise from devolution and which should be given further consideration before any transfer takes place.  These included:
- the far from successful results of the transfer of other programs to the States, eg. immunisation and Commonwealth funded disability services, which were regarded as an indication of what could occur with aged care;
- equal accessibility to nursing home/hostel beds across Australia. Community Services Australia (CSA), for example, expressed the concern that the range, quality and amount of aged care services available may become varied, as State governments take on different `priorities';
- the possibility of Special Purpose Payments (earmarked for funding of hostels and homes) being subsumed into general purpose payments by cash strapped States, with the potential that funds could be diverted to other programs thereby compromising the provision of aged care services;
- the effect on the continuity and uniformity of consumer protections and user rights, and care standards with the possible development of an inconsistent aged care system nationally; and
- the impact for the Home and Community Care program (HACC) through the possible further restructure of services to older people.
6.11 The Australian Catholic Health Care Association (ACHCA) referred to the importance of the Commonwealth's continued role, commenting that:
ACHCA recognises some benefits in the transfer to the States of day to day responsibility for management of programs with the Commonwealth retaining control of funding through a national payment system, equity of access to services, affordability for consumers through national income security measures and national quality standards. 
6.12 The Committee received evidence from Dr Marinovich, a consultant physician/geriatrician from Western Australia, who identified antagonism between the State and Commonwealth health departments as a major problem where Commonwealth programs are handed to State departments with the Commonwealth retaining higher level policy control. 
Shortcomings in State/Territory administration of health care
6.13 A number of groups pointed to the allegedly poor record of States and Territories in the area of health administration as an argument against devolution.  The Australian Nursing Homes and Extended Care Association (ANHECA), in particular, referred to the inability of States to `effectively deliver expected outcomes, despite rigorous Commonwealth oversight in the following areas: the public hospitals system, the disabilities services programs, the home and community care program, and the children's immunisation program'. 
6.14 As an example, reference was made in a number of submissions to the Commonwealth/State Disability Agreement (CSDA), which represented an effort on the part of Federal and State levels of government to develop a coordinated, rationalised and integrated approach to disability services in Australia. Professor Anna Yeatman, who reviewed the CSDA in 1995, produced some highly critical findings arising out of the implementation study. These included:
- a variation across jurisdictions of State Government readiness and capacity to implement the CSDA;
- inconsistent patterns and mixes of service types across jurisdictions and these imbalances have been perpetuated to some extent by the CSDA (for example, the proportion of day activities varied from State to State); and
- inconsistencies occurred between States in the service components which were included in the calculation of base funding levels. 
6.15 Not all views on transferred responsibility were negative. The ACT Disability, Aged and Carer Advocacy Service (ADACAS) submitted that an advantage of the State/Territory governments becoming responsible for aged care `is that the relationship between aged care and other social services will become more apparent and could result in more seamless service delivery'. 
6.16 The Accommodation Rights Service (TARS) felt that the principal advantage of devolution of power to the States was the ability of the States to establish complaints mechanisms and tribunals with the power to give binding orders between consumers and their representatives and service providers. TARS also said that the enactment of binding and effective consumer protection laws for residents by the States should be a proviso to the transfer of any power over the aged care system to any State. 
6.17 TARS expressed the concern that the residential care model is disliked by forces within some State government departments and professional associations which see the residential rights which are incorporated into that model as a threat to entrenched power structures.
6.18 The Committee shares the concerns which have been expressed about the transfer of responsibility for aged care to the States and believes that before any transfer is to occur further consultation is required to ensure that the concerns held by the various parties involved are satisfactorily resolved.
Recommendation 27: The Committee recommends that further consideration of the implications of the transfer of responsibility to the States and Territories on the provision of aged care services needs to be undertaken by all parties involved before the transfer is to occur.
Recommendation 28: The Committee recommends that before any transfer of responsibility occurs it needs to be demonstrated that improved outcomes for providers, residents and staff will result from such a transfer, and that adequate protection for all parties involved has been put in place. In addition, there needs to be certainty that transferred funds will be used for aged care services and not diverted to alternative programs.
Senator Mark Bishop
Navigation: Previous Page | Index | Next Page
 Council of Australian Governments, Communique, 14 June 1996, p.3.
 ibid., p.6.
 Submission No.94, p.54 (DHFS).
 Submission No.94, p.54 (DHFS).
 Submission No.94, pp.54-55 (DHFS).
 Submission No.94, p.55 (DHFS).
 Submission No.31, pp.5-6 (NCOSS); Submission No.24, p.7 (NSW College of Nursing and GeriactionNSW); Submission No.57, p.5 (Anglican Community ServicesSA).
 Submission No.15, p.3 (Catholic Care of the Aged); Submission No.34, p.15 (ANF); Submission No.49, p.6 (Older Persons Advocacy Service); Submission No.62, p.7 (Anglicare Australia).
 Submission No.80, p.9 (ACOSS).
 Submission No.50, pp.16-17 (CPSA); Submission No.56, pp.19-20 (ANHECA); Submission No.67, p.6 (CSA); Submission No.80 (ACOSS), Appendix 1. CSA and ACOSS appended to their submissions a copy of The Risks of Devolution: A Joint Statement of Concern, issued by the National Consumer and Community Service Organisations following the June 1996 COAG meeting.
 Submission No.38, p.23 (ACHCA).
 Transcript of Evidence, p.188 (Dr Marinovich).
 Submissions No.25, p.3 (ANFWA Branch); No.32, p.6, (APSLQld); No.43, p.5 (RSL); No.56, pp. 20-22 (ANHECA); No.66, p.19 (CSA); Transcript of Evidence, p.187 (Dr Marinovich).
 Submission No.56, p.20 (ANHECA).
 CSDA Evaluation - The Implementation Study: Supporting Paper 1 - January 1996, pp.ix-x. Reference was made to this review by ANHECA, ACOSS and APSF in their submissions.
 Submission No.67, p.6 (ADACAS).
 Submission No.75, pp.15-16 (TARS).