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Aged Care Amendment Bill 1998


The Aged Care Amendment Bill 1998 seeks, inter alia, to amend the Aged Care Act 1997 to:

These and other changes to the Act were first announced by the Government on 27 October and 6 November 1997. They were made only four weeks after the commencement date of the Aged Care Act 1997 (1 October 1997).

The Government's subsequent changes to its aged care policies, particularly the reversal on accommodation bonds for nursing homes, clearly demonstrates that the Opposition's approach to the legislation at the time was correct. We proposed that the accommodation bonds for nursing homes be scrapped and that the legislation be delayed to enable further negotiation and consideration by the aged care sector.

The Government's refusal, at the time, to accept our view has resulted in a situation where many issues still remain unresolved and where the aged care sector still has major reservations about the Government's overall policies.

In their evidence Uniting Community Services Australia summarised the position as follows:

Access and Discrimination

There is widespread concern in the sector about the adverse effect of accommodation charges on access to care. The emerging fact of bed vacancies indicates that older Australians needing nursing home care are not getting that care. This is the result of confusion over the multiplicity of changes and fear of the impact of the changes which will see many older Australians having to sell, rent or re-mortgage their homes to get care. Many submissions and evidence presented called for a slowdown in the over-all pace of the Government's aged care reforms. There has been major structural reform, the announcement of a National Strategy and the introduction of the first plank of that Strategy – the Carers package, but no real sense of industry involvement in the formulation of that Strategy.

There is a danger of discrimination against certain types of residents as institutions try to maximise their income from the different fees available. It is argued that the rates of concessional and assisted resident supplements will need to be increased in order to increase equity of access by financially disadvantaged persons.

Of particular concern to representatives of consumers and to many providers is the fact that the introduction of the extra daily income tested fee has the potential to lead to two tiers of care as those paying extra demand extra services.

A disproportionate number (39%) of nursing homes in Victoria have failed certification. Many providers may be tempted to simply carry on until they lose care subsidies in three years time. There is real concern about the quality of care of residents over this period. Resident groups also raised the issue of the rights of residents of facilities that close or transfer licences.

The National Association of Nursing Homes and Private Hospitals (NANHPH) warn that many providers will have to cut operational and staffing costs. There is the potential in this for a crisis in residential care in that state. Aged Care Australia (ACA) has called it a potential `time-bomb' that must be defused using a pro-active strategy. The Australian Nursing Federation has also called attention to the issue of leaseholds and the impediments imposed on use or transfer of licences for the purpose of infrastructure improvements.

The solution must involve direct and urgent capital input from the Government. As the Australian Catholic Health Care Association (ACHCA) stated:

Quality of Care

The Resident Classification Scale is currently the subject of review; however, a large number of providers and others involved in the sector insist that it is resulting in a lowering of the total care subsidy for facilities. There is a real concern that providers will be forced to compromise care and service standards in order to survive this reduction in subsidy.

NANHPH supports a moratorium period until the Government's reviews on this document are complete.

Lack of acquittal requirements mean there is a danger of subsidies allocated for care or refurbishment simply being taken as profit. Further, the watering down of requirements for trained staff is already seeing the reduction and replacement of skilled nursing staff. It is probable that lives will be lost if this run-down of trained staff continues.

Many in the sector believe the Minister is more interested in deflecting and defusing criticism than in finding genuine solutions for the problems of aged care. Boards and advisory groups are set up, officers are appointed, meetings held, funds allocated and re-allocated but nothing concrete ever seems to happen.

Quality of Homes

Cutting $500 million from aged care and failing to make satisfactory alternative funding arrangements means that many residential aged care facilities have little or no prospect of upgrading. Aged Care Australia estimate that the new funding arrangements for capital reduce the capital funding for the industry by $307.4 million over three years - a shortfall which ACA says cannot be made up by the industry through the new accommodation charges. This view is supported by most of the submissions and evidence given to the Committee. One specific example – that of Maroba Nursing Home Inc - provided evidence from their accountants that the facility cannot afford to carry out any serious upgrades with the level of capital generated by the accommodation charge and the concessional resident subsidy.

The Government must provide capital funding to ensure adequate upgrading and refurbishment of the sector. Providers of aged care have made it plain that the $4380 raised annually from the accommodation charge will not be sufficient to upgrade.

Changing funding arrangements mid-stream by forcing providers to choose between Additional Recurrent Funding (ARF) and Accommodation Bonds and then replacing Bonds with the lower Accommodation Charge has financially disadvantaged many providers. Aged Care Australia also make the point that this is not an equitable arrangement as it effectively introduces retrospective conditions for the receipt of ARF for capital work already completed or in progress. NANHPH also raises the issue of ARF in relation to facilities that are sold. There is a serious problem in that the ARF payments follow the original provider and not the new owner, therefore they fail to assist with any upgrade of the facility.

The Government should honour existing ARF arrangements and address ARF anomalies involved in the sale of facilities.

The aged care providers are being forced to act to collect the extra daily income tested fee but the monies collected from this fee go to the Budget bottom line and not to care – this is already creating problems for nursing homes.


For all of these reasons, the Opposition believes that the Aged Care Amendment Bill 1998 should not proceed.

Senator Michael Forshaw Senator Kay Denman

(ALP, New South Wales) (ALP, Tasmania)

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[1] Senate Hansard, 27.03.98, p.CA3.

[2] Senate Hansard, 27.03.98, p.CA4.