CHAIR —I would like to welcome representatives from Eliza Purton Ltd, Tandara Lodge Community Care and Huon Eldercare to today’s hearing. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. The committee has your submissions before it. I now invite you to make a short opening statement. At the conclusion of your remarks, I will invite committee members to put questions to you.

Mr Lange —Thank you for the opportunity to present our submission. Huon Eldercare supports the Australian government’s provision for the aged-care sector. As the chief executive officer/director of nursing, I have been involved in aged care for 30 years—20 years in management—and I am a registered nurse and psychiatric nurse. Colin is an accountant with four years experience in aged care.

Huon Eldercare is the most southern not-for-profit provider of residential aged care in Australia. We are a standalone facility. The region is socioeconomically disadvantaged. We provide a continuum of care, the main component being residential aged care, which has 84 beds. Three of those are respite. In those 84 beds we have a 10-bed dementia secure unit. We look after high-care, low-care and community aged-care packages. We run a flexible care program. We have a mountain view facility that provides residential rental accommodation and six rural health beds that are funded by the Tasmanian government. We have a high-quality environment and a purpose built and designed facility to create efficiencies.

Huon Eldercare acknowledges that the Australian government’s expenditure on residential aged-care services has increased over the amount of services and has increased by a significant amount above CPI over recent years. There are three components to this increase in expenditure, the first being additional places allocated to residential aged care, the second being the Commonwealth own purpose outlays increase and the third being the conditional adjustment payment, which is currently under review.

We are concerned about the introduction of ACFI. It has confused and complicated the funding. Previous RCS levels seven and six are not receiving funding. This is impacting upon even a small facility like ours, which can attract low-care bonds. The crux of the issue is that the funding increase for existing places that we have is insufficient to provide a quality level of care and all the appropriate services expected and required. There is increasing assessment of care, increasing high-level needs and we need more highly qualified staff. In our response in 2008, Huon Eldercare had to negotiate only a 2.5 per cent increase for nurses in comparison to an average 3.5 per cent for Australia. We contained our expenses to a minimum level to maximise efficiencies whilst upholding the quality of care and equal competencies.

The funding formula for aged care appears to discriminate against providers who give care on a needs basis. We are not selective in who we take for admission. We do not cherry-pick, even though the Huon valley has cherries. We are a community organisation that is inclusive. We are rural and financially disadvantaged. We believe that the current system is an urban and socioeconomic advantaged model and does not suit financially disadvantaged or rural services. People have mentioned the worrying signs and the reduction of facilities elsewhere so I will not harp on that. The September 2008 survey by Stuart Brown reported that almost three-quarters of providers are running at a loss. We also are one of those.

We would like to reinforce that Huon Eldercare is recognised for its high quality of care, the quality environment provided by experienced staff and our relationships with our general practice. It provides a continuum of care in ageing in place for the community.

The ACFI system has failed to fund ageing in place for rural and financially disadvantaged communities. Ageing in place enables all aspects of the funding system to support the residents and provide a level of qualified staff. Without low-care bonds there is no capacity to provide the environment for the future. The introduction of ACFI has confused and complicated the funding at a time when we are already vulnerable. To this end, we have discussed our situation with the Department of Health and Ageing. We will use the services provided by KPMG, which is funded by the Australian government, and other services. ACFI has not matched the level of funding to the level of care but reshuffled the funding from the RCS model.

Huon Eldercare is eligible for the viability supplement under the grandparenting arrangements. Any further extension in our bed licences will make us ineligible for that viability supplement. What happens after grandparenting? Do we see more facility closures with people forced to the urban centres at great cost to themselves and their families? There needs to be a transparent and fair system for the indexation of funding. Commonwealth own purpose outlays are not clearly accountable. I understand that Professor Hogan was not even able to understand what the system was.

Basically, our flexible system of funding maintains and supports rural and remote facilities that admit residents on assessed needs rather than on financial capacity. Is it not a fundamental principle of the Aged Care Act 1997 to ensure that residential care services are accessible to all Australians? Thank you.

CHAIR —Thank you very much.

Mr Crantock —I would like to thank the committee firstly for giving me the opportunity to appear before it. Tandara Lodge is an aged-care provider located in Sheffield, which, for those who do not know, is about a 30-minute drive inland from Devonport. We have 29 high-care and 12 low-care beds, so we are a fairly small rural based provider. We also have community aged-care packages and a number of independent living units. We also provide some community health and community transport in the region.

It is fair to say that we are under financial pressure, and I am sure that you have heard the same sorts of sentiments from other people who have appeared before you. Effectively, our income is capped but our expenses are not. That is the crux of our problem. On top of that, we operate in a highly regulated environment, within which we have to maintain very high standards.

Clearly, there is a problem with funding or the lack thereof, and I can see only two options to solve that. One is an increase in the level of government funding and the second is an increase to the user pays system. Or there could be a combination of those two. What we need is a better method of indexation so that our annual funding increases more closely match the increases in actual costs. The other thing we need is more flexibility and scope to charge our residents. I very much hope that something positive does come out of these hearings and that aged care in Australia is given a brighter future as a result. That is all I have. Thank you.

CHAIR —Thank you very much.

Mr Johnstone —By way of opening I would like to refer to and highlight a few of the main points in our written submission. I would like to begin by stating that whilst our issues are essentially operational in nature, the potential strategic impact on the industry, particularly in rural and remote Australia, is likely to be significant. The Eliza Purton group currently comprises four residential facilities, two in Ulverstone, one in Launceston and one in Penguin. We have a total of 248 beds, 30 CAP packages and 20 IOUs across the four facilities.

As regional providers of government funded aged-care services in north-west Tasmania for the past 50 years, Eliza Purton has participated in changes to the industry that have occurred to this point in time, and it has survived to this point in time. Historically, we have accepted operational funding deficits as being par for the course. We have had deficits for the last three years, and if we review the funding in the two previous years we had deficits there as well, but we have accepted them through managing non-operational resources and cash reserves. As you would be aware, many other providers manage them by cross-subsidising from independent living units, retirement villages and so on.

Then came ACFI. It severely compromised our ability to operate effectively and efficiently. At this point in time we are $257,000 for the first six months of this financial year below where we were for the first six months of the last financial year, and that does not recognise any increases that would have come along—the 3.75 per cent with the cap in the indexation.

I suppose the essence of our submission is that one size does not fit all. We are perceived to be outer regional, so we are talking on behalf of regional and remote. For the reasons identified in our submission and in others, the provision of services in those areas comes at an extra cost. Some of those costs include our ability to get bonds, and our bonds are much smaller than the bonds that you can get in metro areas. There is an inability, or certainly our inability, to sustain a resident profile—that is, as Mr Burgess was talking about earlier, getting like for like; we just cannot do that. There is an inability to create and sustain reasonable economies of scale in small communities. There is the cost of providing training to our staff outside metro areas. Other areas include the significant cost of empty bed days, which we have touched on, and the cost of compliance. An example of that is that when the introduction of police checks took place we acted in good faith, paid for all the police checks for all our current employees in the first round, paid for all our volunteers and paid for the board members. It cost us $12,000. We had an accreditation over Tuesday and Wednesday of this week at a facility. We have one of the facilities that is closing down in Tasmania—a 34-bed facility in Ulverstone. We are hoping to and are on track to close it by June. We had to have an accreditation because our accreditation runs out in June, and we may still be open. We may have a small number of residents there. That cost us $7,000, and we are not going to be operating after June if things go according to our plans. We have only got 14 residents still there.

As has been previously said, we have been looking at 3.75 per cent annual indexation when all is added up. We are running at round about a seven to eight per cent increase in expenses. Our staff negotiated a five per cent increase in their wages and salaries in our last agreement.

The current system of assessment by ACAT again has been touched on. We are finding, unfortunately, the reverse, with people coming in with high ACATs and, on assessment, reverting to low care. Unless we are very quick off the mark, that negates our ability then to go back and ask them for a bond, so there is a potential of losing money there. There is only a 28-day window of opportunity. And, there is an issue, which I am sure John would be happy to talk about, of bonuses paid to pensioners who are living in residential care, particularly items such as the utility bonus. We are paying for all the utilities but we have no access to that bonus.

Like many regional providers, we have over the years developed the infrastructure needed in our community to provide the appropriate services for the ageing population. The goalposts have changed significantly. We are now finding that, whilst we have not really changed our resident profile, we are losing money hand over fist. We are still providing the same services to the same people in the same community but, as I said, we are $257,000 down on where we were for the similar period last year. I think we are getting to a situation where—I coined a term in the shower this morning—resident profiling is occurring. If residents do not meet an organisational profile, they will essentially not be able to access services from that organisation, because you cannot afford people on low care. Low to medium care is just not viable at all. We have no waiting lists in the high-care area. We unfortunately had a higher than anticipated turnover of residents in the first six months of the year and had something like 800 empty-bed days, which we talked about previously. There is a significant value attached to that. The issue that is compounding that, though, is that when we do find people to come in they are generally of a lower funded level than the person who moved on. There is a significant difference between the two funding levels. There are the empty bed days, the difference in the funding levels and, a third one, a reduction in funding for new clients.

Senator CAROL BROWN —Delay in receiving—

Mr Johnstone —There is certainly an issue around the delay in receiving that that affects the cash flow.

Senator BILYK —The extra on-costs?

Mr Johnstone —We cannot significantly reduce overheads. Seventy-five per cent or so of our expenses are staff wages; we cannot reduce those. Whilst 800 empty-bed days may seem a lot, we have four facilities. The facilities are split up into areas, and if we operate on a ratio—although there is no particular ratio—of one to six or one to seven care staff in the morning and a ratio of one to eight in the afternoon, and we are going to reduce staffing numbers, we have to have eight empty beds to do that, for example, in the afternoon. It is not just a matter of saying, ’Can you go home early?’ Obviously we have a collective agreement and we have to abide by the elements within that.

We have had a significant change in the past six months in our operations. We have accepted and managed deficits over the past five years but, because of a chain of events that occurred early in this financial year, we are in significant deficit, and we cannot see a way out. Thank you.

CHAIR —Thank you very much. Before I go to someone else, I just want to follow up on those residents who will still be in the facility that you are closing or planning to close in June. Do they have beds to go to?

Mr Johnstone —We have put into place procedures for relocation of residents and redeployment of staff.

CHAIR —And they will stay within Ulverstone?

Mr Johnstone —The majority, yes. I think two people have moved to Launceston but the rest will stay in the Ulverstone area, the majority with us.

Senator SIEWERT —Can you tell me why the changes mean that you are not going to be eligible for viability subsidies?

Mr Lange —We applied a couple of years ago for 17 extra beds and we were unsuccessful. If we add any more beds to our licences, which our finance manager knows more about in detail, under the viability supplement we would then be exempt, so we are just on the cusp of almost getting it removed. That viability supplement is the massive amount of approximately $20,000. We have two licences in our place, low-care and high-care licences. It is $20,000 per licence. As I alluded to, we are different because in the city you can ask for a bond of $500,000. At five per cent that is $25,000. That is just one person’s bond. It is easy to get that. We believe that the viability supplement should be for all Tasmania.

Senator SIEWERT —Does anybody else get the viability subsidy?

Mr Crantock —Yes, we do.

Mr Johnstone —We get it on one facility.

Senator SIEWERT —Thanks.

Mr Crantock —It is based on the number of licences.

Mr Patmore —It has to be below 45 beds per licence. Huon Eldercare only gets it under grandparenting arrangements because the act changed in 2004, I think, and made it harder to get. Even with the viability supplement for the CAP which was introduced a couple of years ago, we are not eligible under that either. That gives the background.

Senator SIEWERT —I have a couple of other questions, but since you have mentioned CAP I want to go on to CAP. Did all of you access the CAP?

Mr Lange —Colin was referring to community aged-care packages there.

Senator SIEWERT —Sorry.

Mr Lange —They are indexed under the viability supplement.

Senator SIEWERT —I want to come back to the community packages in a minute, but in terms of CAP did all of you access that?

Mr Patmore —Yes.

Mr Lange —Yes.

Senator SIEWERT —In Western Australia one of our regional providers said it was too much hassle to do separate audited accounts for it, so it didn’t.

Mr Patmore —It is too much money to forgo.

Senator SIEWERT —Yes. I want to ask you the same question I asked the other providers earlier about beds. How many of you applied for beds in the latest ACAR?

Mr Lange —No.

Senator SIEWERT —Did you apply for community care packages?

Mr Lange —No.

Senator SIEWERT —Do you all provide community care?

Mr Crantock —Yes, we provide it.

Senator SIEWERT —Was there a reason why you did not apply for any additional beds? I assume it was that you could not afford to apply, that it was not economic to apply for extra beds?

Mr Lange —Even with a zero-interest loan, which is CPI interest, you cannot apply for a loan or pay the principal when you are not making a surplus.

Senator SIEWERT —Is that the same for all of you?

Mr Johnstone —In contrast to what has probably been said by many other providers, we do not see that there is a demand.

Senator SIEWERT —You have said that you do not have a waiting list.

Mr Johnstone —No. Sorry, we have a very robust waiting list in Launceston but on the north-west coast we only have low-care people who are looking to come in.

Senator SIEWERT —What about the rest of you—do you have waiting lists?

Mr Crantock —Yes.

Mr Lange —Yes, we do. The issue there, I suppose, for us is that two years ago we did see a change because we were successful in getting another nine community aged-care licences and some more dementia licences, and that has lightened the load on our waiting list considerably.

Mr Hughes —Can I add a comment just to clarify Malcolm’s comment. This is my personal belief; it may not be as professional as Malcolm’s. I believe that there is a need in the community for low care. But low-care places are not viable as far as the home is concerned because of the funding we are receiving; therefore, we do not have a waiting list for high care. There are many people in the community who want low care, but we cannot afford to accept them.

Senator SIEWERT —Because you are not getting subsidies.

Mr Hughes —We do not have the support from the government for the subsidies and the payments we are receiving. So it is a matter of a viable waiting list. It is not a viable waiting list.

Senator SIEWERT —The position with low-care places has changed with the introduction of ACFI?

Mr Hughes —It has not been great for the last couple of years, but it has certainly changed. The facility we closed was a low-care facility with 34 beds. Effectively, we have removed 34 beds from the municipality of Central Coast, and they will not be replaced.

Senator SIEWERT —I have sidetracked. I want to go back to the issue around licences and beds in a minute. We heard here this morning, we are hearing from elsewhere around Australia as well, about the shift from low care to high care. What you are highlighting, that people want to go into low care, is a bit of a different trend. Around Australia we have heard that people are staying at home more because of the community care packages and a lot more community support. They are going straight into high care and skipping low care. We have been told that that is not because of ACFI but because that is the way the trends are operating. People are staying healthier et cetera.

Mr Hughes —I suspect there is a combination. I am not certain that the government is supporting the CAP program to the level it needs to to give people the comfort and the support they need at home. It is a social issue as much as anything else.

Senator SIEWERT —In the areas that you are talking about, is the point you are making that people need low care because the community care packages are not supported at the level they should be supported?

Mr Hughes —I have personal examples with some of my elderly relatives. They basically are low-care people. One of them has moved into care because they found it too difficult to be responsible for looking after a home alone, even with outside care coming in one or two days a week. So it is a social issue. It is a matter of communicating with other people and friends. They get isolated. There is a need for low-care facilities in Australia, but the current models do not support that, and the current approach of government is not to support that. I am not suggesting that people will want to stay at home for a longer period. My mother is in that position. She will not go into a home until she is high care, but that is her preference. There are other people who need to go into a hostel type situation, but we as a home cannot afford to accept them under the current model.

Mr Johnstone —I think it is about having options for people. As I said earlier, one size does not fit all, unfortunately.

Senator SIEWERT —The other point that is been made frequently is that community care packages are not getting indexed enough either. Although there are still a lot of community care packages available, the amount of care that you can buy with those packages is now reduced. For example, instead of being able to provide, say, 10 hours, now you can provide only seven or eight hours. Is that a similar situation here, or are you managing on the care packages?

Mr Patmore —From Huon Eldercare’s point of view we have not compromised ours too much. There is a small element of that. We are lucky enough to have the rural health beds, which help balance out surplus. We can cross-subsidise. We are more about the level of care they give than necessarily looking at the bottom line surplus in each area, but our aged care is really taking a battering around the ears with the introduction of ACFI. We are losing $35,000 a month at the moment compared to what we would have got under the RCS. It is quite material.

Senator SIEWERT —Yes, that is quite significant.

Mr Patmore —We may have to take a different approach in the future, but if it is only a nominal amount we would not. The board’s ethos is to give the level of care, not to look at the bottom line unless there is a major problem with it.

Mr Crantock —I would certainly echo those sentiments from our point of view. We only have a few packages but we could not care less what hours we are given. We are going to provide the hours of care those people need regardless, and the funding will just come from somewhere. Malcolm mentioned cross-subsidisation. We do that with our independent living units. They fund a large proportion of what we do now, which should not be the case.

Senator SIEWERT —Providers have presented similar information. The point they have been making is they are getting to a point where they cannot do that any more.

Mr Crantock —That will come. There is no doubt about that. I think you asked Meercroft what their time line was. We were talking before. We have probably got five years maximum and probably two years at the minimum. So somewhere within that time frame we will not operate.

Senator SIEWERT —I know I will get chopped soon so I do want to go back to my question about the bed licences and ask the same question that I asked the others earlier—that is, do any of you hold licences for beds from previous rounds that you have not been able to put into effect yet?

Mr Johnstone —Senator, we hold 15 in Launceston. We got them in the 2006-2007 round. We cannot afford to build them.

Senator SIEWERT —Have you told the department that?

Mr Johnstone —Oh, yes.

Senator SIEWERT —What have they said?

Mr Johnstone —They understands the position, and we will put in for an extension at the correct time to give us some more time, essentially.

Senator SIEWERT —Does anybody else—

Mr Johnstone —If I may say, we did put in for capital funding as well to go with that, but we did not get the capital funding; we just got the beds.

Senator SIEWERT —Right.

Mr Crantock —We are the opposite. We put in for capital funding and we were lucky enough to get it, which was the only reason we could build extra rooms. We have pretty big waiting lists, so we can fill them instantly, which we did.

Senator SIEWERT —But you do not hold any other beds that you have not built yet?

Mr Crantock —No, and we will not apply for any more.

Mr Lange —We do not.

Senator BERNARDI —I will address this question to you, Mr Johnstone, if that is all right. In your submission you suggested that there needs to be a better method to recognise the unique variables and disadvantages associated with location, size, expenses and bond values. Do you have any suggestions about what that method should be?

Mr Johnstone —The education department funds independent schools on what is called, I believe, a social/economic scale. In Tasmania the schools get more than the King’s School would get in Sydney or wherever. It is about recognising the variabilities, the differences in the regions. You yourself, Senator, were talking about the differences in the costs of beds. They vary remarkably. I was in North Queensland after Cyclone Larry went through, and the price per bed went up by something like $30,000 or $40,000 as a result. There are significant variables in each area that would cause those differences and they need to be recognised and addressed. There is a variability supplement, which was talked about earlier. I think it is $1.37 a day per resident, and that is if you have fewer than 40 or 45 people. With the figures we are talking about it is a drop in the ocean.

Senator BERNARDI —You would like to see a system more akin to that which exists within the education department funding now?

Mr Johnstone —If the government is committed to continuing to provide aged-care services in all the areas that we are providing them now, something has got to change. As I said in my submission, we are disadvantaged because we cannot get the high bonds. We cannot get bonds at all because the market is just not there, so there has got to be some recognition of that potential. All I think everybody is looking for is the ability to meet their expenses. With the help of the department, every organisation is very effective and very efficient in its operations. We just cannot match the income to the expenditure.

Senator BERNARDI —You mentioned bonds then, and earlier you mentioned that you were closing the Ulverstone facility?

Mr Johnstone —One of them, yes.

Senator BERNARDI —One of them?

Mr Johnstone —Yes.

Senator BERNARDI —Is that because you cannot get access to adequate bonds, which is something you raised in your submission?

Mr Johnstone —No. When the decision was made to close that—do not quote me, please—probably 50 per cent of the people in there were on bonds or had provided bonds, so that had not been an issue at that point in time. It is been subsequent to that, since the global financial crisis has impacted. We have a number of bonds owing, and they are well over the six-month mark potentially, because people cannot sell their assets.

Mr Johnstone —The decision to close one of the Ulverstone facilities was driven by lack of demand, was it, or by financial considerations?

Mr Johnstone —Lack of finance. That was the be all and end all. There was no other reason behind it.

Senator BERNARDI —Where are the residents being accommodated, then? You said there were going to be 14 still there when this facility closes in June.

Mr Johnstone —It is a 34-bed facility. We have relocated 20, and there are 14 left to go. They will be relocated to where they want to go, but the indications are they all want to relocate to our facilities.

Senator BERNARDI —I found your submission fascinating because it raised a number of issues that are obviously common across the industry but were not raised specifically in some other submissions. You said that the visits of the department for compliance put a rather large burden on your facility because you have to take your key personnel away from what they are doing. Can you elaborate on that a little bit for us and explain the pressures it does put on your facility?

Mr Johnstone —I have a couple of examples from the past two weeks. Last week we had visits from the department, which is separate to the agency, to two of our facilities on Tuesday—

Senator SIEWERT —The Commonwealth department?

Mr Johnstone —The Commonwealth department—on Tuesday and Wednesday, on Thursday we had a spot visit from the agency to another one of our facilities, and then this week we have had two days of accreditation. Is that correct?

Mrs Boerma —That is correct.

Mr Johnstone —We accept accreditation—well, we have to—we accept the spot visits, but that takes the time of Cathrin, of our quality officer, some of my time and some of the time of the floor staff. I will ask Cathrin to respond.

Mrs Boerma —It certainly does put a real strain on the staff. It is not just me; it is our clinical managers on the floor and the expectation that they need then to step away from the roles that they were playing on that day to come and address the department, address the agency and answer their questions. I have three facilities on the north-west coast, and I am expected to go to each of those facilities when we have a support visit, an unannounced visit and the like, and it is the same for our quality manager and our HR manager. It is quite a drain on resources, our time and our energy.

Senator BERNARDI —Mrs Boerma, these visits are done, I guess, to ensure that there are minimum standards, and I am sure we all can appreciate the importance of that. Is there a better way? Do you have a suggestion of a better way that would reduce the need or the difficulties for the aged-care facilities? I love asking the tough questions, putting people on the spot.

Mrs Boerma —Yes, that is a really tough question. There is nothing that comes to mind at the moment. Possibly desktop audits, phone link-ups or submission of information may be some ways.

Senator BERNARDI —Okay.

CHAIR —Can I just follow on from that, if I could. The public rightly expect to ensure the best possible care and safety of patients. Unfortunately—and I think most of my colleagues on this committee would agree—the media’s interest is only ever about promoting the negative aspects of the very rare instance, I think, although there have been a few in recent years. It appears to me that there needs to be some good publicity and to gain media support for the industry in what is surely an underfunded area in terms of staffing remuneration. I think the industry is suffering probably from the public’s point of view. There should be changes in administration that can be streamlined, but in terms of spot checks; you would have to agree that they are an essential part of the industry in making sure that the community has confidence in the industry.

Mrs Boerma —I certainly do agree, and we appreciate and welcome them to see what a good job we are doing. But, I do certainly agree, Senator, with your comments about the need for positive media coverage, because every time you hear about aged care it is always negative, it is always damning to the industry, and that is quite draining.

Mr Lange —In regard to that I am not quite sure what evidence there is. I would like to know if there is any evidence of the benefits that unannounced visits have over announced visits. A question I would ask is: what evidence has the department or the agency got on that? I agree with you that we are all for that. My background is in the Australian Council on Hospital Standards and private hospitals many years ago. I agree that we all are happy about that, but I think the problems occur when someone turns up at nine o’clock and you are about to have a meeting with someone you lined up two months earlier who has just flown from Brisbane and you have just got to say, ‘No, I cannot have that consultancy with you now,’ or you are looking at improvements in trying to minimise staff medication systems and things like that because we are running at a loss and trying to look at other things and you get a visit at nine o’clock. I think we have to be accountable in that situation.

Can I just add that I think we need to be careful that we do not confuse ACFI with the indexation system. The indexation system was poor before ACFI came in. ACFI is a disaster and there needs to be an urgent top-up, and not wait for the 18 months, or something needs to be done fairly smartly on that. The index system of COPO was never transparent. The two issues here that I am hearing people talk about are the indexation system and also ACFI, but they are two separate issues. Unfortunately in the past six months, as Colin said, we are losing $35,000 a month and that has confused it and made it even worse.

CHAIR —I think, Mr Johnstone, you wanted to make a comment.

Mr Johnstone —Just responding to your statement, Madam Chair. We are on our fourth accreditation process now and I think as we move forward we have to forge a better relationship between the players. At the end of the day we are all looking at the resident and the outcomes for the resident. I think they can be achieved in a better, more harmonious fashion, and that is something we need to be working on. One of the issues that Cathrin did not touch on is the stress that is associated with visits. It is not just the time and the potential financial losses, the stress is significant, and I think if you asked other providers you would find the same thing.

Senator BERNARDI —Mr Johnstone, you have raised the issue of the one-off payments to pensioners and you believe there is a reasonable case for 85 per cent of those payments to go into the aged-care facility.

Mr Johnstone —Yes.

Senator BERNARDI —What are the arguments against that? I am not asking you to argue against the case so much but what would be the resistance that would be encountered if that were the case?

Mr Johnstone —It is on two levels. One is at the community level and one is at the government’s level. In the community, as Madam Chair indicated, there are a lot of myths about aged care, one being that if you pay a bond you never see it again. If your children believe that myth, then they will be resistant to paying a bond. I think it is the same with the bonus payments. People think that we are making huge profits. That is what has being reported in the press. If somebody says, ‘We want 85 per cent of those bonuses,’ if the bonus is a utility bonus, that is essentially for utilities. We provide all the power, all the gas, all the utilities for each one of our residents. I suppose the question could be asked: why was that money not paid out in $30 a week allotments, then we would have been able to access that? It is not that we are trying to be mean and grab everything from our residents, it is just that we are trying to be viable and provide services to our residents. At the government level we asked whether we could access those funds, and the response was ‘no’. I did not drill in too deeply but that was the response I got.

Senator BERNARDI —If a family or an individual receives a utilities bonus, it goes into their bank account; it is not used specifically for utilities because you cannot get access to it, but some people could probably justify that it is used to provide a range of additional needs for the resident themselves and thus it needs to be spent on that. How would you respond to that?

Mr Johnstone —Well, how many bonuses are we going to get?

Senator BERNARDI —Everyone is getting a bonus.

Mr Johnstone —Yes, I know. Every bonus we lose, or every bonus that we cannot access, is money that we are spending because we are still paying for the power, and we cannot access funding to do it.

Mr Lange —Can I respond to that?

Senator BERNARDI —Please.

Mr Lange —The main point I want to make is that the services that a resident gets are more than just three meals a day and power. It is all the additional services like going on trips, going out in the garden. It is all those sorts of things as well. For me, that 85 per cent plus the indexation we get from the government is only a very, very small amount when you look at all the resources we need to have. Just to give an example, we have 140 staff, mostly female part-time staff. We have 100 volunteers. We are a community based organisation. We have to pay out penalties for Sundays and Saturdays, we have IT—the list goes on, including workers comp, which in Tasmania is privatised. Other states do not have that. so there are all these other things. I have asked this question to people outside. We talk to other people and ask, ‘How much do you think it would cost to look after someone?’ Obviously this is anecdotal, but they are amazed at the amount it takes to provide accommodation and services.

Senator CAROL BROWN —Mr Lange, in your submission you talk about the top 25 per cent making good money, and then you talk about other providers not being able to do so, not due to poor management but as a direct result of following the rules. Do you want to elaborate on that?

Mr Lange —Yes. If I give some examples, that is probably the best way to explain it, and then I will ask our business manager to add or correct me if I am wrong. For example, we take homeless people. Do we look at what they are going to give us? No, just like the people said here before. Like I also said before, we do not select on what they are going to give financially to an organisation. If someone is homeless and under the act they are getting $6 or $13 a day, and there is a need for it, we are the last port of call. We have no-one else to call on, so of course our community based organisation has been based on that strong ethos of giving care to all people in the Huon Valley. That is the philosophy, which is very strongly felt. I suppose following the rules is following our philosophy as well.

We have been challenged, like you have heard from some of the other people, and one of the things that we have been challenged with now is having to minimise some of those services which were cross-subsidised beforehand. This is something that causes us angst, because it is not what we would want to do and what our ethics say we should do. An example is that our dementia respite bed is being closed. We are going to transfer that into the general area. The reason for that is that the costing to look after a dementia respite person is $173 a day. If you have to give one-to-one care, which sometimes you have to do with people coming in for a short term, as well as all the paperwork, all the medication charts and all the other work you have to do in getting the doctor aligned to that for the two, three or four weeks they might be there, all of that time has to be taken into consideration. Then you might have one carer, or it might even have to be a nurse, depending on the level of need, or you might look at one-on-one. When you are looking at $15 to $20 plus add-on costs, you can see how it is unviable. If these things were just done normally, without thinking about the financial implications, we would have to cut back on those. So there are two examples of where we have had to decrease services because of financial resources.

Senator CAROL BROWN —When you are talking about following the rules, are you talking about the rules that you apply to your facility?

Mr Lange —But also there are concessional ratios and—

Mr Patmore —But what it refers to is that the government sets the daily care fee, the accommodation charge, the maximum amount you can charge for high care based on the assets of the individual. In some situations there is an income tested fee on top of that where the home is just a collector of that money, and that is reduced from the amount of subsidy we get from the government. The only area of discretion is bonds, where you can charge more. There is no limit. We take the resident based on care, and therefore their assets determine how much income we get. The only area is bonds, and we are not in a position like people in Melbourne or Sydney, where someone can charge half a million or a million dollars for bonds. Our community does not have that capacity, as a rule.

Senator CAROL BROWN —You have a facility that takes 40 per cent concessional rate?

Mr Patmore —Yes.

Senator CAROL BROWN —I assume that is no bond?

Mr Patmore —Exactly. They are people with assets—

Senator CAROL BROWN —Regardless of—

Mr Patmore —at the time of writing, of under $36,500. That is their level of assets. Every resident is entitled to keep the minimum of $36,500, if they have that much, so yes, it is a poorer reason. We are actually up to about 50 per cent concessional ratio or supported resident ratio.

Senator CAROL BROWN —Your first port of call for residents is your surrounding area—they get first option? That is my understanding.

Mr Patmore —Yes, it is. That is right.

Mr Lange —That is correct.

Senator CAROL BROWN —Do you support the introduction of bonds into high care?

Mr Patmore —It would help, but it would not solve all of our problems.

Senator CAROL BROWN —That is what I am trying to get to.

Mr Patmore —Naturally it would help because you make more money on bonds. Mind you, the interest rates have dropped since we wrote this submission, and therefore it is not as attractive as it was at the time. Probably the answer is that the government has to recognise the amount of support it is prepared to give to people with low assets in regional areas like us. Otherwise in the long term we will suffer.

Senator CAROL BROWN —So my question to everyone who is here, and it goes to the question posed by Eliza Purton in their submission—and you have sort of answered it—is about what the government can do for places such as Tasmania that have very different profiles in terms of the service that they provide and where the services are provided. Also, we have the other issues of the lack of an appropriate workforce and other services that we need to get from the mainland. I want to know what you think is really going to help, putting aside high-care bonds? We have the issue about delays of payments, and whether we have some more flexibility in the viability supplement, or more flexibility for people who are in low care going back onto a CAP. I am just trying to get some sense of what will help, because a service that has 50 per cent concessional is not really going to work, is it?

Mr Johnstone —As I said, we have lost 800 bed days. We need a daily fee to cover empty bed days. We need to also have in place a regime that makes sure that providers do their utmost to fill those beds. Whenever we have any empty bed days, whenever we have a reduction in fees coming in, our overheads remain constant. It is not viable. We are getting a 3.75 per cent increase this year and we are spending eight per cent. The maths just do not add up, and I think everybody I have heard today is saying exactly the same thing.

There are ways of doing it. Because of the short piece of time that people in high care potentially stay in aged-care facilities, there would be problems with a high-care bond, but there have got to be other ways of looking at it. I think we also need to take a much more strategic view of it and start looking from a health and economic point of view at what perhaps some of the European countries do. People start saving for their old age, not from a superannuation point of view but for their health throughout their lives by secreting away some money in some sort of scheme. I am talking right off the top of my head here. But that is much longer term. In the short term we have to deal with the issues that are facing us. If the system does not change, there are going to be a lot fewer providers around to provide those services.

Senator CAROL BROWN —I agree. Does anyone want to add something?

Mr Lange —I think we need to increase our viability supplement. It has been a flat fee, so we need to recognise those places that are having concessional residents. As I said, there seems to be an increase in that formula or in that sort of dialogue. We feel as though all of our discussions over many years, and I am glad that these discussions have happened, have been falling on deaf ears. For the first time, we are actually being listened to. Maybe we do not have all of the answers, but we have a crisis and I think we are just overwhelmed that finally someone has realised that it has been so. The financial returns for most of the organisations going back to the department would be clearly showing those losses over the years, and, as Senator Polley said earlier, these are things that have been going on for three or four years. These are things for which we need an immediate injection because places are operating in a quite diabolical situation. We support increasing the viability supplement and a formula worked out for that.

Senator CAROL BROWN —I would invite the people here, if they do have other suggestions, particularly those relevant to Tasmania, on what can be changed or implemented to make things work easier and to build some flexibility into the sector, to send in that information later to the committee so that we can have a look at it.

CHAIR —Thank you very much. Unfortunately we have run out of time. There was a reference made in relation to European countries in providing payments until after the funeral of the former resident. We have asked the following in other hearings around the country, and if people could take it on notice we would be really interested to hear from you. Is there any other model around the world that works better? My understanding from information that we have is that Australia has the best aged-care model. But if there are any examples from Europe or from America—although I would hate to think of America, because I could not imagine them doing too much that is better than what we do here in any area—that you can give us that we can use, we would greatly appreciate them. So I ask everyone to take that on notice. Can I again thank you all for giving up your valuable time and appearing before us. I know time is taken in dealing with red tape, so your providing a submission was greatly appreciated by us.

[11.51 am]