Senator CHRIS EVANS (6:16 PM) —I rise to speak on the Aged Care Amendment (Omnibus) Bill 1999 , which seeks to make a number of amendments to the Aged Care Act 1997. The most significant of these is the inclusion of accommodation charges in the act. We all remember the Prime Minister, Mr Howard, appearing on A Current Affair to announce the backdown on the government's aged care policy, but we are only now seeing the legislation to implement that backdown.

Until now the accommodation charges he announced have been implemented through subordinate legislation, without the proper scrutiny of parliament. We are now also told that, because of his ad hoc arrangements, residents paying the charge have been denied basic protections. Labor opposed the introduction of the accommodation charge. We had very serious concerns about the equity of requiring pensioners to pay thousands of dollars a year for nursing home care. Those concerns remain. However, as those charges have been implemented, we support any move to introduce better protection measures for residents paying the $12 a day fee. We do have serious concerns that the protections introduced in this bill do not go far enough, and we will be moving amendments to increase residents' rights in relation to accommodation, bonds and charges. The government abrogated its responsibility two years ago by introducing the charges without those protections.

The bill makes a number of technical amendments to address problems with the act, which include providing for the refund of accommodation charges to residents who were in homes prior to October 1997—honoured only after Labor pressured the government to fulfil its commitments to those residents—ensuring that people were not liable for fees and charges before they have even agreed to move into a facility, clarifying the situation where a person admitted to a facility has a mental impairment, formalising reduced qualifying periods for co-residents, and broadening the definition of `family'. Labor supports all of these amendments. They are a belated attempt to fix up some of the problems with the Aged Care Act—problems that the government has been aware of for more than 18 months now.

Unfortunately for older Australians, while the bill does fix up some of the many technical problems associated with the government's Aged Care Act, many significant problems with the act are not addressed by this bill and will remain. These problems include: difficulties with the government's income tested fee, which has caused significant distress to older Australians and their families and is forcing providers to divert resources away from the care of residents; problems over the use of capital funding in the sector; an inability to appropriately deal with poor providers, including the closure of poor providers and provisions for the investigation of residents' complaints; significant difficulties being experienced by providers with the government's new resident classification scale; difficulties in accessing aged care, as the ratio of places to people aged 70 and over has declined over the last three years and waiting times have increased; a blow-out in the budget for aged care, which has occurred alongside the reduced access because of the government's misdirection of taxpayers' dollars; the continued implementation of the government's coalescence policy, which has been described by the Productivity Commission as inappropriate and inequitable; and providers in some states facing very serious problems arising from workers compensation premium increases without any support from the government, which is resulting in a reduction in the quality of care to residents.

These and a number of other problems have emerged as a result of the failure of the government's aged care reforms. The hasty changes introduced in fright in 1997 are now falling apart. They have reduced access to residential aged care, and they have forced providers to compromise on the quality of care delivered to residents. They are failed reforms. These problems are causing distress to older Australians and their families and, in some cases, are forcing providers to reduce the quality of care delivered to residents. What is inexcusable is that the government has known about these problems for some time, yet it has done nothing to address them.

The two peak provider organisations in the sector have raised serious concerns about the minister's inaction in relation to the issues confronting the industry. A recent journal included a headline article from the chief executive officer of one of those organisations, entitled `Government inactivity', that indicated that `issues currently affecting the operation of the aged care facilities are reaching crisis point.' Uniting Community Services has also stated that the minister's inaction in relation to the comprehensive Productivity Commission report into the nursing home sector is a time bomb and that older Australians deserve better.

This bill provided the government with the perfect opportunity to respond to the concerns of residents and their families and to providers and employees in the aged care sector, yet it has merely sought to recycle an 18-month-old bill that does nothing to fix the many problems that have emerged over the last 18 months. Because of the government's inaction, Labor will move amendments to the bill to attempt to address some of the issues facing this sector as a result of the failure of the aged care reforms.

The only reason we are debating this bill today is that Labor put pressure on the government to meet its commitment to residents in nursing homes before 1 October 1997. These residents were promised by the Prime Minister that they would not have to pay the $12 a day accommodation charge, but nothing was done to implement that promise. It was only after pressure from the Labor opposition and questions in the parliament in April that Senator Herron finally committed the government to meeting those commitments to those residents in the 1999-2000 budget.

One and a half years after the government introduced its aged care reforms, the government finally undertook to honour its commitments to them. Unfortunately, many of those residents have since passed away. Because of the government's reluctance to implement its commitments, not one of them has received any refund of the potential millions of dollars they have paid in total in accommodation charges—charges that they should never have paid.

Almost two years after the reforms were introduced, these residents are still required to pay the $12 a day charge. They are still facing financial pressure—pressure to sell their homes and somehow come up with the $12 a day charge when the government has promised they would not have to pay the charge. This is a tragic situation caused by the government's reluctance to act. These residents rightly feel cheated by the government, and the government failed to respond by introducing this bill until June 1999. This, of course, is consistent with its reluctance to debate aged care. The government seems desperate to keep aged care off the political agenda, given the history of losing two ministers in trying to implement these reforms.

I have raised the government's inaction in relation to aged care on a number of occasions in the past. The history of this government's failure in aged care was discussed broadly in the house when this bill was debated in June, and I will not seek to repeat some of that debate today. But the earlier bill that the government introduced was then withdrawn by it. Knowing the problems being experienced by residents and providers, the government chose to drop the bill that sought to fix some of the problems. Facing an election, the government put its own political interests ahead of the interests of aged care residents. Eighteen months later, under pressure from Labor, the government finally sought to introduce legislation when it took the opportunity to recycle the 1998 bill.

The provisions to provide for the refund of accommodation charges to pre-October 1997 residents, inserted at our insistence, are the only major changes to the bill tabled in March last year. Given the history of inaction, it is not surprising that the minister has failed to address a number of significant problems within the Aged Care Act that have become apparent over the last 18 months. In the context of this bill, I will be highlighting just three of the problems now facing the aged care sector: the income tested fee, capital funding and how we deal with poor providers.

In terms of the income tested fee, there have been numerous reports in the media recently about the problems with the government's income tested fee. We have heard that aged care residents are receiving a series of letters from the department, sometimes within a matter of days, each indicating a different level of fee. In one case the department sent three letters to a resident in two days, advising of three different levels of fee. Understandably, residents are confused and upset by this inconsistent advice. Residents, many of whom are pensioners, are rightly distressed when they are then hit with bills for thousands of dollars as a result of the department's confusion.

At the same time, providers are complaining about the complexity of the fee which is requiring more and more staff resources to administer. This means more staff filling in forms and less time caring for residents. These problems flow from the government's bungled implementation of the fee, which was criticised in the recent Audit Office report. That report identifies significant problems with the fee's implementation and ongoing complexity in its administration.

In the face of all these problems, it is not surprising that we have also been getting reports that the department is advising people to divorce to avoid the income tested fee. You know a system has failed when the department's officers advise people to divorce to avoid it. These problems were raised by the sector with the government over a year ago, yet the minister has done nothing to relieve the distress of residents and their relatives. She did not take the opportunity provided by this bill to address those problems. It is just not good enough. Residents continue to receive confusing advice and continue to be upset by large bills for backdated fees that they did not even know they had to pay. Labor calls on the government to urgently introduce legislation to resolve the many problems with the income tested fee and thereby relieve the distress of residents and their families.

I turn to the question of capital funding. A few weeks ago I mentioned an example which graphically demonstrates the failure of the government's arrangements to fund capital improvements in the residential aged care sector. A Victorian nursing home provider closed his facility after it appeared he did little or nothing to improve the infrastructure of the facility. Residents at the nursing home had been paying the government's $12 a day accommodation charge. The Commonwealth had been paying on behalf of other residents the equivalent through the concessional resident supplement.

In total up to $200,000 could have been paid to the provider to fix up the nursing home, yet he was under no obligation to spend any of that money on capital works, and it appeared that he did not do so. Instead he chose to leave the industry and pocket the funds. The minister cannot guarantee residents or taxpayers that one dollar of the $200,000 was actually spent on improving the nursing home.

Unfortunately, this is not an isolated case. In Victoria, in particular, there have been a number of recent instances where aged care facilities have closed their doors. In all these recent cases, the provider has been under no obligation to spend the funds collected from residents through an accommodation bond or charge on capital improvements. In all cases, the provider has been under no obligation to spend taxpayers' money collected through the concessional resident supplement on capital improvements. In all cases, the provider can simply pocket the money and walk away with hundreds of thousands of dollars. This bill does nothing to prevent that circumstance recurring.

While the providers who close down their facilities in these circumstances are few and represent the small minority of irresponsible providers in the system, there are other providers who are using the funds raised through the accommodation bonds and charges to cover ongoing costs. Under the current system, they are perfectly entitled to do so. These providers have the interests of residents at heart and are compensating for a lack of recurrent funding by dipping into their capital funding stream. Unfortunately for the provider, this has long-term consequences as these providers will have little or no means of refurbishing their facilities in five or 10 years time.

The current system is disguising the crisis in ongoing funding that many providers are facing—a crisis that the Productivity Commission identified in its recent report into nursing home funding. Some providers are sacrificing future capital reserves to meet current costs. Accommodation charges were introduced to fund capital improvements. We do the residents, the providers or the taxpayers no favours by refusing to quarantine those funds. I think this highlights a significant failing of the current Aged Care Act.

The funds collected from residents are not quarantined specifically for capital improvements. Attempts were made by both Labor and the Democrats at the time the act was passed to tighten accountability for the use of these funds. However, they were resisted by the government and the current arrangements have proved to be ineffective. At the time Labor raised the very possibility of the situa tion that has unfolded with providers simply incorporating the capital funds into their daily budgets. The minister has proudly produced graphs showing the amounts the new user-pays fees raise and claims that this will meet the capital needs of the sector, but she cannot guarantee that one dollar of that money is actually spent on capital improvements.

Nursing home residents have been told they must find $12 a day to fund the capital development of the aged care sector when many of them simply cannot afford it, and the government has not put any accountability arrangements in place to ensure that the money is directed to improving their accommodation. It must be remembered that accommodation bonds and charges are only half the picture. We know that 47 per cent of residents are not paying any accommodation bond or charge. In this case the Commonwealth pays the provider $12.34 a day through the concessional resident supplement. There is no provision in the current Aged Care Act that defines what that money should be used for. Providers are able to simply pocket that money. This year the Commonwealth will spend $142 million on the concessional supplement, next year it will be $169 million and the year after that $181 million, yet we have put no conditions on how that money should be used. Given that the concessional resident supplement is paid when the resident cannot afford an accommodation bond or charge, the clear intention is that the supplement be used for capital improvement. The Aged Care Act does not reflect that intention. We will move amendments to try to ensure that funds raised from residents through their accommodation bonds and charges are used for capital improvements and that taxpayers' dollars spent on the concessional resident supplement are similarly used for that purpose.

Where a provider closes a facility, forcing residents to relocate to other facilities, the provider will have to ensure that the money is used for those purposes or refund it to taxpayers and residents if it has not been used on capital improvements. A provider should not be allowed to accumulate these funds, knowing that they will close down, do no capital improvements and simply walk away with the money. That is a very real issue as accreditation approaches. The current arrangements encourage providers in this situation to do no capital improvement. Our amendments will require providers to refund any moneys collected through the accommodation bonds or charges or the concessional resident supplement when that money has not been or will not be spent on capital improvements. If a resident pays $12 a day to the provider for that purpose and the provider chooses not to spend that money on improving the facility, the resident is entitled to a refund of the money.

The recent cases in Victoria also highlight another significant problem in the government's Aged Care Act—how to deal with poor providers. The department have indicated to me that there are a small number of providers that they would like to close down but cannot because of difficulties with the act. As a result, the government is now proposing an amendment that will allow for the gradual wind-down of a facility when it wants to revoke a provider's approval to operate. While I can understand the rationale for this amendment, it raises significant issues over the care of residents in a facility that is being wound down and poses real risks to their health. These residents will potentially be left for an extended period in a facility that has been assessed as not providing an adequate level of care. Given the shortage of alternative places in some areas, the resident may have to wait for months as the facility is gradually wound down. In this situation, there is a clear need to ensure that these residents are being appropriately cared for. We should not set up a situation where we leave residents in a facility under the control of a provider who is known to have acted irresponsibly in failing to provide appropriate care to residents.

The problem will only get worse as the January 2001 accreditation deadline approaches and some providers make a decision to leave the industry and make as much money as they can in the process. They will be looking to cut staff hours and reduce the level of care provided to residents. They will be looking to cut back on the quality of food and generally looking to save costs. It has to be remembered that residents are potentially in a very vulnerable position. Some of them may have no relatives within the area to regularly visit them, some may be suffering dementia, all of them are physically frail. I find it appalling that the government is now proposing an amendment to allow a known poor provider to continue to operate for six or 12 months, while the facility is gradually wound down, without providing extensive additional protections for the residents. The provider knows they are being closed down and therefore has every reason to try to extract the most money they can from the facility in the time remaining, which means reducing the quality of care to an intolerable minimum. I have serious concerns about the provisions in the act in relation to the investigation of complaints. Many people have noted the current provisions do not ensure that complaints are promptly and thoroughly investigated. To rely on these provisions in the case where a known poor provider is allowed to continue to operate a facility is inviting disaster. The Labor opposition will move amendments to ensure that the care of residents in this situation is monitored by a departmental officer who will report directly to the minister.

We will also move amendments that seek to protect the interests of employees when a nursing home is closing down. We know of a number of instances where staff have been left owed large amounts of money—termination and leave pay—by providers exiting the industry without meeting their obligations. The department has the ability to prevent the sale of the licence if those debts are not met, and we think it is an important reform to provide for those employees. The government has accepted the need to protect employees in these situations in other industries, and we think it should accept its responsibilities in the nursing home industry as well.

I look forward to contributing in the committee stage of the debate to this important legislation. We have tried to highlight that we do not think this legislation goes far enough as a legislative response to the problems confronting aged care. Many of the problems have not been addressed. We think the government should have a much more comprehensive response to the issues confronting the industry. We will attempt at the committee stage to deal with some of those, but we really do require a more comprehensive legislative response, and we require a government commitment to address the issues in the industry rather than delay, defer and hope that somehow they will go away. There are real problems that need to be addressed, and I urge the government to start being accountable and to start addressing those concerns of the industry.