Senator HOGG —My question is to Senator Herron representing the Minister for Aged Care. Will the minister confirm press reports that the government will be abandoning the policy of coalescence in aged care, a policy that was rejected by the Productivity Commission? Will he also confirm that the Prime Minister's office has been forced to intervene to resolve the issue, given the failure of the Minister for Aged Care to work with the sector towards a solution? Isn't the government's backflip on this issue a response to pressure from the Queensland coalition backbenchers, led by the member for Fadden, and does the minister support the attacks by the member for Fadden against Minister Bishop on this issue? Isn't this yet another example of the failure of the Minister for Aged Care to handle difficult issues in her portfolio?

Senator HERRON (Aboriginal and Torres Strait Islander Affairs) —One thing I have learned after being in this place about nine years is to gauge media reports and such things very carefully. An even more important thing I have learned is to gauge even more carefully assertions made by the Labor Party spokesman. I know Senator Hogg has not been here that long but he has been very active in Labor Party affairs, and I am sure that he would be very wary of propositions that were put to him. I do not believe those assertions that are in the paper. I have certainly campaigned for a resolution to the coalescence question—as all of my fellow Queensland senators have done—because it is a significant thing for Queensland. I am sure that is why Senator Hogg is putting this proposal as well. But I think it should be put in the context that the government publicly released the Productivity Commission's report on nursing home subsidies on 31 March this year. The report endorses the government's intention to move towards uniform national subsidies for residential aged care. The Productivity Commission also found no evidence of a funding crisis in the residential aged care industry. The Productivity Commission says:

The substantial prices paid for bed licences do not sit comfortably with the view that there is a funding crisis in the sector. Similarly, the commission notes that many homes, private for profit and not for profit alike, are producing operating surpluses under the current subsidy levels, even in the lower subsidy states.

Now that the Productivity Commission's report has been released, the government has conducted a series of consultations, and those consultations are continuing. Industry and consumer stakeholders in all states have been consulted on the key issues raised, and when these consultations are completed there will be a whole of government decision on the recommendations and the way ahead. Just because the industry want a decision accelerated in their favour in my own state—and I can understand that because that is what industry does, and I commend them for their activity—that is not going to force the hand of the government into making a decision that will influence the whole of the country.

The government will be especially mindful of the impact on the industry and on those older Australians who live in nursing homes and hostels. In 1995-96 the Labor government spent $2.5 billion on residential aged care across Australia. The outlay in 1999-2000 is budgeted to be $3.5 billion. That is an increase of 42 per cent since the coalition was elected to government in 1996. We will be continuing to consult with the industry and with the residents of nursing homes and hostels. We will respond to our reports at the appropriate time, because it is an important question that needs to be determined by government, that needs a whole of government response to be developed.

Senator HOGG —I ask a supplementary question. Is the minister aware that Aged Care Queensland has been left out of the discussions between the sector and the government on this policy backdown? Can he confirm that, along with the ill-fated accommodation bonds, this is another of the government's aged care reforms that will be jettisoned by the government?

Senator HERRON (Aboriginal and Torres Strait Islander Affairs) —At the risk of repeating myself, which I am not wont to do, Aged Care Queensland has been very active in lobbying all my colleagues and me. To my understanding, they have briefed departmental offices. If the implication was that they have not met with the minister, then I will follow up on that. But I am certainly aware of the fact that there have been extensive consultations from Aged Care Queensland both with the minister's officers and with the department.