Senator SIEWERT (2:21 PM) —My question is to Senator Ludwig, the Minister representing the Minister for Ageing. My question relates to the open letter to the PM today around aged care, one which concerns the widening gap between the cost of delivering aged-care services and the funding provided by the federal government. I draw the minister’s attention to the stark figures of the provision of a 1.7 per cent indexation rate at a time when CPI is 2.9 per cent, the minimum wage rise of 4.8 per cent, the rising of utilities costs—for example, in WA—of up to 10 per cent, and the current pay equity case before Fair Work Australia. My question is: will the government immediately restore the 1.75 per cent conditional adjustment payment supplement for residential care, and also extend it to community care from 1 July this year?

Senator LUDWIG (Special Minister of State and Cabinet Secretary) —I thank Senator Siewert for her question. I know that Senator Siewert does have a continuing interest in this area. Can I also indicate that at the conclusion of question time I can also table a letter to Mr Rod Young, the chief executive officer of the Aged Care Association Australia from the minister, Justine Elliot, in response to that open letter.

The annual indexation of aged-care subsidies is based on a formula introduced in 1996. The formula reflects minimum wage decisions and movements in prices in the broader economy and, of course, given the decision of Fair Work Australia not to increase the minimum wage through 2009, the application of this formula would have resulted in an increase in subsidies of substantially less than one per cent. To lessen the impact on aged-care providers the government adjusted the formula, resulting in indexation of subsidies for 2010 to 2011 of 1.7 per cent. Of course, in accordance with the recent decision of Fair Work Australia to increase the minimum wage—which is the first since 2008 and which will benefit more than 1.45 million Australians who rely on awards to set their pay—and in accordance with long-standing practice, the most recent decision will be factored into future outcomes.

I also welcome the opportunity to look at our record as against the previous government’s record on that. Under this government total funding for aged care and community care has increased by nearly 30 per cent, or more than $2.4 billion. In 2010-11 total funding will increase again to $10.8 billion, with nearly $7.4 billion of that for residential aged care. The opposition do carp about their role— (Time expired)

Senator SIEWERT —Mr President, I ask a supplementary question. I note that the minister did not answer the question, which was: will the Rudd government restore the capped supplement of 1.75 per cent to the aged-care sector to acknowledge the crisis that is facing the sector and which was outlined in the open letter to the Prime Minister in most Australian papers around the country?

Senator LUDWIG (Special Minister of State and Cabinet Secretary) —I did indicate in my answer that—

Senator Abetz —No, you bashed up the opposition and didn’t answer the question.

Senator LUDWIG —I do have a letter from the honourable Justine Elliot MP, Minister for Ageing, which I intend to table at the conclusion of question time if I am permitted by those who are carping on the other side—the opposition, of course.

The Rudd government is engaged in fundamental reform of the health and hospital and aged-care systems. The government is taking a full policy and funding responsibility for aged care to build a national aged-care system. We are supporting that national system through—and these are the issues that we are trying to achieve for the aged-care system—better access to services by establishing one-stop shops for aged-care information assessment, more highly trained aged-care workers, more aged-care places, better access to GP and primary health services, greater choice through the introduction of consumer-directed care and stronger protection for older Australians receiving care. The government welcomes, of course the aged-care sector commitment to— (Time expired)

Senator SIEWERT —Mr President I ask a further supplementary question. I will not waste my third question asking the same question again; I will take it that the answer to that question is no, they will not. Measures that the government have taken to date do not address the current crisis in aged care. Will the government acknowledge that the current system is unsustainable, and what do they intend to do about it?

Senator LUDWIG (Special Minister of State and Cabinet Secretary) —Firstly, what I dealt with, in part, was the question and then supplementary No. 1 dealing with Minister Elliot’s response. In addition, I have been adding what we have committed to, to assist the aged-care sector. Any of those questions I will also consider and take on notice, and see if the Minister for Ageing can provide any additional response to what I have already provided.

Can I add that this government is better integrating aged-care services with the rest of the health system through local hospital networks. And can I say to Senator Siewert that we are taking aged-care reform very seriously—to build a modern system that provides better support and better care to older Australians. The reforms that we are implementing will build the foundation for a modern aged-care system, and these are reforms that have been welcomed by the aged-care sector. (Time expired)