Dr NELSON (9:12 PM) —The purpose of the Aged Care Amendment (Omnibus) Bill 1999 is to address the administrative and procedural issues that arose from the introduction of the aged care standards re forms in 1997. I will speak about these in a moment. The bill seeks to do a number of things. The first is to clarify the provisions for pre-entry leave. The second is to strengthen revocation action which would be taken by the secretary to the department where a provider was no longer considered suitable to be providing services—as the member for Grayndler pointed out, to give effect to sanctions. The third is to formalise the daily accommodation charge for people entering high level residential care. The fourth is to similarly formalise the reduction of the qualifying period for co-residence for a carer or close relative of the person occupying the family home and in receipt of an income support payment from five to two years.

It also provides authority for residents who have already paid an accommodation bond in a hostel to roll over that bond on entering a nursing home instead of paying an accommodation charge in lieu of it. It further enables legal provision for representation of people with mental impairment so the accommodation payment arrangements can be entered into within a defined period. It further exempts from payment of an accommodation charge those nursing home residents who were in care at the commencement of the Aged Care Act 1997 and who would otherwise be liable to pay an accommodation charge on moving to another aged care service.

The bill also ensures that concessional resident status applies to a person who has a determination in place that the payment of an accommodation charge would cause financial hardship. This status currently applies only to a person for whom a waiver for an accommodation bond actually exists. Finally, it allows for rental income to be excluded from the pension income test, and the value of the home will be exempted from the pension assets test where a former home is being rented to pay for an accommodation charge—this being one of the options available under the act for those who are liable for an accommodation charge, and for them to meet it.

The member for Grayndler in his contribution made a number of remarks, some of which I would like to address. The first is that he said that the government's aged care reforms were the government introducing some kind of competition into the sector. The reforms themselves do not change the nature of competition within the sector but, in fact, it is a limited form of competition that is actually required. One of the reasons why we have seen a phenomenon, over the last decade in particular, of some nursing home proprietors acquiring racehorses, expensive pieces of property and all kinds of other things—whilst owning a nursing home or a number of homes that would not be the sorts of places into which you would like to place one of your parents—is that there is a lack of competition.

You actually have aged care assessment teams assessing the need of a person to go into a residential aged care facility. The nursing homes themselves have occupancy rates in excess of 95 per cent, usually approaching 98 to 100 per cent. Why should you spend money on your nursing home when you have quite a lengthy list of people waiting to go into it and the money could be siphoned off and put somewhere else? When you think about it, we spend over $3 billion on residential aged care on 135,000 nursing home and hostel residents. You have to wonder whether all of the money that is allocated is actually going to where it is intended.

The further point that is made by the member for Grayndler is that people have had to sell their homes to go into a nursing home. I do not know whether he is aware of it but, when the act was actually introduced prior to these reforms, 50 per cent of people sold their home to go into a nursing home.

He also alleges that the reforms have not raised enough money to spend on capital. I will emphasise this point in a few moments, but in 1992 the previous government allocated $45 million for all of the nursing homes in Australia for capital upgrading and maintenance. By 1995, that allocation was $10 million. These reforms will raise between $1.2 billion and $1.3 billion over a 10-year period for capital expenditure. Also, with the introduction of an accommodation charge for the first time, we actually have prospective residents and their families asking questions about whether in fact they are prepared to pay an accommodation charge to go into the facilities which are available to them.

The member for Grayndler said that the legislation should ensure that the money is actually spent on capital. One of the things that the legislation does is introduce an aged care Standards and Accreditation Agency and a quality assurance framework which ensure that, no matter what standard a nursing home is actually at, it has significant incentives applied to it to improve its capital.

Finally, on the issue of coalescence, the concept of coalescence was actually argued for by the industry. In fact, across the country there is variation in terms of superannuation and workers compensation. It depends in no small way on the number of beds in a nursing home facility. You can have a nursing home—for example, a 25-bedder in Victoria where there is a disproportionately large number of such facilities—that might well be competing with a 90-bed facility in Queensland that has completely different economies of scale. The Productivity Commission inquiry was as necessary as it was overdue.

More than anything else, the ageing of Australia will change the political, economic and social priorities of this country—and in many ways it already has. Our life expectancies are increasing and, with the exception of indigenous Australians, are amongst the highest in the world. The circumstances that we all face as Australians are these. At the moment, about five per cent of us over a lifetime will eventually need some form of residential aged care. Currently 135,000 people are in receipt of such care. About 13 per cent of us are over the age of 65 at the moment; by the year 2010, it will be around 16 per cent. About eight per cent of Australians over the age of 75 and a quarter of Australians over the age of 85 suffer from dementia. The next 40 years will see a 300 per cent increase in this age group alone. In fact, whereas last year Australia had 1,660 centenarians, by 2060, there will be some 54,000.

The National Commission of Audit, which was commissioned by the government shortly after it came to office in March 1996, included significant work by the retirement income modelling taskforce. It found that in 1993 the ratio of Australians between the ages of 15 and 64 was 5.3 to one. It is called an age dependency ratio. It is estimated by the National Commission of Audit that, by the year 2030, that ratio will be 2.6 to one. To put it in other terms, we will need to spend 10 per cent more of the nation's entire productivity on the health and welfare costs of ageing just to maintain the current level of services, above and beyond real growth. In other terms, in 1996 dollars, in the year 2030 we will need to spend $38 billion, if you include $6 billion in pensions, on the health and welfare costs of ageing. That is more than the relative drain on the Australian economy during the banana republic crisis of 1985.

The ABS estimates at the moment that about seven million Australians are working, and they support some 6.2 million Australians, most through no fault of their own, who are relying on some form of social security benefit. In 1974, we spent 7½ per cent of GDP on welfare. By 1995, it was almost 15 per cent. When the previous government was starting to turn its mind to the issue of aged care, in 1992 it consulted Andersens, and in 1993 it commissioned Professor Bob Gregory from the Australian National University who was also on the board of the Reserve Bank to do a major review of the nature of Australia's residential aged care and what problems it might have.

Amongst other things, Gregory found that we would need to spend $1 billion on fire, health, design and outcome standards just to bring Australia's nursing home stock up to acceptable standards in 1994. The Australian Valuation Office study of 150 nursing homes for the Gregory report found that three-quarters of homes needed to be fixed or completely rebuilt to meet Australian design standards. Seventy per cent of homes failed to meet outcome standards. Thirteen per cent did not meet fire standards. Thirty-nine per cent of residents in nursing homes lived with at least three other people, and 13 per cent lived with at least five other people. Gregory reported:

Since 1987, irrespective of the type of accommodation received, a nursing home resident, irrespective of income, pays a set fee representing 87.5 per cent of age pension, meaning that the wealthiest person in the country can be accommodated in a nursing home for this rate of payment.

Yet, as Gregory also told us, 85 per cent of residents at that time had income above this, totalling $238 million in 1994. Then you wonder why the government introduced the same kinds of reforms in 1996 that the then Labor government introduced into the hostel sector in 1988. To complete the scenario, while all this was occurring Labor was actually reducing the capital funding provided to nursing homes from $45 million in 1992-93 to $10.7 million in 1995-96. To put that into perspective, this government is currently providing $40 million in capital funding for nursing homes in low income, remote and rural areas. This was also in the context of a government that was financing essential social infrastructure on debt and asset sales while simultaneously casting the social security net further across the nation's income bands and condemning an increasing number of Australians to a future of government and welfare dependency.

As I said to the member for Bass last sitting week, whatever our politics we cannot have it both ways. We cannot live in a country that, up until recently, was sustaining underlying growth rates of between two and three per cent and, on the one hand, say, `I am not going to have waterfront reform, industrial relations reform, regulatory reform; I am not going to consolidate the finances of my country; I am not going to undertake reforms in communication and energy' and, on the other hand, snuggle into bed at night and say, `Yes, but I want every Australian to have a first-class and free education; I want every Australian, irrespective of their means, to be able to have access to a fully funded government nursing home place or for all of us to have access to the most modern health interventions that are available and to have them provided basically by the government.' As noble as those objectives might be to many Australians, they are simply not achievable.

The options that we have ahead of us are these: we can live in a country that sustains over a very long period of time very high rates of growth and we can provide all these things; or we reduce services; or we increase taxes, which has significant impacts on wealth creation and employment; or we introduce some kind of user-pays for those who are able to afford to do so.

When the Labor Party went to the 1996 election, it took with it a policy on aged care that was 211 words. Yet many well-intentioned and decent members of the opposition stand up in this place and give us all kinds of lectures about what we have sought to do for what is best not only for aged care but for the future of this country, standing behind a policy of 211 words. When you read between the lines of that policy you will find that, had the Labor opposition won in 1996, much of the reforms initiated and, with some courage, taken through by this government would have in fact been implemented, I believe, under a Labor government.

Central to these reforms have been accommodation charges. Particularly if we look 30 or 40 years hence, if we as a government cannot raise the resources to fund all of these things, we have said that those people who can afford to do so ought to make some contribution for their nursing home care, and that is what we have done with accommodation charges. Similarly, we have introduced income tested daily fees. We have sought to amalgamate the nursing home and the hostel sectors and have started with the new resident classification scale. We have also established the Aged Care Standards and Accreditation Agency, and we have done so in consultation with the industry, who have been a major driver in this regard. So no matter what level a nursing home is at, it actually has to improve beyond the standard that it is currently at.

I have visited over 60 nursing homes in three states, often at four o'clock in the morning, when you really find out what they are like. When you walk into one of these places the critical test is asking yourself: is this a place that I would like to have my mother in? Many of them are, but I can tell you that many others most certainly are not. We have also made a contribution to capital infrastructure in nursing homes which is four times the amount that was actually budgeted by the previous government when it left office in March 1996.

In terms of accreditation, the government has introduced an accreditation based quality assurance system for residential aged care services. We have developed, in consultation with the industry and in a way which reflects practices in many other industries, a form of accreditation. As agreed with the industry, the providers will be required to pay a fee to cover some of the costs of accreditation. It will not in any case be more than one per cent of the revenue going to that particular nursing home. We are providing a subsidy level on a sliding scale that is linked to the number of approved places or beds that are owned by the facility. The fees are for all providers and they will be subsidised by the government. The fee and subsidy levels have been developed using coverage and industry income, and the cost to each service will be less than one per cent of average annual income. Providers with fewer than 10 beds will be fully subsidised; those with up to 19 beds will be partially subsidised. All Commonwealth funded aged care facilities need to meet accreditation standards by 1 January 2001 and they need to have applied for accreditation by January next year. If they have not done so, there will be no Commonwealth funding.

I go back to the comments made by the member for Grayndler in relation to competition. What we need a bit more of in this sector is competition, not less of it. I have not yet been through this process with my own parents, but over the years I have been through it with patients and their families. When you reach that point where an aged care assessment team assesses a person's needs and says that residential care is required, there is no market; you basically have to go where you are told to go.

Some of the places into which people go are dumps, but they have no choice. With an accommodation charge of $4,380 perhaps being required for each year for up to five years, prospective residents and their families—and perhaps in some cases their lawyers—are now at least actually asking questions about the quality of the facilities into which they are going. However, if nursing home occupancies were 95, 90 or 85 per cent, perhaps the proprietors, people running hotels or motels, would have more incentive to put on extra rooms, to put money into painting and upgrading the facility—in other words, to make that facility more attractive to those people who essentially are buyers subsidised by the government in the marketplace, with the assistance of aged care assessment teams.

Essentially, the process of accreditation will require self-assessment by a provider. The provider then applies to the Aged Care Standards and Accreditation Agency, and the provider can nominate three preferred assessors. There is then a desk audit and, if that is okay, they will move on to a site audit. The decision to accredit will be for a period of between one and three years. This is a process that is very much long overdue.

In concluding, I would just say this: one of the tragedies of our parliament is that, no matter what the government does or whoever the government is, the opposition feels it has a moral obligation to oppose everything that is being suggested. I just repeat what I said when all of these reforms went through. By all means, criticise the detail of what the government is doing even while supporting that detail. But, as a matter of principle, it is absolutely critical to this country that we introduce a form of sustainable funding for residential aged care which ensures not only that there is a place available when we eventually need it but also that it is a place of quality and one in which you would be proud to be placed or have a member of your family placed. If we do not set into this system now some kind of user-pays provision for those who can afford to pay it, we are abrogating our responsibilities to the future of aged care in particular. (Time expired)

Debate (on motion by Mr Tanner) adjourned.