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Thursday, 29 March 2007
Page: 78


Ms ROXON (1:43 PM) —I rise today to speak on the Aged Care Amendment (Residential Care) Bill 2007. This bill is to amend the Aged Care Act 1997 to introduce a new arrangement for allocating subsidies in residential aged care called the Aged Care Funding Instrument, or the ACFI. The bill also changes the current arrangements, in which classifications expire after 12 months. It removes the requirement for providers to submit reappraisals but gives providers the option to reappraise a resident after 12 months. The amendments also allow a provider to accept a resident’s current classification when a resident moves from one home to another rather than being required to submit a new appraisal.

The Aged Care Act 1997, as it currently stands, allows the secretary to suspend a provider from appraising residents for funding purposes if the provider repeatedly fails to conduct appraisals or reappraisals in a proper manner. This amendment allows the secretary to stay the suspension subject to the provider meeting certain obligations. These obligations may include appointing an adviser at the provider’s cost or undertaking training. This is aimed at encouraging providers to conduct appraisals and reappraisals properly to avoid a suspension coming into effect.

The ACFI was designed to reduce the amount of documentation generated in aged-care facilities that is required by the Commonwealth to justify the funding classification for each resident. The reduction of paperwork for aged-care staff is welcome and trials indicate it will allow staff to spend more time on resident care, rather than filling in forms—something that I am sure everyone in this House believes is desirable. Despite that, as a number of concerns have been raised by the aged-care sector, Labor has referred the bill to the Senate Standing Committee on Community Affairs for inquiry. Following the inquiry, amendments may well be necessary in the other place.

I will go back to the history of the resident classification scale and the excessive documentation that has been required up until now. As the New South Wales Nurses Association has pointed out, the federal government’s aged-care reforms in 1997 and the introduction of the Aged Care Act 1997 resulted in increased regulation of the aged-care industry and the introduction of a complex funding instrument called the resident classification scale, or RCS, which made Commonwealth funding contingent on the completion of excessive documentation for each resident. The burden of completing this paperwork fell to registered nurses in aged-care facilities. It significantly increased their workload and reduced their ability to care for residents and provide support for the other care work in aged-care facilities. The government has been aware of the burden of that paperwork since its introduction in 1997, yet it has taken a full decade for it to actually do anything about it.

A review of the operation of this system, the resident classification scale, was announced on 9 May 2002. The review was commissioned to address industry concerns about the excessive documentation and new funding instruments were proposed and trialled. The aim of the new funding instrument was to have fewer basic funding categories than in the RCS and to include two new supplements to better target available funding towards the highest care needs. In particular, residents with dementia and challenging behaviours—and residents who had complex health and care needs, including palliative care—were included. The new supplements were to be implemented from within the basic subsidy funding, which is currently allocated by the RCS.

The government announced in the 2004 budget that it would implement a new funding system for residential aged care in response to recommendations from two reviews. Firstly, there was the review of pricing arrangements in residential aged care undertaken by Professor Hogan, the report of which was handed down in 2004. This made both short- and long-term recommendations to ensure the sustainability of the sector. Secondly, the new funding system was to reflect the principal recommendation of the resident classification scale review. Since the 2004 announcement, several projects and trials have been commissioned by the government to identify and test a new funding model. These trials were completed in October 2005.

The new ACFI, the Aged Care Funding Instrument, which was originally announced for introduction on 1 July 2007, has now been deferred. The former Minister for Ageing recently announced that the instrument would now be introduced on 20 March 2008 as part of the government’s securing the future package. It is felt by many in the aged-care sector that the introduction date of 20 March 2008 should have been deferred to 1 July 2008 to bring it in line with the financial year. This would make it easier for the sector to undertake analysis of their expected financial status after the ACFI is introduced.

This deferral was in response to the government’s February aged-care funding announcement, as I have mentioned—Securing the Future of Aged Care for Australians—where the subsidies will be assessed according to the new funding instrument. While the government’s new funding package was welcomed by providers at the time of the announcement, as more information and further analysis has been undertaken the aged-care sector has become increasingly concerned about the potential loss of funding and the impact on care provision, particularly in low-care facilities.

The Aged Care Association of Australia, which represents predominantly for-profit providers, has called on the government to resolve the flaws in its package as a matter of urgency. I quote from Mr Young, who is the CEO of the Aged Care Association of Australia:

ACAA initially supported the package ... however an examination of the detail of the package has revealed that the Government has removed two supplements that will be worth nearly $300M in capital and care to providers over the life of the package.

He went on to say:

The removal of the supplements significantly undercuts the apparent merits of the package.

The removal of these supplements will have immediate impacts on the viability of many providers and the capacity of many to continue to provide existing levels of care ...

                   …              …              …

As it now stands, this is not the package the Government has been promising to deliver to the industry and older Australians for the past year or two following the Hogan Report ...

These are pretty serious comments from someone who is the CEO of the leading organisation in the aged-care sector for for-profit providers. Aged and Community Services Australia, ACSA, which represents the predominantly not-for-profit part of the aged-care sector, have stated:

Changes are required to the Australian Government’s package of aged care funding measures ...  if they are to achieve their stated objectives without unforeseen consequences.

Greg Mundy, the CEO of ACSA, went on to say:

We were initially very pleased with the package but as more detail became available on the various offsets and trade offs contained within it, it became clear that the gains were modest and that there were significant negative impacts.

He continued:

Worse than this, many low care homes may actually be worse off under the proposed measures.

Again, that is a pretty serious allegation from this peak organisation. The Chief Executive of Churches of Christ Homes and Community Services in Western Australia, Wayne Belcher, has undertaken economic modelling on his aged-care services and has said that the government’s securing the future funding package ‘fails the test of reasonableness’. He said:

Upon reviewing the detail of the announcements, there is little average additional accommodation revenue gained. Indeed for our current mix of clients we anticipate losing approximately $860,000 over the next five years based on the full content of the package provided by the Department of Health and Ageing.

These losses are directly related to removal of a means tested fee for some new residents from our current operating subsidies from 20 March 2008, and also the removal of a pensioner supplement for many of our residents from our operating income to accommodation.

He went on:

Some organisations might fare better, but my view is that even after five years the offering is nothing better than an indexation of real costs—insufficient to service a loan for new buildings. We are in a position where we may no longer be able to support the cost of building a nursing home for Grandma.

He continued:

The Australian government has failed to meet its reasonable commitments to residential aged care funding through these recent announcements.

So yet again we see another government announcement which is welcomed at the time but where the devil is in the detail. We now see three leading organisations in the sector being extremely critical of the approach that the government is taking.

In the Australian Financial Review on Wednesday, 28 March, further concerns were raised by the President of Aged and Community Services Australia, Glenn Bunney. He said that 10 days after the funding package was released he had seen the Department of Health and Ageing financial modelling that showed the ‘vast majority’ of aged-care home operators would be left worse off under the reforms. The government must now publicly release their financial modelling so that providers can assess their financial position and the public can determine whether the government has hoodwinked them over its $1.5 billion funding announcement.

As I said earlier, the date of commencement of the new ACFI, the Aged Care Funding Instrument, has been deferred to 20 March 2008. It is thought that this date has been chosen as it is the date that pensions rise in line with indexation. However, sector representatives advise that this is irrelevant to them, as care subsidies are not related to accommodation charges. This matter also needs to be pursued during the Senate inquiry. The level of funding to be allocated to each care level has not been provided by the government and aged-care providers are unable to make an assessment of the effect that the new instrument will have on their facilities’ financial operations. These issues also must be pursued during the Senate inquiry.

In conclusion, Labor is prepared to support the bill in principle in this place. However, we require that attention be given to the Senate inquiry and any recommendations that come from it to ensure that these matters can be resolved and any unintended consequences can be nutted out. In the interim, the aged-care sector also needs to know the subsidy levels that will apply to each level of the Aged Care Funding Instrument. The sector must be provided with this information so that it can undertake its own financial modelling on the impact that the government’s proposal will have on its services. I trust that the government, with the advisers who are here in the box today, will ensure that that information is made available so that a proper inquiry can be conducted into the impact of this bill and, when it is debated in the other place and no doubt returned here, we will have that information in front of us. I commend the bill to the House.