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Wednesday, 20 June 2007
Page: 66


Mr HENRY (1:20 PM) —There is no doubt that one of the biggest and greatest challenges facing us is how we prepare for our ageing population. There is no doubt that our population is ageing. Mr Deputy Speaker, I am sure you share that with me. Baby boomers are reaching their early 60s. I am right there; I am a 1946er at the leading edge of the baby boom population. I have no fears about the future for aged care in this country. Since 1996, the policies of the Howard government have established a great foundation for the future development and care of ageing Australians.

As baby boomers reach their early 60s, we face a challenge to ensure that the largest demographic is properly catered for, not just by ensuring financial certainty with support in age pensions but through health care, aged accommodation and quality of life. Our population is ageing. We need to ensure that we can respond properly and promptly to the challenges that occur in the area of aged care. Last year there were over 312,000 Australians aged 85 and over. Over the next 20 years, the number of Australians aged 70 and over will grow 3.3 times faster than the growth of the total population. It is a very interesting statistic when we look at the needs of our aged. Our population of people aged 80 will double over the next 20 years and triple over the next 50 years.

However, as I mentioned, I feel very optimistic about the future of our ageing population. Importantly, the type of accommodation provided for them will be an essential part of that. The requirement for supported accommodation is a huge concern that needs to be addressed. According to the latest data on aged care in the Productivity Commission’s Report on government services 2007, there were, as at June 2006, a total of 163,468 residential aged-care places across Australia. At that time there were just under 3,000 residential services providing these places. The Commonwealth’s contribution to the funding of these residential aged-care places, including the funding for aged-care packages in 2005-06, was about $5 billion.

The Howard government for years has been working to ensure that older Australians have a secure future. In 1996, the Treasurer, the Hon. Peter Costello, released a white paper which highlighted the requirement for major structural reform within the aged-care sector to prepare to meet the challenges being posed by the ageing population. The Aged Care Act was passed by parliament in 1997. The act provided for the establishment of a single residential care program, the improvement of service standards and the improvement of building standards. Previous to the Aged Care Act, Australia had two distinct and separate residential aged-care programs: the hostel system and the nursing home system. That act merged these into a single residential care system and introduced the resident classification scale, or RSC, to provide a means for assessing resident care needs and allocating funding.

The 1997 act improved service standards through the introduction of the accreditation system and the formation of an independent Aged Care Standards and Accreditation Agency. The accreditation system is built around 44 outcomes across four standards: management systems, staffing and organisational development; health and personal care; resident lifestyle; and physical environment and safe systems. These accredited standards provide both government and consumers with confidence in the quality and standard of Commonwealth funded aged-care services. The act also provided for a certification system, which has seen a vast improvement in building standards. The certification system requires all buildings to be independently assessed against rigorous criteria, which include safety, security and resident privacy. From 2008, new space and privacy requirements will become part of the certification regime ensuring that residents can move from their family home to an aged-care facility without a loss in accommodation standards.

In May 2002, the Treasurer, the Hon. Peter Costello, released Australia’s first Intergenerational report, which identified emerging issues associated with an ageing population. As a response to that Intergenerational report, the 2002-03 budget allocated $7 million for a review of Australia’s residential aged-care system. This review, headed by Professor Warren Hogan, was asked to examine the current and alternative funding arrangements for residential aged care; examine the long-term financing options for residential aged care; recommend the appropriate future public and private funding arrangements, including appropriate future indexation arrangements for the industry; and examine performance improvement in the industry, including the appropriate use of performance indicators and long-term financing of the aged-care industry. The Hogan review was delivered to then Minister for Ageing, the Hon. Santo Santoro, in February 2004. It set out 15 recommendations for immediate change and five medium-term recommendations for a sustainable industry, and posed six options for further consideration.

The resident classification scale is a tool used to fund residential aged care. In his report, Hogan recommended that the number of resident classification scales be reduced. He stated:

... main disadvantages identified in the current funding delivery mechanism are the administrative burden inherent in the RCS and the adequacy of the current funding arrangements to approximately compensate for the care needs of particular groups of care recipients.

Key among the recommendations for immediate change were recommendations 5 and 6. Recommendation 5 dealt with basic subsidies and how they should be paid, recommending three levels—high care, medium care and low care—to replace the existing resident classification scales categories in the following way: (a) low care to consolidate current RCS levels 5 to 7, (b) medium care to replace RCS levels 3 and 4, and (c) high care to replace RCS levels 1 and 2.

Recommendation 6 dealt with arrangements through which supplements are paid. The Aged Care Funding Instrument, ACFI, gives effect to these recommendations. Aged-care residents’ classification is important because the amount of Commonwealth subsidy paid to residential providers depends on the classification level that residents are placed in. For example, a resident classified on the scale at level 7 receives a daily basic subsidy of $26.27, whilst those patients classified at level 1 receive a basic daily rate of $122.77. The average subsidy paid to approved providers per occupied aged-care place in 2005-06 was $34,000. That is an average of $34,000 per person in aged-care beds.

Amendments in this bill aim to replace the resident classification scale with a new Aged Care Funding Instrument. This new Aged Care Funding Instrument has been designed to target funding towards the care of residents with higher needs. At the same time, it is expected to reduce the amount of paperwork required for funding purposes. The amendments will vary provisions in the Aged Care Act 1997. The intention is to reduce the number of funding categories for basic care, introduce new payments to target residents with complex nursing or behavioural needs and reduce the administrative burden on aged-care staff. The details of these new funding arrangements and the manner in which specific levels of funding are calculated for residents with different care needs will be included in amendments to the Residential Care Subsidy Principles 1997 and the Classification Principles 1997.

In 2005, a national trial involving almost a quarter of all residential services was held. The results of this trial showed a large reduction in the time staff spent filling in forms. Less time filling in forms certainly means more time that staff can devote to residents and their care. Another important factor was the outcomes of these new resident agreements. The level of agreement between the providers’ assessments of residents and those of the external assessors was much greater. Assessors took less than an hour to complete an ACFI appraisal. Once classified, a resident’s classification expires after 12 months and aged-care providers are required to reappraise a resident’s care needs to obtain further funding. Over 60,000 of those annual reappraisals completed and submitted by providers resulted in no change in the amount of funding received by the approved providers.

This is a massive amount of paperwork being undertaken for nil effect. It is proposed that a standard ACFI classification will not expire. Instead providers will be given the option to reappraise a resident after 12 months. It is intended that the Classification Principles 1997 be amended so that residents who move into aged-care homes from hospital be reappraised after six months. This takes into consideration the likelihood that these particular residents’ level of care can change quite quickly. Each year, approximately 12,000 residents move from one aged-care home to another. Currently, when the resident moves, their classification for funding expires. It is proposed that, when a resident leaves one aged-care home to live in another, from commencement the new aged-care home may choose to accept the existing classification, rather than being required to submit a new classification application.

A provision of the Aged Care Act 1997 allows more than one aged-care home to be paid a subsidy for the same resident when the person is on what is commonly known as high-dependency care leave. Very few residents can qualify for this provision and it is now rarely used, following the changes introduced in 1997 to allow residents to ‘age in place’—that is, to move from low care to high care within the same home. It is proposed to repeal this provision. The ACFI Industry Reference Group supported the removal of this leave type due to its very low take-up rate—fewer than 50 residents were eligible last financial year.

If providers repeatedly fail to conduct appraisals or reappraisals in a proper manner, the Aged Care Act 1997 allows the secretary of the department to suspend an approved provider from appraising residents for funding purposes. It is proposed to allow the secretary to stay the suspension, subject to the provider meeting certain obligations, which may include appointing an adviser at the provider’s cost and/or providing training for its officers, employees or agents. The secretary will have greater flexibility to encourage providers to conduct appraisals and reappraisals properly to avoid a suspension coming into effect. The bill will also include an additional power for the secretary to require a provider to appraise or reappraise some or all of their residents.

In consultation with the industry, the ACFI has been designed to streamline accountability requirements and reduce the uncertainty that arises when departmental audits of residential classification scale classifications lead to a subsequent downgrading leading to a reduction in an aged-care home’s income.

Apart from the key initiatives dealing with recommendations 5 and 6, the government announced a number of new measures aimed at improving the aged-care industry. In May 2004 the government responded to the findings and recommendations of the Hogan review with the $2.2 billion Investing in Australia’s Aged Care: More Places, Better Care package. Investing in better care to enhance staff education and training provided funding to increase education and development opportunities for aged-care staff, including new university places, and strengthened financial accountability standards for providers. There was an increase in the number of funded places from 100 to 108 per 1,000 people over the age of 70 years—the first such increase since ratios were introduced back in 1985.

My electorate of Hasluck has benefited from the increased allocation of new aged-care places by the government. Aged-care operators in Hasluck who have recently received new allocations of aged-care places are now planning major aged-care infrastructure projects which will bring significant improvements to the level of aged-care services in the electorate as well as create new employment opportunities. I have been very pleased to represent the ageing community in the electorate of Hasluck on their aged care needs.

Improvements to capital funding arrangements include the one-off payment of $3,500 per bed to all residential care providers for the purposes of improving building standards and, in particular, fire safety standards. Funds were made available to providers to update or improve fire safety standards, including existing fire safety equipment, to meet state and local government regulatory requirements, to improve the level of staff fire safety training or to engage the services of professional fire safety consultants to advise on possible improvements. This measure cost over $513 million in Australian government funding.

It is important that people seeking placement in an aged-care facility have access to services and information on placements and their standard of care. Additional funding to improve the way older people access residential aged-care services, as well as new funding to improve the Aged Care Standards and Accreditation Agency’s ability to monitor the performance of aged-care providers and care standards, has been provided by the government.

In June 2005 my colleague the then Minister for Ageing, the Hon. Julie Bishop MP, announced that aged-care homes across Australia would receive an extra $1,000 per resident in a one-off payment to target specific issues and help ensure they remain sustainable in the long term. The Howard government provided $152 million for the one-off payment, which will help aged-care providers take advantage of new technology, improve their business practices and efficiency, and increase staff training, particularly in dementia care. In announcing the funding Minister Bishop said:

This funding will also enable aged care providers to improve their efficiency in management and administration. The Hogan Review identified the need for aged care providers to adopt more sophisticated and contemporary business practices to ensure the sector was on a sustainable footing for the future.

The funding enabled operators to invest in new information and communications technology to support their services. Within my own electorate of Hasluck I am aware of private sector providers who have used this funding, in partnership with major software and technology vendors, to commence a major new program of new systems development. This significant investment by those providers will ultimately lead to greater service and system efficiency, improved outcomes for residents and for staff, and the creation of new knowledge which will support the aged-care sector into the future.

The Aged Care Funding Instrument, ACFI, is part of the $1.5 billion Securing the Future of Aged Care for Australians package announced by the Prime Minister, the Hon. John Howard, in February this year. This package comprehensively addresses the remaining recommendations from the Hogan review and will see Australian government expenditure on aged care grow to an estimated $9.9 billion by 2010-11. This represents an increase of 219 per cent over the $3.1 billion in Commonwealth aged-care expenditure in 1995-96. That is a fantastic increase in anyone’s language, for a very important issue.

Preparation for the introduction of the new funding system has been a lengthy process involving a review of care assessment and clinical practices, the development and trialling of a number of assessment and funding options and extensive consultation with industry participants to ensure that the new system is a workable one which meets the objective of reducing the administrative burden on aged-care staff.

The Prime Minister noted in his press release in February this year:

A new Aged Care Funding Instrument (ACFI) will be introduced from 20 March 2008 that will, over time, see payments for those with the highest care needs rise from $123 per day currently to more than $160 per day in 2011.

The government has provided an additional $393.5 million over four years to assist homes in managing the change to the ACFI. This includes an additional $96 million for the new supplements on top of substantial existing funding for residents with complex care needs. The government wants to make sure that aged-care services are available and accessible to all Australians.

This is further evident in the additional funding of $42.6 million over five years to provide support to aged-care services that care for people in difficult circumstances. This funding will help make aged care more available to Indigenous communities, homeless people and people living in remote and very remote Australia by helping providers deliver care. Some $25.5 million will be provided over five years—as recommended by Professor Hogan—to enable the government to pay full subsidy rates to residential aged-care places that are no longer operated by state governments. Through these initiatives the Howard government is realising its vision for a world-class system of aged care that provides high-quality, affordable and accessible services to meet the individual needs and choices of older Australians.

Over the past 10 years the government has identified the areas that need addressing and has worked in consultation with aged-care providers to ensure that, as the needs arise, it is prepared to meet them. The Prime Minister, the Hon. John Howard, stated in February 2007:

It is imperative that we secure the future of aged care to ensure that older people continue to have access to high quality aged care in their own homes wherever possible, and also in high quality aged care homes when they choose.

It is clear that the future of aged care is in safe hands. Older Australians can be confident of receiving the best possible aged care now and into the future. I am very pleased to commend the bill to the House.