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Wednesday, 1 June 2011
Page: 5589

Ms O'NEILL (Robertson) (17:42): I am delighted to speak on the Aged Care Amendment Bill 2011. This bill once again demonstrates the government's commitment to ensuring that older Australians receive the best possible care available. This bill again demonstrates that protections are in place to ensure that money paid by those entering assisted living is being returned in capital investment. These amendments will also strengthen the arrangements for managing complaints concerning facilities providing subsidised care by creating more flexibility in the resolution process.

This is not new. The Gillard government has taken a number of steps to improve aged care for older Australians and to ensure the aged-care system is both sustainable and responsive to care needs. The Gillard government will give $55.4 billion for aged care over the next four years. This year's budget will support continued investment in the aged-care industry to meet the increasing demand for services.

(Quorum formed) When entering a care facility, residents are often required to pay a bond, much like any other individual entering into an accommodation arrangement. The value of these bonds has increased to more than $10.6 billion. Currently we can see an increase in value of more than 20 per cent every year. These bonds are, in essence, an unsecured loan paid by care recipients to the approved provider. Given the significant and increasing amount of bonds, it is appropriate that care recipients can be assured that their funds are being used for the intended purposes and that there is transparency of, and accountability for, that use.

While the intent of the legislation was always that the bond would be used for capital funding, a lack of clarity in the language—being that bond money should be used for expenses related to 'providing' aged care to care recipients—has allowed some service providers to fund a wide variety of other purposes. The danger is that certain expenditure of bonds, especially those which fund day-to-day operational costs, makes having bond money on hand for repaying recipients on leaving the care facility extremely difficult. This does introduce unnecessary concern and it is resulting in a higher chance of default on these important payments.

This legislation ensures that we clearly articulate what these bonds can and cannot be used for. The legislation is not about making life more difficult for providers by taking away a potential source of income; rather, this legislation is about ensuring that what is a significant part of each resident's life savings—and we are talking about a sum of about $167,000 per individual on average—is used to provide the necessary capital improvements that are just a part of maintaining a home.

Similarly, the amendments in this bill will enshrine that these bonds can be invested in term deposit accounts and act as interest-bearing investments. While some providers have done this in the past, it was never expressly known as a possibility, as previously it did not meet the requirement that it was spent on providing care to recipients. My electorate of Robertson, and the Central Coast as a whole community, is an aged and ageing community. We do have a large cluster of young people at the other end but aged care is definitely part of the landscape of the Central Coast.

In our care facilities we have a high population of retirees who downsize from the long-held family homes in the region and use a proportion of the profit from the sale of their home to fund their accommodation bond. Often making this move into a new facility—a change at the later stages of life—can be very daunting. Whatever we can do as a government to give more certainty to those individuals will ensure that people have confidence in the sector. It is important that people have confidence. It is important they know that the facility and the management are doing the right thing and that when it is time for their bonds to be returned, the money will be available.

These amendments are for the care of recipients. These amendments are aimed at improving the quality of aged care for the care recipient through increased investment in capital works. These amendments will increase the reliability of refunding of bonds and add more transparency and more certainty to ensure that bonds are not squandered but reinvested. This certainty will, in turn, provide longer term benefits to the providers themselves. The removal of restrictions on the use of income derived from bonds will provide aged-care providers with a legitimate cash flow and will reduce the current regulatory burden.

The introduction of criminal offences, which this amendment bill provides, is a reflection of the moral importance that we as a government put on ensuring that money which is essentially 'loaned' to providers is spent properly. It is our intention to protect the rights and the interests of care recipients, who are often in a vulnerable situation. There was considerable support for the introduction of criminal penalties, and we are very aware of this from the submissions to the inquiry. Submissions urged the department to carefully structure any penalties to ensure that key personnel could not unintentionally be caught up under any new offences. The legislation was also structured to ensure that the new offences did not dissuade people from taking up roles within aged care and that offences would only apply to those individuals in the worst cases where an individual has deliberately acted in a way that has caused a provider to misuse bonds.

These changes in the legislation have received wide consultation. The government has spoken to consumer groups, peak bodies, providers of aged care and the financial services sector. A total of 33 submissions were received: six from peak industry bodies, 23 from approved providers, one from a consumer group and three from other interested organisations. It is important to note that the aged-care sector supports these changes. It is also important to note that we are not responding in panic; rather, it is a much-needed and carefully considered response to the reality that exists in our communities.

The bill provides much more clarity in the language, This will ensure that providers know precisely what they can and cannot do, and that has to be a massive improvement for aged-care recipients who are participating in transactions. The consultation period yielded a great sense of a need for this change. Providers and consumer groups all recognised the issues that currently existed within the unclear language and they all agreed that action had to be taken to review what options were available. The government was open and responsive to these needs and, with wide contribution from all those participants in the formation of the legislation, we know that we have brought the best legislation before the House.

We also do not propose to blind side the industry with these changes. We understand that there will be some immediate compliance costs with the changes, as providers make the necessary changes to their financial affairs. The government is proposing that the changes take effect from 1 October 2011 for all bonds received on or after that date. Bonds received before that date can continue to be used in accordance with the existing rules or may be used in accordance with the new rules. This ensures that the changes do not have any retrospective impact but also gives approved providers the flexibility to choose to treat all bonds in the same way.

A two-year transition period is also proposed, whereby approved providers may use bonds for existing purposes associated with aged care. This will provide the department with the data necessary to determine if further adjustments to this proposal should be made to assist the cashflow management of approved providers and will provide industry with a reasonable transition period to become familiar with these important new arrangements.

This legislation is effective in clarifying our aged-care bond system. It is absolutely effective in providing a more positive outlook for service providers and care recipients. It is a practical reform that is not based on some ideological rhetoric; rather, it is based on a genuine consideration of the needs of the system and those who use it and on the way in which accommodation bonds could and should be used. I commend the bill to the House.