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Thursday, 9 February 2006
Page: 11


Senator ELLISON (Minister for Justice and Customs) (9:57 AM) —I move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

FUTURE FUND BILL 2005

The Future Fund Bill 2005 implements another important part of the Government’s long-term fiscal strategy. This is a Bill which will put in place arrangements for future generations to allow them to deal with the massive changes that the ageing of the population will bring, from a much stronger financial position.

When this government was elected in 1996, Australian Government net debt stood at $96 billion. We are forecasting that by 30 June 2006, after ten years of Coalition Government, we will have reduced that debt by around $90 billion and, by doing so, released more than $6 billion a year from ‘dead’ interest payments to fund priority areas like health, education and national security.

With net debt now under control, we are turning our attention to addressing the largest single liability on the Government’s balance sheet: unfunded public sector superannuation. As at 30 June 2005, unfunded public sector superannuation liabilities stood at around $90 billion, and are forecast to grow to around $140 billion by 2020.

The Future Fund will strengthen the Australian Government’s long-term financial position and ensure we are better able to meet the challenges of an ageing population without raising taxes or driving the budget into deficit. The Future Fund will reduce calls on the budget in future years and free up resources at a time when the 2002 Intergenerational Report tells us significant pressures are expected to emerge.

The Future Fund will be invested with the aim of accumulating financial assets sufficient to offset the Government’s unfunded superannuation liabilities by 2020. The Bill provides for seed capital of $18 billion to be transferred to the Fund in 2005-06. The Government will also contribute future realised surpluses and proceeds from asset sales to the Fund. To ensure that the Fund grows over time the earnings of the Fund will be re-invested and the assets held by the Future Fund will be quarantined from the rest of the budget. Notably, New Zealand, Ireland, France and Canada all have similar strategies in place and in none of those other national funds are the returns on investment allowed to be siphoned off to fund pet projects of the government of the day. This will also be the case for the Future Fund.

The Fund will only be drawn upon at the earlier of 2020 or a time when an independent actuary determines that the Fund’s assets are sufficient to offset the unfunded part of the Government’s accrued superannuation liabilities.

Queensland has already fully funded its superannuation schemes. Other States and Territories have put in place arrangements to fund past service liabilities with the aim of achieving fully funded schemes over the next thirty to forty years. The Commonwealth is now, for the first time, making proper financial provision for its liability.

An appropriately qualified Board of Guardians, chaired by Mr David Murray, will manage the Fund. Mr Murray is a well known figure in Australia and with 13 years experience as CEO of the Commonwealth Bank of Australia is an outstanding choice to lead the Future Fund through its inception and early years of operation. The Board will be responsible for deciding how to invest the Future Fund. By creating an independent Board of Guardians with powers protected by legislation, the Government is putting in place robust measures to guard the Fund from being raided by any future Government. The assets and the earnings of the Fund will be locked away, to grow over time, and will be directed to the purpose for which it has been created.

When the Fund is eventually drawn down to pay superannuation liabilities (some of which are accruing now), taxpayers will face a lighter burden than would have been the case if this Fund had not been established. The Fund represents a sensible financial policy now for the benefit of future generations. The Fund will be needed in the future because we know that future generations will have the costs of the ageing of the population on their hands within twenty years time. The fact that the current generation is funding its liabilities, and also funding liabilities accrued in the past, will give future taxpayers a much better chance to cope with these challenges.

The Board of Guardians will be assisted by a new statutory agency, the Future Fund Management Agency. The Agency will implement the decisions of the Board and undertake the associated operational activities but investment activities will primarily be outsourced to private sector funds managers. The primary functions of the Agency will be to provide administrative and policy support to the Board and manage the relationships between the Board and investment managers such as funds managers, transition managers and custodians.

The Government’s clear view is that detailed investment decisions should be left to the Board. The Bill provides a framework for these decisions by outlining an investment mandate to guide the Board and setting the broad parameters within which the Fund can operate. The Government’s initial investment mandate will set a benchmark for long-term returns on the Fund and will include any restrictions on the investment of the Fund. The general view of the Government is that restrictions should only be applied where there are sound policy or national interest reasons to do so.

The Future Fund is a financial asset fund. This means that the Board will be able to invest in a wide range of financial assets including shares and bonds, but it cannot invest in non-financial assets such as direct holdings of property and infrastructure. However, the Board will be able to gain exposure to these asset classes through pooled investment vehicles. Under the external reporting standards which the Budget is prepared on, transactions involving financial assets do not have an impact on the Budget bottom line.

The provision of a broad investment mandate does not in any way compromise the independence of the Board to deliver the Government’s desired risk and return objectives. The Bill sets out a transparent process by which the Board’s view on the investment mandate is tabled in Parliament. The Bill allows the Board to take a long-term view of the investment strategy and gives them the investment powers to maximise the returns on the Fund over the long term. This is broadly consistent with the approach taken by national funds in New Zealand, Ireland, France and Canada. The framework ensures that the management of the Fund will remain at arm’s length from the Government and that the Board is accountable for the performance of the Fund.

Full details on the establishment of the Fund, Board and Agency are contained in the explanatory memorandum.


AUSTRALIAN SPORTS ANTI-DOPING AUTHORITY BILL 2005

AUSTRALIAN SPORTS ANTI-DOPING AUTHORITY (CONSEQUENTIAL AND TRANSITIONAL PROVISIONS) BILL 2005

These Bills establish the Australian Sports Anti-Doping Authority as the focal point for Australia’s continuing campaign against doping in sport.

Australia is acknowledged internationally as being at the forefront of the fight against doping in sport, balancing a ‘tough on drugs’ approach with ensuring that all athletes are treated fairly and that athletes’ rights are protected.

Through its Tough on Drugs in Sport Strategy, launched in May 1999 in the lead up to the Sydney 2000 Games, the Government has ensured that Australia has a robust anti-doping framework that is world’s best practice. The Government’s unrelenting pursuit of this strategy has meant that all major Australian sporting organisations are now compliant with the World Anti-Doping Code.

In the 2004 Election policy Building Australian Communities through Sport, the Government committed to strengthening its Tough on Drugs in Sport Strategy through enhancing the investigation of alleged doping violations and establishing clear and consistent arrangements for the hearing of doping in sport matters.

As part of that commitment, on 23 June 2005, the Minister for the Arts and Sport, Senator the Hon Rod Kemp, announced that the Government will establish a new Australian Sports Anti-Doping Authority (ASADA) to investigate allegations of anti-doping rule violations and present doping cases at hearings.

ASADA would assume the existing drug testing, education and advocacy functions of the Australian Sports Drug Agency (ASDA) and include the current Australian Sports Drug Medical Advisory Committee.

The Bills before the House delivers on that commitment. They set out a new, more robust regime for responding to alleged anti-doping rule violations in Australia through a new, dedicated agency.

The ASADA Bill empowers ASADA to investigate all allegations of Anti-Doping Rule Violations outlined in the World Anti-Doping Code and present cases against alleged offenders at the international Court of Arbitration for Sport and other sports tribunals.

The Bill provides ASADA with the following functions:

  • Undertake anti-doping testing, investigations and presentations at sport tribunal hearings functions;
  • Determine mandatory anti-doping provisions to be included in Australian Government funding agreements with sports;
  • Advise the Australian Sports Commission, as the Government’s principal sports funding body, of the performance of sports in observing these requirements;
  • Provide education for Australian athletes and support personnel in relation to anti-doping matters;
  • Support and encourage research into anti-doping matters;
  • Encourage anti-doping initiatives by the States and Territories and cooperate in carrying out these initiatives;
  • Provide anti-doping and other services under contract;
  • Make resources available to the Australian Sports Drug Medical Advisory Committee for the performance of its functions; and
  • Provide advice to the responsible Minister on matters relating to these functions.

The establishment of ASADA will mean that sports, athletes and the public can have complete confidence that doping allegations will be investigated and pursued in an independent, robust and transparent way.

ASADA’s establishment represents the next step forward in strengthening Australia’s already world-class anti-doping regime.

In the event of serious allegations of doping infractions by athletes, Australia will have in place an integrated system to respond vigorously from the outset - from collecting, preserving and analysis of evidence to making recommendations on its findings and carrying a case to a tribunal hearing if required.

The creation of ASADA will enhance Australia’s compliance with the World Anti-Doping Code, and will strategically implement the UNESCO International Convention Against Doping In Sport, once ratified by Australia.

The creation of ASADA, more broadly, represents a tough response to doping in sport and a response that treats all athletes fairly.

The ASADA Bill sets out the broad requirements under which ASADA will exercise its functions. Detailed protocols and procedures for the exercise of ASADA’s functions will be contained in a National Anti-Doping Scheme, which will be a legislative instrument developed alongside the ASADA Bill, to be tabled in Parliament.

The National Anti-Doping Scheme will reflect the provisions of the two major international instruments on anti-doping to which Australia is a party - it will be consistent with the mandatory provisions of the World Anti-Doping Code and will implement the UNESCO Convention (once ratified).

The Scheme will contain:

  • Anti-doping rules applicable to athletes and support personnel, including details of Anti-Doping Rule Violations and the consequences of infractions;
  • Protocols for ASADA drug testing procedures;
  • Protocols and procedures governing ASADA investigations;
  • Protocols for ASADA to establish a register of its findings, and to advise sporting organisations and athletes of its findings; and
  • Protocols for ASADA’s presentation of doping cases at sports tribunal hearings.

The Scheme will set out the obligations for Australian sporting organisations in the following areas:

  • Promoting athlete compliance with the Scheme;
  • Referring violations of the Scheme to ASADA;
  • Assisting ASADA in the course of its investigations;
  • Taking action in response to ASADA finding a violation has occurred; and
  • ASADA’s role in hearings and appeals for doping cases.

The Scheme will also authorise ASADA to:

  • Monitor the compliance of sports and sports administration bodies (including the ASC) with these obligations;
  • Notify the ASC in regard to such compliance; and
  • Publish reports about the extent of compliance.

As a condition of any funding from the Government, sports will be required to adopt the Scheme as part of their anti-doping policies, which will include submitting to the anti-doping jurisdiction of ASADA.

This carries with it requirements for sports to ensure that their athletes and support personnel cooperate with ASADA officials in carrying out its testing, investigations and presentations at hearings functions. Sports will also be required, as a condition of the Scheme, to accept any findings by the new authority that an individual has committed a doping offence and apply the appropriate penalty.

The Bill also contains provisions facilitating the exchange of sensitive information between ASADA, the Australian Customs Service and the Australian Federal Police in regard to the use and importation of prohibited substances.

The Bill provides protection from civil actions to ASADA members, staff and those giving information to ASADA for any act undertaken in good faith during an ASADA investigation.

These provisions, along with the obligations imposed on sports through the contractual arrangements with the Government, will put in place a system that will provide ASADA with the powers and ability to carry out its functions to the fullest extent.

In framing the proposed ASADA legislation, the issue of safeguarding athletes’ rights was a prime consideration.

Accordingly, the ASADA Bill attaches strict conditions to the receipt and disclosure of sensitive information from Customs, the Australian Federal Police and other law enforcement bodies. For example, disclosure must not contravene the terms of Customs initial disclosure to ASADA, and sports in receipt of such information must give an undertaking that any use of the information on its part must be for anti-doping purposes and will not occur in a way prejudicial to the subject of the information.

It also stipulates the rights that athletes will have in relation to ASADA decisions. Athletes will have access to established external review mechanisms in relation to any ASADA investigation (including a test or the testing process) including the Commonwealth Ombudsman, the Administrative Appeals Tribunal and the Federal Court or Federal Magistrates Court under the Administrative Decisions (Judicial Review) Act 1977.

Further, the Bill contains appropriate privacy safeguards for athletes and sporting support personnel - the Privacy Act 1988 will apply to ASADA’s advocacy, education, drug testing, investigative and reporting functions, and any other operations where ASADA is required to collect and deal with sensitive information.

Taken together, these provisions will continue to ensure that athletes’ rights are protected under the new anti-doping regime.

The World Anti-Doping Agency, the body responsible for coordinating the international effort against doping in sport, has welcomed the entry of ASADA as the new key body in Australia’s anti-doping framework.

As host of the Commonwealth Games in Melbourne in March 2006, Australia now has an opportunity to showcase internationally its commitment to the fight against drugs in sport and to demonstrate to athletes who might be inclined to cheat that they face a strong and systematic response once detected.

The establishment of ASADA represents a significant enhancement to a tough on drugs in sport strategy that is already world-leading. ASADA will ensure that Australia remains a leader in the international fight against drugs in sport.


AGED CARE (BOND SECURITY) BILL 2005

On 15 September 2005, I announced the Coalition Government’s decision to strengthen the existing protection surrounding aged care residents’ accommodation bonds, by establishing a scheme to guarantee the repayment of bond balances if a provider defaults - and by introducing new prudential regulatory arrangements.

This Bill - the Aged Care (Bond Security) Bill 2005 - together with two other Bills that I will be introducing today - the Aged Care (Bond Security) Levy Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005 - form the legislative framework to strengthen the protection of bonds.

An accommodation bond is an initial payment that, in certain circumstances, an approved provider may charge a resident of an aged care service. Some aged care residents in Multipurpose Services may also be charged accommodation bonds. The bond balance is refunded to the resident when he or she leaves the service.

Before the Aged Care Act 1997 was introduced, some residents of aged care services were charged entry contributions. These entry contributions are akin to bonds and are covered by the new arrangements.

Around 74 per cent of aged care services levy bonds on residents. Based on 2004-05 data, around $4.3 billion in bonds is held across the industry - a significant increase from $500 million in 1996. The average new bond has also increased from $26,000 in 1996-97 to $127,600 in 2004-05.

Bonds can represent a significant proportion of residents’ life savings - and, understandably, residents and their families expect secure arrangements for their bonds and the reassurance that their bond balances will be paid when the resident leaves the home.

To date, the existing arrangements have worked well, as shown by the fact that there has not been an instance where a resident’s bond balance has not been repaid.

However, under the existing arrangements, if a provider becomes bankrupt or insolvent, the resident is not guaranteed the return of their bond balance because the resident ranks as an unsecured creditor under corporations and bankruptcy law.

While to date there have been no cases where a resident’s bond balance has not been repaid - the risk is increasing because of the increasing value of bonds, and the number of approved providers and MPS’ charging bonds.

In developing this new legislation, the Government’s key objectives are:

  • to improve the efficiency and sustainability of the aged care sector, and to strengthen the management of bond moneys to reduce the likelihood of providers becoming insolvent or bankrupt and being unable to repay bond balances;
  • to strike a balance between the added security for residents that is provided by this strengthening - and the financial impact of the new arrangements on the sector’s viability and its standing with the capital markets, including its ability to construct and maintain aged care homes - and pressures that might flow on to subsidies, user charges, and the quality and continuity of care;
  • and - last but certainly not least - to ensure that all residents who pay bonds receive their full entitlement to the balance of the bonds that they have paid in the event that a provider becomes insolvent or bankrupt.

The legislative framework provided by this Bill and the Bond Security Levy Bill, will establish a guarantee scheme whereby the Australian Government will pay 100 per cent of the bond balance owed to residents - with interest - in the event that a provider becomes insolvent or bankrupt and is unable to meet its financial obligations to residents.

The Government will then become a creditor of the insolvent provider and will recover the debt and associated costs from the insolvent provider. The Government will also have the ability to levy all other providers holding bonds to recover from industry the debts left by the defaulting provider.

New prudential regulatory arrangements, established under the Aged Care Amendment (2005 Measures No. 1) Bill 2005, will complement the guarantee scheme.

These new arrangements to strengthen protection of residents’ accommodation bonds were foreshadowed in the Government’s 2004-05 Budget, which committed record funding of $2.2 billion for the Investing in Australia’s Aged Care: More Places, Better Care package - building on the Coalition Government’s earlier reforms in the aged care sector.

In particular, these new arrangements, which will improve both the security of bonds and the management of bonds by the sector, will complement the $877.8 million Conditional Adjustment Payment - also a part of the 2004-05 Budget package. In particular, the CAP - an additional 1.75% of the annually indexed recurrent subsidy, cumulative over four years, requires approved providers to prepare General Purpose Financial Reports.

These and other measures will, over time, assist in making the residential aged care industry more financially mature and more sustainable.

The introduction of these protections underlines the Coalition Government’s commitment to 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.

Our thinking and actions are not confined to the present. We have developed a system that will see us into the future, that can be adapted as the sector matures into a more sophisticated, self-reliant industry that embraces a culture of continuous improvement.

Our population is ageing. Over the next two decades, our population over the age of 65 will increase both numerically and structurally. By 2040, 25 per cent of the population will be over 65 with over 1 million people over the age of 85.

While the ageing of the Australian population is not expected to have a major impact on the Australian Government’s Budget for at least another 15 years, the Coalition Government’s Intergenerational Report 2002/03 clearly identified that forward planning for demographic change is important, to ensure that governments will be well placed to meet emerging policy challenges in a timely and effective manner.

Recognising that innovative planning and substantive policy reforms are needed to meet the impact of our changing demographics - the Coalition Government has, and will continue to, implement necessary, wide-ranging and effective reforms. The transformation in aged care began with the new Aged Care Act in 1997.

In residential aged care, we have introduced and enforced national quality standards and accreditation, reformed financing arrangements, made special provision for dementia sufferers, greatly improved training for aged care workers, and subsidised a massive expansion in aged care places. More than 95,000 new aged care places have been allocated since 1996, and with 193,753 operational aged care places, we are on the way to reaching our target set in 2001 of 200,000 operational aged care places by 30 June 2006. We have also greatly expanded the consumer rights of residents.

Responding to our older Australians’ call for more choice - and based on the philosophy that most people value being able to live in their own home and a recognition that some older people and people with a disability may find this difficult without assistance - we have increased funding for Home and Community Care and Community Aged Care Packages.

In addition to increased funding, the Government initiated a review of community care programs in 2002 to identify strategies that would simplify and streamline current arrangements for the administration and delivery of community care services.

The Coalition Government’s ‘The Way Forward’, arising from the review, will ensure programs operate in a more consistent and coordinated way. Agreed assessment processes, eligibility criteria, consistent accountability and quality arrangements and targeting strategies are among reforms required to achieve these aims.

The Way Forward will build on the strengths of existing community care programs while delivering a less complex, stronger system capable of responding to the challenges that lie ahead.

Overall funding to aged care has increased by 140% in nine years, from $3 billion in 1996 to $7.3 billion this year.

The Coalition Government is meeting the challenges head on - and there is still more to achieve.

As foreshadowed in the Government’s response to the Pricing Review undertaken by Professor Hogan - consultation on longer term reform of the aged care sector will soon be underway.

Our commitment to meeting the challenges of an ageing population extends beyond aged care.

The Howard Government has adopted a whole-of-government approach, encompassing policies, strategies and initiatives including in relation to:

  • Retirement incomes and the adequacy of retirement savings;
  • Enhancing workforce participation across all age cohorts, particularly mature age;
  • Healthy and productive ageing;
  • The built environment and its impact on the health and wellbeing of Australians as they age; and
  • Community attitudes to, and legislative barriers that discriminate against, ageing.

As the intergenerational report signalled, this Government is planning for the next generation of older Australians and building for the future.


AGED CARE (BOND SECURITY) LEVY BILL 2005

Having earlier introduced the Aged Care (Bond Security) Bill 2005 - I now present the Aged Care (Bond Security) Levy Bill 2005, which together will establish the legislative framework for a scheme to guarantee the repayment of bond balances to a resident or family should an approved provider default in the repayment of that balance.

As I have indicated in the Second Reading speech for the Bond Security Bill, under the guarantee scheme the Australian Government will pay 100 per cent of the bond balance owed to residents - with interest - in the event that a provider becomes insolvent or bankrupt and is unable to meet its financial obligations to residents.

The Government will then become a creditor of the insolvent provider and will recover the debt and associated costs from the insolvent provider and / or by levying all other providers holding bonds.

This Bill allows for the imposition of a levy to recover the debt. The levy details will be prescribed in regulations made in the future if necessity arises.

1.   The levy amount will be based on the providers’ accommodation bond holdings as a proportion of the total accommodation bond holdings for the aged care industry.

2.   Approved providers holding accommodation bonds, as a whole, will not be levied any more than the total amount repaid to residents plus administrative costs associated with the refund and the attempt to recover from the insolvent approved provider.

3.   As each default event is likely to be different, the Government will take the necessary steps to work out the details of the levy when the situation occurs, including the rate at which the levy will be recouped. This will enable the Government to consider all the factors which will influence how and when the levy is to be imposed and ensure that costs to Government are recouped without jeopardising quality of care to residents.

These Bond Security Bills, together with the Aged Care Amendment (2005 Measures No. 1) Bill 2005 that I will be introducing later today, form the legislative framework for the Government’s decision to strengthen the protection of residents’ accommodation bonds - which I announced on 15 September 2005.


AGED CARE AMENDMENT (2005 MEASURES No. 1) BILL 2005

On 15 September 2005, I announced the Coalition Government’s decision to strengthen protection of aged care residents’ accommodation bonds by establishing a guarantee scheme and new prudential regulatory arrangements.

Having introduced two Bond Security Bills which establish the legislative framework for the guarantee scheme, I have pleasure in introducing a 3rd Bill, the Aged Care Amendment (2005 Measures No. 1) Bill 2005, which provides for new prudential regulatory arrangements to give residents even more assurance about the financial security of each provider, and to ensure that Australia’s aged care system continues to strengthen and grow to meet the expected demands of our ageing population.

The new prudential regulatory arrangements - which will enhance existing requirements under the Act - will initially require providers to comply with three standards - prescribed in Principles - relating to liquidity, record keeping, and disclosure. Compliance with these prudential standards will be monitored by the Department of Health and Ageing.

The new prudential arrangements are designed to:

  • ensure that greater responsibility is taken by individual providers to appropriately manage and secure residents’ accommodation bonds;
  • provide certain information to residents and prospective residents about the financial viability of the provider and the total bond holdings; and
  • better inform residents and prospective residents (and their representatives) about the financial viability of the provider and allow judgements to be made about the safety of residents’ bonds.

The Government will assess the effectiveness of the new prudential arrangements and further strengthen them should this be required. The Government will consult widely with the sector in developing and strengthening the new regulatory arrangements.

We expect that these arrangements for securing bonds can be adapted further in the future, with industry taking greater responsibility for ensuring bonds are secure.

Compliance with the stronger prudential regulatory arrangements will improve the quality of financial performance information, and together with other reforms, will also help place the aged care industry on a more sustainable basis.

This Bill also includes provisions to extend the timeframes, in which providers must refund an accommodation bond balance and to add new provisions which require providers to pay interest on late accommodation bond balances.

The most significant change in relation to the timeframes is a change to the timeframe for repayment of bonds when a resident dies. Instead of the current 60-day provision - which is problematic for providers if the legal beneficiary has not been firmly established - under the new provisions, a provider must refund the accommodation bond balance within 14 days of being shown probate or letters of administration. This does not preclude the provider making the repayment earlier if the provider is confident that the correct beneficiary has been identified.

The other significant change is the addition of new provisions to require approved providers to pay interest on accommodation bond balances once a resident leaves a service. The amount of interest will be detailed in the Aged Care Principles and will include a penalty rate if the bond balance is not refunded within the legislated timeframe.

The changes in this Bill in relation to accommodation bonds, together with those in the two Bond Security Bills that I introduced earlier today, provide the legislative framework to strengthen protection of residents’ bonds and to ensure that residents’ expectations that their bonds are well-managed and secure are met.

Entering aged care is a significant step for our older Australians - one that is rarely reversed. By strengthening protection of accommodation bonds, we are making that step a little more comfortable for everyone.

Debate (on motion by Senator Ellison) adjourned.

Ordered that the bills be listed on the Notice Paper as follows:

(a)   Future Fund Bill 2005;

(b)   Australian Sports Anti-Doping Authority Bill 2005 and Australian Sports Anti-Doping Authority (Consequential and Transitional Provisions) Bill 2005; and

(c)   Aged Care (Bond Security) Bill 2005, Aged Care (Bond Security) Levy Bill 2005 and Aged Care Amendment (2005 Measures No. 1) bill 2005.