Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
 Download Current HansardDownload Current Hansard    View Or Save XMLView/Save XML

Previous Fragment    Next Fragment
Thursday, 21 June 2007
Page: 165

Senator McLUCAS (6:28 PM) —The speech read as follows—


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 the assessment of allocation of subsidies in residential aged care, called the Aged Care Funding Instrument (ACFI).

Government subsidies are provided according to the different levels of needs of residents in aged care facilities.

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 to encourage 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 which 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 care staff spend more time on resident care rather than filling in forms.

Refer to a committee

As a number of concerns were been raised by the aged care sector, Labor referred the Bill to the Community Affairs Committee for Inquiry. Following the inquiry, the recommendations have led to three proposed amendments to the Bill. Two from the Government and one from Labor.

Recommendation 1

The Committee noted that the provision allowing more than one residential care service to be paid a subsidy for the same resident will be repealed.

The payment of two subsidies is an unusual situation which is rarely used. It is required when a resident has to relocate on a temporary basis to another facility—usually a facility that can provide a higher level of care and the place at the original facility needs to be retained for the resident.

The Department has indicated that only a small number of aged care facilities use this provision and in some cases it was not applicable in the circumstances.

However, the Committee considered that circumstances may arise particularly in regional and remote areas where it is appropriate that a subsidy be paid temporarily in both aged care facilities and therefore recommended the omission of Item 27 of the Bill.

Recommendation 2

The Committee noted submissions from witnesses on the lack of detail on Items 28, 29, 31 which allow the Minister to determine a lower basic subsidy level where a resident is receiving extended care in hospital and also Item 32 which removes the existing provision in section 44-4 outlining the possible reduction in a classification level under the RCS.

Questions were raised by the aged care sector about the quantum of the minimum amount of the new basic subsidy level and the basis for these determinations. The Committee recommended that the Minister ensure that the lower basic subsidy level is reasonable.

The Government has sensibly proposed amendments to the Aged Care Amendment (Residential Care) Bill 2007 that will deal with Recommendations one and two which Labor will be supporting.

Recommendation 4

The Committee noted that this Bill represents major change to the aged care sector and has the potential to impact on the funding available to aged care facilities so recommended a full and robust review of the ACFI eighteen months post implementation.

The Government has put forward amendments that deal with Recommendation 1 and 2, but omitted to put forward an amendment that deals with Recommendation 4.

Labor has put forward an amendment that deals with this issue and we will deal with the issues around the review in Committee.

History of RCS and excessive documentation

As the NSW 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 (RCS) which made Commonwealth funding contingent on the completion of extensive documentation for each resident.

The burden of completing this paperwork fell largely to registered nurses in aged care facilities, which increased their workload and reduced their ability to provide direct care for residents and provide support for other care workers in aged care facilities.

The Government has known that the issue around the burden of paperwork for nearly 10 years yet it has taken till 2007 to do anything about it.

History of the ACFI

The ACFI was initially proposed to be introduced on 1 July 2007 which would not have allowed for training on the new instrument to have occurred.

The former Minister for Ageing announced that the new Aged Care Funding Instrument would be delayed from 1 July 2007 and will now be introduced on 20 March 2008 as part of the “Securing the Future” aged care funding package.

A review into the operation of the Resident Classification Scale (RCS) was announced on 9 May 2002. The review was commissioned to address industry concerns about excessive RCS 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 current 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 have complex health and care needs, including palliative care. The new supplements are to be implemented from within the basic subsidy funding which is currently allocated by the RCS.

Since the 2004 announcement, several project and trials have been commissioned by the Government to identify and test a new funding model. These trials were completed in October 2005.

After further adjustment, the ACFI was originally announced for introduction on 1 July 2007 but has now been deferred for introduction on 20 March 2008.

Securing the Future

This deferral is in response the Government’s February aged care funding announcement “Securing the Future” where the subsidies will be assessed according to the new funding instrument.

While the Government’s “Securing the Future” funding package was welcomed at the time of the announcement by providers.

With more information and with further analysis the aged care sector has become increasingly concerned about the potential loss of funding and impact on care provision, particularly in Low Care facilities.

The Aged Care Association Australia has called on the Government to resolve the flaws in its package as a matter of urgency.

“ACAA initially supported the package.” said Mr Rod Young the CEO of ACAA. He went on to say “However, an examination of the detail of the package has revealed that the Government has removed two supplements that will be worth nearly $300 million in capital and care to providers over the life of the package.”

He said: “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 may 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 two or three years following the Hogan Report.”

Aged and Community Services Australia stated: “Changes are required to the Australian Government’s package of aged care funding measures… if they are to achieve their stated objectives without unforseen consequences.”

Greg Mundy, 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 the gains were modest and that there were significant negative impacts.”

He also said that “Worse than this, many Low Care homes may actually be worse off under the proposed measures”.

The Chief Executive of Churches of Christ Homes in Western Australia, Wayne Belcher, has undertaken economic modelling on his aged care services and has said the Government’s Securing the Future funding package “fails the test of reasonableness”.

“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.

“We are in a position where we may no longer be able support the cost of building a nursing home for Grandma”.

Mr Belcher went on to say: “The Australian Government has failed to meet its reasonable commitments to residential aged care funding through these recent announcements.”

As we see, yet again with another Government announcement where the devil is in the detail.

Labor has called on the Government to publically release their financial modelling so providers can assess their financial position and the public can determine if the Government has hoodwinked them over this $1.5 billion funding announcement—to no avail.

The May Budget did provide a patch-up for the flawed “Securing the Future” funding package, but only after intense pressure from the aged care sector.

The former Minister used the term “unintended consequences” to describe the problems the aged care sector was discovering with the “Securing the Future” package.

I’m sorry, but with the resources of the Government; with the information facility by facility provided by the sector; with the millions spent firstly on the Hogan Review and the never-to-be-seen Government response to Hogan to describe failings in the package as “unintended consequences” is offensive.

The Minister and the Government knew exactly what would happen, especially in smaller facilities with a higher proportion of low care residents.

As a result of sectoral activism through aged care representative organisations we then saw the “patch”, the “band-aid”, the Transitional Assistance Subsidy in the Budget.

So here we are four years since the Government announced that future financial sustainability in residential aged care was a problem, in a position very much like where we were in 2003.

The Howard Government has had a short term view when it comes to aged care. It has failed to provide certainty into the future, especially with Australia facing an increasingly ageing population.

The provision of aged care needs honest engagement with the sector and considered vision.


Australia’s frail older citizens and their families need certainty that aged care will be available to them, when they need it and where they need it, near their families and friends.

Labor is prepared to support the Bill, but will put forward its own amendment to undertake a review of the Bill after 18 months to ensure there are no unintended consequences after it has been in operation.