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Wednesday, 22 June 2011
Page: 3498


Senator POLLEY (TasmaniaDeputy Government Whip in the Senate) (10:55): I rise to speak in support of the Aged Care Amendment Bill 2011. I thank Senator Siewert for her contribution. I was almost in total agreement with Senator Siewert until she said that we had our heads in the sand. I remind people that when we came to government in 2007 aged care was already in crisis and was facing difficulties. I think it is important that we put on record that the Senate Finance and Public Administration Legislation Committee, which I chaired, handed down a very good report. We were very clear in our remarks relating to the Department of Health and Ageing, we were very clear that we were concerned and we were also very clear with them that we were not happy in how they had responded to that inquiry.

It is a bit rich, although it is typical, of the Liberal opposition leadership to try and rewrite history every time they come into this chamber. It is disappointing, because I know Senator Fierravanti-Wells does have a genuine interest in aged care. I am concerned that she is trying to paint the picture that all of a sudden during that inquiry in 2009 the industry was blaming the Rudd government. That is misleading and untruthful. The industry said at every hearing that they did not lay the blame for the issues that were confronting the aged-care industry at the foot of the Rudd government. They acknowledged that we needed to do something, of course, but let us not forget it was the Howard Liberal government that was in power for 11½ years. Quite frankly, Senator Gary Humphries has told me on a number of occasions that the issue of bonds relating to aged care was too difficult—he was pleased to be in opposition not having to deal with it. Let us be truthful with the Australian people that there are huge issues affecting this industry, especially if you are talking about trying to attract people to work in this industry. This sector is extremely important and we as a government take that responsibility very seriously.

I take very seriously what Senator Siewert said about the government having to act urgently when the Productivity Commission hands down its report, as I said, but you cannot expect to quickly turn around a sector that was run down for 11½ years by the previous government. When we are critical of the former minister, let us be quite truthful about how many ministers there were over that 11½ years. There were five or six ministers. Let us not forget about the kerosene baths; let us not forget about the facilities and how run down they were.

I also place on the record—having just recently been to Scotland to talk to people about dementia and aged care—that Australia has pretty good record. I acknowledge that those people who work in the sector do a wonderful job. The sector in my home state of Tasmania, which is predominantly run by not-for-profit organisations, does have some serious issues, particularly when it comes to infrastructure, which have to be addressed. I think it is very misleading and pretty typical of those opposite to try to blame this government. We will address the concerns and we will be ensuring that we do everything we can, I have no doubt. I have to commend the current Minister for Mental Health and Ageing for his action.

While I do not want to dwell on the Standard and Poor's study Global Aging 2010: An Irreversible Truth, a couple of observations recorded in that study are worth noting. Age related spending on health, pensions and aged care is estimated to rise to 14.4 per cent of GDP by 2050. Without further reforms to address these mounting spending pressures, net general government debt could increase to 71 per cent of GDP over that period. The study goes on to forecast that government debt associated with age related spending could reach 300 per cent of GDP in 40 years in advanced economies if fresh measures are not introduced to address the issue. While this does not particularly apply to Australia it suggests the dimensions of the challenges that the world faces. However, I am reassured by the fact that the Gillard Labor government is the government of Australia and the future of aged care is being very seriously managed. On current projections there will be 3.6 million Australians in need of aged care by 2050—not that all of them will be of a certain age but that 3.6 million people will be in need of some sort of care. Aged care needs to be considered within the entire spectrum of care—from high-intensity care to simple advice to enable people to remain at home, from residential care to the support at home packages that will be needed by older Australians. I think we need to be more innovative in the way we provide these home care packages. Personally, I think they need to have more mobility. We certainly need to do a lot more in this area to make it simpler for families to negotiate their way through assessing what their older family members need and what is available to them.

This bill is just one of a series of reforms that will enable Australia to manage the special needs of aged care into the future. While this bill specifically relates to two aspects of residential care management, the Gillard government is committed to preparing Australia to manage the total impact of future aged-care needs. The Productivity Commission, when asked to review future aged-care needs, was required to consider the following three principles in preparing its report:    every older Australian has earned the right to be able to access quality care and support that is appropriate to their needs when they need it; older Australians deserve greater choice and control over their care arrangements than the system currently provides; and funding arrangements for aged care need to be sustainable and fair, both for older Australians and for the broader community. The Productivity Commission is developing detailed options for redesigning Australia's aged-care system and the government will consider these options in full when the final report is delivered later this month.

Meanwhile, just last Saturday the Minister for Mental Health and Ageing, Mark Butler, announced another 12,000 new aged-care places throughout Australia worth over $400 million—part of the 2011 aged-care approvals round. The 12,000 extra places will be rolled out this year, building on the 234,000 aged-care beds and community care places already operational. Increasing the number of aged-care places is essential to meeting the challenges of our ageing population—and I mentioned earlier the number of places that will be needed by 2050.

The aged-care approvals round is the major funding round in the aged-care industry each year and sees new Australian government funded aged-care places allocated to service providers through a competitive process. Places are offered to the providers who best demonstrate that they can meet the growing needs of the ageing population in their local region—that is, applications are independently assessed against criteria including financial strength, capacity to provide care and past experience in delivering care. These residential, community and flexible aged-care places are worth more than $400 million a year. There is also up to $150 million in zero-real-interest loans and more than $58.5 million in capital grants to build or upgrade residential aged-care facilities. This year's round demonstrates that the government is continuing to invest in developing and improving the aged-care experience for the nation's oldest Australians. Since 2007 the Labor government has increased funding to aged care by over 34 per cent.

The Aged Care Amendment Bill 2011 delivers on reforms by amending the Aged Care Act 1997 to: limit the permitted uses for accommodation bonds, such that providers of aged care may use accommodation bonds for capital works, investment in financial products, loans for these purposes and refunding accommodation bonds; introduce new criminal offences where misuse of accommodation bonds has been identified and the approved provider has failed financially, owing accommodation bond refunds; introduce new information-gathering powers to enable the Secretary of the Department of Health and Ageing to better monitor approved providers that may be experiencing financial difficulties or using accommodation bonds for non-permitted uses; and remove restrictions on the use of income derived from accommodation bonds, retention amounts and accommodation charges. This will provide aged-care providers with greater flexibility in managing their cash-flows and assist to offset the restrictions proposed in relation to the lump-sum element of accommodation bonds.

New complaints principles—incorporated in the aged-care principles—will improve the process of handling aged-care complaints and increase the focus on achieving outcomes for care recipients, their families and other representatives. The Department of Health and Ageing will adopt a range of approaches to assist in resolving complaints cooperatively with care recipients and providers of aged care—approaches that will include, for example, conciliation, mediation and investigation.

Funding of $21.8 million over four years was provided in the 2010-11 budget for a range of enhanced prudential measures, of which the proposed changes to accommodation bonds is one. Funding of $50.6 million over four years was also provided in the 2010-11 budget for improvements to the aged-care complaints system. Since the introduction of the act in 1997 there has been strong growth in the value of accommodation bonds—from around $500 million to more than $10.6 billion. As at 30 June 2010, approved providers held more than $10.6 billion in bonds on behalf of more than 63,000 aged-care residents. There are 1,150 approved providers and about 970 of them currently hold accommodation bonds. The average total bond holding by an individual approved provider is $11.2 million and the average accommodation bond is $167,000. This constitutes a significant part of each resident's life savings, which becomes a problem for people, particularly in my home state, because of the value of residential properties.

Existing legislation has a lack of clarity on the permitted use of accommodation bonds. This lack of clarity about the prescribed use of the principal of an accommodation bond has resulted in bonds being used for a wide variety of purposes, including some uses that may increase the risk of default on refunds of the accommodation bond. For example, using accommodation bond funds to meet operational expenses could arguably be considered a permitted use under the current arrangements, as this relates to providing aged care.

There is also evidence that approved providers are making loans to related and other entities using accommodation funds and there is uncertainty around whether these funds are consistently being used for an aged-care purpose. There is evidence of approved providers using accommodation bonds to make loans to related parties for non-aged-care purposes and using bonds to meet operational expenses, which triggered the creation of the Accommodation Bond Guarantee Scheme. This scheme was introduced in 2006 to increase protection for residential accommodation bonds and is triggered if an approved provider becomes insolvent and defaults on its accommodation bond refund obligations. In these circumstances, the government repays the amount owing to residents in full and has the capacity to impose a levy on the sector to recover any losses under the guarantee scheme. Since 2006, the guarantee scheme has been activated on five occasions and around 150 accommodation bonds have been refunded, at a cost of approximately $24.5 million to the Commonwealth.

In all the cases involving the guarantee scheme there was evidence that the failed approved providers had made significant loans to related parties, a number of which appear to be involved in non-aged-care activities. The impetus for strengthening regulation has also been reinforced by an audit conducted by the Australian National Audit Office. In its 2009 report Protection of residential aged care accommodation bonds, the ANAO recommended that the department enhance its regulatory approach.

I turn now to the inability to request certain information and inadequate penalties for noncompliance. In cases where accommodation bonds have been misused, the most significant action the department can currently take is to revoke approved provider status and/or allocated places. Also, there is currently no capacity for the department to take action against key personnel of approved providers.

Restrictions on the use of income derived from bonds, retention amounts and accommodation charges have been more significant than those related to the bonds themselves. The tight restrictions on the use of income related to bonds does not reflect the comparative risk, creates an unnecessary administrative burden and could impact on an organisation's cashflow, resulting in a risk that the bond itself may be drawn upon to manage day-to-day operations.

This legislation will address current legislative inadequacies while keeping the regulatory burden as low as possible; ensure, as far as possible, that the financial interests of residents are protected; maintain effective regulatory safeguards for accommodation bonds; provide a regulated source of capital funding for investment in aged-care infrastructure; provide a regulatory framework that is commensurate to the risk associated with the exponential growth of accommodation bond holdings, currently over $10 billion; and promote public confidence in the aged-care system.

The option of doing nothing to protect people receiving aged care is not an option. Retention of the status quo would continue to expose the government to the risks of underwriting the sector through the guarantee scheme. As I said earlier, this has already cost the Commonwealth $24.5 million since commencement of that scheme in 2006.

I would reiterate how important it is for all of us to work in the best interest of the aged-care sector. We need, along with the sector itself, to be proactive in attracting more people to work in the sector, which is a very important one. I have a very strong and passionate interest in this area and I make no secret of it. I want to make sure we get it fixed because I am getting old rather quickly—I want to make sure that things are in place before I have to call on the services.

I am somebody who has tried to navigate this, on behalf of my family, in looking for accommodation for my mother, who is in a facility receiving high-dependency and palliative care. The people who work in that industry are passionate and caring individuals and without them the industry would not be as strong as it is currently. Yes, we do need to work together to improve it, but I do not think it does anything for the sector, and certainly does nothing at all for the wider community, when those opposite constantly try to rewrite history by making themselves out to be the great saviours of the aged-care industry. They have been doing it for the last three or four years. We have to work together to improve this sector. We have to acknowledge the things that were not working in the past and we have to be innovative and prepared to work with the sector to find the best outcomes. This will ensure that we continue to lead the world in providing the care that every Australian has the right to expect.