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Aged Care (Bond Security) Levy Bill 2006

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2004-2005

 

 

 

 

 

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

AGED CARE (BOND SECURITY) LEVY BILL 2005

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Ageing, the Honourable Julie Bishop MP)



AGED CARE (BOND SECURITY) LEVY BILL 2005

 

OUTLINE

This Bill operates in conjunction with the Aged Care (Bond Security) Bill 2005 and enables the imposition of levies on approved providers in order to recover any costs incurred by the Australian Government as a result of repaying accommodation bond balances to residents in the event that an approved provider becomes insolvent (as provided for in the Aged Care (Bond Security) Bill 2005 ).

 

This Bill forms part of a suite of Bills, including the Aged Care (Bond Security) Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill 2005, which together strengthen protection of residents’ accommodation bonds, as announced by the Government in September 2005, by enhancing prudential regulatory requirements and by guaranteeing the repayment of bond balances to residents in the event that an approved provider becomes insolvent and is unable to repay bonds.

 

FINANCIAL IMPACT

There will be no cost to industry unless a provider becomes insolvent and the Australian Government has to pay outstanding bond balances to care recipients.  Costs will only be realised in the event of an approved provider defaulting on their obligation to refund an outstanding bond balance and the magnitude of costs that flow to industry will depend on the number of bonds repaid by the Australian Government on behalf of the defaulting provider, whether any money can be recovered from the defaulting approved provider and the administrative costs of the Australian Government associated with the repayment of bonds.  In the event of a default, the Australian Government will assess the impact of recovering costs from all other approved providers and will have the legislative capacity to enable costs to be repaid in a series of instalments over a number of years.  This will minimise the impact on approved providers.

 

REGULATORY IMPACT STATEMENT

This Bill forms part of a package of three Bills that creates new prudential regulatory arrangements and a guarantee scheme for the repayment of bonds to aged care recipients in the event that the approved provider of the service becomes insolvent and has outstanding bond balances.  The Regulatory Impact Statement for the suite of Bills is included in the Explanatory Memorandum for the Aged Care (Bond Security) Bill 2005.   



 

AGED CARE (BOND SECURITY) LEVY BILL 2005

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

This clause provides that the Bill may be cited as the Aged Care (Bond Security) Levy Act 2005 .

 

Clause 2 - Commencement

This clause provides that clauses 1 and 2 of the Bill will commence on the day on which the Act receives Royal Assent and clauses 3 to 10 of the Bill will commence at the same time as Schedule 5 to the Aged Care Amendment (2005 Measures No. 1) Bill 2005 commences.  Schedule 5 to the Aged Care Amendment (2005 Measures No. 1) Bill 2005 will commence on a day to be fixed by Proclamation or, at the latest, 6 months after Royal Assent.

 

Clause 3 - Application of This Act

This clause provides that the Bill applies in all States and Territories but does not apply in any external Territory (for example, Norfolk Island, the Australian Antarctic Territory, Heard Island, the McDonald Islands and the Coral Sea Islands).  This is consistent with the Aged Care Act 1997.

 

Clause 4 - Binding the Crown

This clause provides that the Bill binds the Crown in each of its capacities and that the Bill does not make the Crown liable to be prosecuted for an offence.

 

Clause 5 - Definitions

This clause defines the key terms used in the Aged Care (Bond Security) Levy Bill 2005.

 

The key definitions included in this clause are:

 

“approved provider” - This term has the same meaning as the meaning in schedule 1 of the Aged Care Act 1997 .  That is, an approved provider means a person or body in respect of which an approval under Part 2.1 of the Aged Care Act 1997 is in force, and, to the extent provided for in section 8-6, includes any State or Territory, authority of a State or Territory or local government authority.

 

“default event declaration” - this term is defined by reference to the Aged Care (Bond Security) Bill 2005.  Clause 10 of that Bill enables the Secretary to make a default event declaration if the Secretary is satisfied that an insolvency event has occurred in relation to an approved provider and there is at least one outstanding bond balance of the approved provider.  In essence, a default event declaration “triggers” the guarantee scheme for the repayment of bonds to residents.

 

“outstanding bond balance” - This term has the same meaning as in subclause 6(2) in the Aged Care (Bond Security) Bill 2005.  A bond balance is an outstanding bond balance of an approved provider at a particular time if:

(a)     at that time all, or part, of the bond balance has not been refunded; and

(b)     that time is later than the time required for the bond balance to be refunded by the approved provider under:

(i)                  Subdivision 57G of the Aged Care Act 1997 ; or

(ii)                the User Rights Principles; or

(iii)              a formal agreement applying in respect of the bond balance.

 

Clause 6 - Regulations may impose levy

This clause enables the Commonwealth to impose a levy on approved providers holding accommodation bonds and/or entry contributions.  This allows the Commonwealth to recover any costs associated with the repayment of bonds to residents in the event that an approved provider becomes insolvent and has at least one outstanding bond balance.

 

Sub-clause 6(1) provides that if a costs recoupment determination has been made (under the Aged Care (Bond Security) Bill 2005), then the regulations may impose a levy.  The levy would be applied to all approved providers who have refund obligations (that is, all approved providers holding bonds).

 

Sub-clause 6(2) defines the refund obligations of approved providers under subclause 6(1).   

 

In relation to clause 6, the Aged Care (Bond Security) Bill 2005 provides that the regulations may prescribe matters that enable or facilitate the collection of the levy imposed under this clause.  For example, the regulations may provide for the person or persons who are liable to pay the levy, the time the levy is due to be paid, the methods by which the levy may be collected (including through instalments) and the penalties (if any) for offences against the regulations.

 

Clause 7 - Rate of levy

The clause provides that the regulations will determine the rate of levy.  This enables, for example, the regulations to impose the levy based on the total bond holdings of each approved provider as a proportion to total accommodation bond balances across the industry. 

 

Clause 8 - Maximum rate of levy

This clause requires the rate of levy to be fixed so that the total amount to be raised by the levy must not be any more than the amount set out in the costs recoupment determination.  That is, approved providers cannot be levied for any more than has been paid by the Commonwealth in both refund amounts and administrative costs.  Aged Care (Bond Security) Bill 2005 provides for the making of costs recoupment determinations and the information that must be contained in them.

 

Clause 9 - Levy may discriminate between classes of approved providers

This clause provides that the regulations may impose different rates of levy for different classes of approved providers.  This enables, for example, the regulations to impose the levy based on the remoteness or otherwise, of the location of services.

 

The clause provides that the regulations imposing the levy must not otherwise discriminate between approved providers.  For example, the regulations cannot state that approved providers in New South Wales will be required to pay a levy but approved providers in Queensland will not be required to pay a levy.

 

 

 

 

Clause 10 - Regulations

This clause empowers the Governor-General to make regulations that prescribe matters required or permitted by the Act to be prescribed or necessary or convenient for carrying out or giving effect to the Act.