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Aged Care (Bond Security) Levy Amendment Bill 2013

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2010 - 2011 - 2012 - 2013

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES/SENATE

 

 

 

 

 

 

 

 

 

 

AGED CARE (BOND SECURITY) LEVY AMENDMENT BILL 2013

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Mental Health and Ageing, the Hon Mark Butler MP)



 

 



Aged Care (Bond Security) Levy Amendment Bill 2013

 

OUTLINE

 

 

  Currently under the   Aged Care Act 1997  certain residential aged care services and certain flexible aged care services may charge certain care recipients accommodation bonds for entry into residential aged care services or certain flexible aged care services. These accommodation bonds (less any allowable deductions made by the approved provider) are required to be refunded to care recipients when they leave the aged care service.  

 

    

 

  If an approved provider becomes insolvent and is unable to refund the accommodation bond balances that are owing to the care recipients, the   Aged Care (Bond Security) Act 2006  provides a mechanism by which the Commonwealth may repay the outstanding bond balances to the care recipients. This scheme is known as the Accommodation Bond Guarantee Scheme (Guarantee Scheme).  

 

    

 

  The   Aged Care (Bond Security) Levy Act 2006  enables the Commonwealth to recover the costs of refunding these bond balances (along with administrative costs) from approved providers via a levy. 

 

    

 

  This Bill amends the   Aged Care (Bond Security) Levy Act 2006  as part of a suite of Bills giving effect to the    Living Longer Living Better   aged care reform package. 

 

    

 

  Amongst other things, the Aged Care (Living Longer Living Better) Bill 2013 describes new ways for care recipients who enter residential care or certain flexible care, on or after, 1 July 2014 to contribute to the cost of their accommodation. The Bill enables care recipients to elect to pay for their accommodation by periodic payment, lump sum or by a combination of both. 

 

    

 

  If a care recipient elects to pay by lump sum, this lump sum will be required to be refunded to care recipients (less any allowable deductions) when the care recipient leaves the residential aged care service or certain flexible aged care services. 

 

    

 

  In order to ensure that the same protections exist for care recipients who pay these new lump sums and those that paid accommodation bonds under the existing arrangements, amendments are required to both the   Aged Care (Bond Security) Act 2006  and the   Aged Care (Bond Security) Levy Act 2006  to extend the operation of the Guarantee Scheme to care recipients who enter care on or after 1 July 2014 and pay lump sums (known as refundable accommodation deposits or refundable accommodation contributions). 

 

    

 

  This Bill amends the   Aged Care (Bond Security) Levy Act 2006  to: 

 

    

·          change the name of the Act to the Aged Care (Accommodation Payment Security) Levy Act 2006 ; and

 

·          ensure that if the Guarantee Scheme is triggered and the Commonwealth repays accommodation bonds or the new types of payments (collectively known as accommodation payment balances), the Commonwealth is able to recover its costs, via a levy, from approved providers.

 

    

 

   Financial Impact Statement 

 

    

 

  There will be no cost to approved providers of residential aged care unless: 

 

    

 

  ·             a provider becomes bankrupt or insolvent;  

 

    

 

  ·             the Commonwealth has to pay outstanding accommodation payment balances (which, as defined through these amendments, will also include bond balances) owed to care recipients; and  

 

    

 

  ·             the Commonwealth decides to recover the costs of refunding these balances from all approved providers via a levy.  

 

    

 

  In this situation, the magnitude of costs that flow to approved providers of residential aged care would be determined by the monetary value of the outstanding accommodation payment balances (including interest) repaid by the Commonwealth on behalf of the defaulting approved provider, whether any part of this cost could be recovered from the defaulting approved provider and the costs incurred by the Commonwealth in administering the default event (including the repayment of the accommodation payment balances).  

 

    

 

  In the event that an approved provider becomes bankrupt or insolvent and defaults on their obligation to repay care recipients’ accommodation payment balances, the Commonwealth would assess the impact of recovering costs from all approved providers that held such lump sum amounts ten days before the default event declaration was made. The Commonwealth has the legislative capacity to recover costs from approved providers in instalments over a number of years. This will minimise the potential impact on approved providers. 



 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Aged Care (Bond Security) Levy Amendment Bill 2013

This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the Bill

 

The Aged Care (Bond Security) Levy Amendment Bill 2013 extends the existing levy provisions under the bond security legislation to enable the levy to be imposed in respect of the obligations of approved providers to refund two new types of accommodation payments, refundable accommodation deposits and refundable accommodation contributions. These new types of accommodation payments are provided for in the Aged Care (Living Longer Living Better) Bill 2013.

 

Human Rights Implications

 

The proposed amendments do not limit any human rights, nor propose any offences or penalties.

 

Conclusion

 

This Bill is therefore compatible with human rights because it does not engage any of the applicable rights or freedoms.

 

The Hon Mark Butler MP, Minister for Mental Health and Ageing

 



Aged Care (Bond Security) Levy Amendment Bill 2013

 

 

NOTES ON CLAUSES

 

Clause 1 - Short Title

This is a formal provision which provides that the Bill, once enacted, can be cited as the Aged Care (Bond Security) Levy Amendment Act 2013.

 

Clause 2 - Commencement

This clause provides that the Act commences on 1 July 2014. This aligns with the commencement of the changes to the Aged Care (Bond Security) Act 2006 and the introduction of the new types of accommodation payments that are described in amendments to the Aged Care Act 1997 which are reflected in the Aged Care (Living Longer Living Better) Bill 2013.

 

Clause 3 - Schedule(s)

This clause provides that each Act that is specified in a Schedule to this Bill is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item has effect according to its terms.

 

SCHEDULE 1 - AMENDMENTS

 

Item 1

This item amends the long title of the Aged Care (Bond Security) Levy Act 2006 . Currently, the long title describes the Act as ‘An Act relating to the imposition of levies in respect of certain obligations to refund bond balances, and for related purposes’. This item amends this long title to read: ‘An Act relating to the imposition of levies in respect of certain obligations to refund accommodation payment balances, and for related purposes’.

 

This reflects the new scope of the Act which enables a levy to be imposed on approved providers for the costs incurred by the Commonwealth in refunding not just bond balances (as defined by the Aged Care (Bond Security) Act 2006 ) but also refundable accommodation deposit balances and refundable accommodation contribution balances.

 

Item 2

This item amends the name of the Aged Care (Bond Security) Levy Act 2006 so that, from 1 July 2014, it will be called the Aged Care (Accommodation Payment Security) Levy Act 2006.

 

A note will be inserted under section 1 to remind the reader of the operation of section 10 of the Acts Interpretation Act 1901 . The effect of this is that if another amendment of the Act is described by reference to the Act’s previous short title (that is, the Aged Care (Bond Security) Levy Act 2006) , that other amendment has effect, from 1 July 2014, as an amendment of the Act in accordance with its new short title (the Aged Care (Accommodation Payment Security) Levy Act 2006 ).

 

Items 3 and 7

These items insert in section 5 of the Act definitions for ‘accommodation payment balance’ (item 3) and ‘outstanding accommodation payment balance’ (item 7).

 

‘Accommodation payment balance’ has the same meaning as that given by the Aged Care (Accommodation Payment Security) Act 2006 (once enacted) . That Act defines ‘accommodation payment balance’ to mean:

 

 

  ·             a refundable deposit balance; 

 

    

 

  ·             an accommodation bond balance; 

 

    

 

  ·             an entry contribution balance; and  

 

    

 

  ·             an unregulated lump sum balance.  

 

‘Outstanding accommodation payment balance’ also has the same meaning as in section 6(2) of the Aged Care (Accommodation Payment Security) Act 2006 (once enacted) . That subsection defines outstanding accommodation payment balance to mean, in summary, an accommodation payment balance that has not been refunded when it was due to be refunded in accordance with the Aged Care Act 1997 or User Rights Principles, or any applicable formal agreement.

 

Items 4 and 8

These items repeal, from section 5 of the Act, the definitions of ‘bond balance’ (item 4) and ‘outstanding bond balance’ (item 8).

 

‘Bond balance’ is the collective term used in the Act prior to amendment to refer to accommodation bond balances, entry contribution balances and unregulated lump sum balances. Each of these concepts is now included in the definition of ‘accommodation payment balance’ (refer item 3). As such there is no longer a need to define ‘bond balance’.

 

Similarly, ‘outstanding bond balance’ refers to a bond balance that had not been refunded by the approved provider. This term is being replaced by the term ‘outstanding accommodation payment balance’ (refer item 7).

 

Item 5

Currently under section 8 of the Act, the maximum amount of revenue to be raised by any levy imposed on approved providers must not exceed the costs recoupment amount specified in the costs recoupment determination, the making of which enables the levy to be imposed.

 

Section 5 of the Act defines a cost recoupment determination to mean a refund costs recoupment determination or an administrative costs recoupment determination within the meaning of the Aged Care (Bond Security) Act 2006.

 

This item amends the definition of ‘costs recoupment determination’ so that instead of referencing the Aged Care (Bond Security) Act 2006 , it will reference the Aged Care (Accommodation Payment Security) Act 2006 which is the new name for that Act.

 

These changes do not affect how the maximum rate of levy is calculated.

 

Item 6

Section 5 of the Act defines a ‘default event declaration’ as having the same meaning as in the Aged Care (Bond Security) Act 2006.

 

This item amends the definition of ‘default event declaration’ so that instead of referencing the Aged Care (Bond Security) Act 2006 , it will reference the Aged Care (Accommodation Payment Security) Act 2006 which is the new name for that Act.

 

Item 9

 

  Subsection 6(2) of the Act describes the circumstances in which a levy may be imposed. This amendment simply replaces all references within that section to ‘bond’ with references to ‘accommodation payment’. The effect of this is to ensure that the levy arrangements apply not just in respect of bonds (which currently include entry contributions and unregulated lump sums) but all lump sum accommodation payments including refundable accommodation deposits, refundable accommodation contribution balances, accommodation bonds, entry contributions and unregulated lump sums.  

 

Item 10

Item 10 is an application provision which provides that the amendments described in this Bill apply in relation to a default event declaration specified in a costs recoupment determination whether the default event declaration was made before, on or after 1 July 2014.