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Funding of aged care institutions

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CHAIR —Welcome. Do you have any comments to make on the capacity in which you appear?

Mr Herbert —I am here as the Chairperson of Community Services Australia, which is the national Uniting Church community service organisation.

Ms Davies —My name is Libby Davies, or Elizabeth Davies. I am the Executive Director of Community Services Australia--Uniting Church.

CHAIR —The committee has before it submission No. 66. Do you wish to make any alterations to that submission?

Mr Herbert —No.

CHAIR —I now invite you to make a short opening statement, and at the conclusion of that I will invite members of the committee to put questions to you.

Mr Herbert —Thank you for inviting us to make a submission today. As you would know from the information provided, the Uniting Church plays an important role in the care of aged persons. However, I would stress that our interest in and concern about legislative changes does not arise only because we are a service provider in this area. The Uniting Church, through Community Services Australia and indeed through all of its work, is vitally concerned with issues of access, equity, participation and rights in regard to all Australians, so we are not only concerned with issues of service delivery.

We all know, or I hope we all know, that much of the impetus of this legislation is budgetary. Indeed, I hasten to say that it is my view that had the Labor Party been in government something along the same lines would have been proposed. Treasury rules.

Community Services Australia supports aspects of the new legislation: the standard classification instrument, the introduction of accreditation, the aim towards flexibility and the portability of the accommodation bond, although that latter question--the portability of the accommodation bond--is immediately negated by the open-ended nature of the amount. The amalgamation of aged persons hostels and nursing homes, while it will take many, many years to actually achieve, is a good idea. However, as indicated in our submission, it is promoted in this instance less by a concern for improvement in services and more because it provides the philosophical basis for introducing accommodation bonds into nursing homes.

At the moment, the circumstances surrounding the entry of a person into what is currently called a hostel and what is currently called a nursing home are two completely separate instances. I am continually meeting people within the Uniting Church who are talking to me about them or their relatives seeking to enter a hostel or making arrangements to enter a hostel. I never meet anybody who says that they are seeking to enter a nursing home bed or they are seeking that for their relatives, because in fact that process takes a period of 24 or 48 hours and therefore there is not time to spend months going around chatting up people about it.

What is more, it is not correct to say that the changes in regard to capital funding only serve to bring nursing homes into line with hostels. It is not correct to say that there has not been capital funding for hostels in the past. The minister has criticised me on ABC Radio on this point, saying, `Why has Mr Herbert complained about this system when he said nothing in 1988 when accommodation bonds, or entry contributions, were brought into hostels?' I have here before me a sheet which shows that in the last two years the Uniting Church in New South Wales has received, for the construction of hostels, $7,736,750--a large sum of money. None of those projects in regard to hostels would have proceeded without those capital grants. This legislation ends all those capital grants. So, while there is a lot of talk about nursing homes, what will happen in the future in regard to hostels is also a moot point.

It is not that there has been an expansion of a system working successfully in hostels into nursing homes. That is not the case. In fact, all capital funding will cease and a new situation will face us in regard to both hostels and nursing homes.

In our submission we have pointed out that the introduction of accommodation bonds--that is, user pays--is a high risk strategy. The government has promised two protections in regard to this system. One is the allocation of specific ratios for the admission of concessional residents, and the other the introduction of a compensation payment for taking concessional residents. It is impossible to comment on the effectiveness of those protections if you do not know what they are. The government deserves to be criticised for the delay in announcing the particulars of those two protections.

With regard to the percentages of concessional residents, we have argued for a minimum figure across all facilities to prevent the creation of what we might call ghettos. If some operators in high income areas are subject to lower targets for disadvantaged people, they receive a double bonus in this system; that is, they take fewer concessional residents, and the ones they do take will have the capacity to pay a higher level accommodation bond. There is a whole world of difference between Bellevue Hill and Blacktown in Sydney.

In a recent 7.30 Report interview in which I participated, a private operator, Mr Doug» «Moran» , after having boasted that he was the government's main adviser in this area, was then asked what he thought about the creation of a two-tier system. He stated, `Indeed, this will be the case; it will be a two-tier system.' He stated further, `This is normal because people in the eastern suburbs drive cars worth three times as much as the cars of people in western Sydney.'

The Uniting Church is saying that all nursing homes--and we believe that they are public facilities--must be of a high standard, whether they are in Vaucluse, Bellevue Hill, Turramurra, Penrith, Blacktown, Young, Harden, or in any other area of New South Wales or the rest of Australia.

I must emphasise that access to nursing homes is not a choice--this has been said before by other people appearing before you--it is based on need. I note the figure that the Council on the Ageing has cited--that 60 per cent of people entering nursing homes do so from a hospital bed. Last night, I was speaking to Dr Russell Clark, the geriatrician at the War Memorial Hospital in Sydney, where I am on the board. He said, `Harry, you tell those senators that it is not 60 per cent in the eastern suburbs of Sydney, it is 90 per cent, in my experience here.'

Of course, the accommodation bond will do nothing for respite care, because you cannot obtain capital funding from people who are in for respite care; and what is proposed in that regard, I can only guess.

We do not believe that the money raised by the accommodation bonds will meet the capital needs of the system. Indeed, the fact that the money is not even quarantined raises the question whether or not, in a decade's time, we will not all be back here again arguing the very same point, and some other Professor Gregory will produce another report to tell us how many billions we are deficient.

As to the amount of the bond, I think our organisation was the first to publicly question the figure of $26,000. We suggested $60,000 to $80,000. In fact, we would now, in the light of further evidence, say that it is likely to be $88,500, which is the cap for the rental assistance.

We emphasise that the concern the Uniting Church has with the user-pays system is that it is not on those who pay, it is on those who cannot pay. If the setting of targets for concessional residents is not done generously, then there will be the creation of two queues, and we would emphasise that we do not think user pays is appropriate when people are entering a facility not out of any choice of theirs, but out of the circumstances in which they are placed.

While we support the introduction of accreditation, we are concerned that some «aged» «care» facilities under the legislation could actually appear to exist and continue to operate without accreditation, although they will not have access to some forms of fundraising. We believe that if any facility consistently fails to meet accreditation, it should be shut down. I agree with other people here today that if there are nursing homes in Australia which are deficient, they should be shut down today.

One new change to hostel funding means that a group of people currently finding accommodation in current hostels will not attract a subsidy in the future. What will happen to those people is an important question that needs to be addressed. In the light of rumoured cuts appearing in newspaper articles about public housing in Australia, one could not be confident about what will happen in the future to that group of people who, if they cannot get into aged persons hostels, will need to seek assistance through some part of the public housing system.

Finally, I would stress that Community Services Australia, despite all that I have said, is not against change. But we think change should always be for the better and we do not believe that this is a change for the better.

Senator WOODLEY —In terms of the two-tier system, one of the concerns I have is that it will not just be a two-tier system which will operate, whereby some facilities will be luxurious and others will be very standard, but that even within the same facility there could be a two-tier system between people paying accommodation bonds and those who do not. Would your organisation see that as a possibility within your own ambit?

Mr Herbert —It could be a possibility. We would resist it as much as we could because the church does not wish to run silver service wings in its nursing homes. Our interest in people's care and how people ought to be treated would make that very difficult for us but it certainly could occur. This is where I believe the Senate could play a role because if the industry is forced to accept a minimum standard of concessional residents right across that board--that is if every operator had to take 20 per cent for example--it would in practical terms be somewhat difficult for operators to carry on in that fashion. If you had a 100-bed nursing home and you had 20 people who were concessional and 80 people who were not, there would be some difficulties I believe in operating along the lines you have said. It would be so apparent and I think, to the Australian sense of fair play, so appalling that in fact an operator would not be able to do it but if you have a low concessional figure for some operators it might be quite easy for them to achieve that. This figure of concessional residents and how many people it ought to take is a very important part of the legislation. We would argue for a very high figure because we already take high numbers of concessional residents. We want the private operators to take a high level of concessional residents too.

Senator WOODLEY —What is your average?

Ms Davies —We have determined that basically most of our facilities currently in the hostel sector take in excess of 60 per cent of concessional residents. Some in our rural and remote areas are 99 per cent concessional residents.

Senator WOODLEY —That is my next question because that is one that I am very concerned about. You have argued for additional funding to be provided for remote and rural areas. Is the $10 million that is being proposed as the additional remote area capital grants program not going to be enough?

Ms Davies —We would argue that $10 million will basically cover two facilities of around 30 beds based on $100,000 per bed, taking into account additional costs associated with remoteness. In Australia, the ability of the church to provide those beds of course has been because of capital grants available. For under $10 million, you cannot provide or meet those services at the current level of demand in rural and remote areas so we have argued for an increase in that amount.

CHAIR —They would of course be the same areas where your parishes would not be able to undertake massive fundraising to supplement anything, I presume?

Mr Herbert —It has not generally been the practice in recent years to be able to fund raise for those facilities.

Senator WOODLEY —I would never ask you a dorothy dixer but I will because I think it is important to get it on the record. I think it is important to get your perspective on the prudential arrangements and why you think the church should be exempted from those prudential arrangements.

Mr Herbert —We do not just think the church ought to be exempted, we are determined that the church should be exempted. That is a very important factor. Why should the Uniting Church or the Catholic Church pay the impost of some insurance scheme as yet undetermined when in fact we have a complete record of security in this regard already? We, for example, in the synod of New South Wales which I work in will give the government a letter on our letterhead which will say we guarantee absolutely all the monies which we receive. That is guaranteed through the Uniting Church in New South Wales--act of parliament--against all the property the Uniting Church own in New South Wales. I will bet the government could not get a guarantee like that in many places. Why would you be expected to put your money in some insurance fund and pay a premium for it if you can offer that sort of guarantee? I do feel for other operators who do not have the benefit of providing that sort of guarantee but I think where guarantees can be provided, they ought to be taken up.

Senator WOODLEY —I will leave it for a while.

Senator EGGLESTON —Why should churches be exempted from provisions which apply to the rest of the community? We have found in recent times in orphanages and care institutions run by the Catholic Church in Western Australia in Clontarf that a high degree of abuse occurred of their charges. One would have to say that churches may present themselves as highly ethical groups when in fact sometimes they are not. I think, in terms of equity, which is what you have talked about, and transparency, the churches should be required to meet the same requirements as any other nursing home provider.

Mr Herbert —Senator Eggleston, I was answering a question about prudentialling arrangements, not about other issues and so I--

Senator EGGLESTON —What we are talking about is the principle of exemption. Why should you be exempt?

Mr Herbert —I do not think you can say it is a principle in regard to standards of care. Absolutely I agree with you. Of course the churches should not be exempt; of course they should have all of those standards. We are talking here about a financial arrangement: that is how there is going to be security for the proposed accommodation bonds. I am indicating that there is a fail-safe, absolutely rock-solid, gold-plated way in which the churches can offer that guarantee and for that reason we are exempt. I am not for one minute suggesting that churches--I agree with you, churches should be subject to the same expectations of standards in provision of care as any other group.

CHAIR —You said that you had been speaking to Dr Russell Clark yesterday who had said that it was not 60 per cent who were direct entry from acute institutions but 90 per cent. How many of that 90 per cent--and I guess the other 10 per cent--are in a capable position to undertake the sale of their home and the disposal of their assets as they are being admitted to a nursing home or in a very short period thereafter?

Mr Herbert —I think that is going to be a difficult problem in regard to implementing these changes. As I said, the entry to a nursing home is a compressed activity, unlike the entry to a hostel in which there is a longer period of time involved. It occurs frequently within, as I said, a 24- or 48-hour period. There is, of course, in the legislation, the provision that the accommodation bond will not come in for six months but nevertheless, people will know when they enter what the accommodation bond at that particular nursing home is. They will know what they will be expected to pay if they are there in six months time. Getting people into nursing homes is not an easy affair in itself, but at the moment there is only one issue and that is, `Is there a vacancy somewhere?' It is of no particular interest to the operator who comes in. Some operators want to have a higher No. 1 classification residence, as opposed to lower classifications, but that is not a serious problem because they are the most needy people anyway. At the moment it is a very simple system but of course once you introduce money into that issue, then I think it will become much more complex.

I envisage a scenario, for example, where the ACAT team or the relatives or the doctor concerned is ringing a nursing home and saying, `I am looking for a place for Mrs X'. The operator will say, `I am full up. Is she concessional or not?' They will say yes and she will say, `I am full up to my ratio on concessional residents. It is a pity because I do have a place coming up in two days, but that is a non-concessional place and I have taken a bond of $100,000 for that place. I will need to get another person in with a similar bond in order that my reserves will not be depleted.' Where there is at the moment one queue, I predict that in the future there will be two queues. I have compared it with the position for elderly people seeking orthopaedic surgery, that is hip replacements, in Sydney. At the moment there are two queues for that. There are those who have private medical insurance and the queue is relatively short and manageable. Then there is the queue of people who are waiting for public hospital treatment and we all know, particularly in Sydney, that that queue is much longer. Unless the concessional ratios are set in a very generous way, I fear that two queues will emerge.

CHAIR —The ACAT teams at present are there to assess a person's physical, emotional, psychological, maybe even spiritual need--their whole need to enter a nursing home or to cope at home or not to cope at home. They are not there measuring their financial situations and doing assessments on assets and things. How do you think this will actually impact upon the working of ACAT teams and the necessity to maybe extend the ACAT team?

Ms Davies —That is a very difficult question to answer. I appreciate that there is a restriction of access imposed by the financial impost that ACAT teams are probably going to have to keep in mind. In terms of the planning ratios that exist within a region, if, for example, there is a high proportion of concessional residents within that region and the ratio has been set at a certain number, then access for people within that region to stay within their home base and home network will be impeded by the fact that those concessional places have all been taken up. So the ACAT team will no doubt have to take into consideration what other possible regional placement could take place for that person at that time.

If the scenario we are talking about is a financially disadvantaged or a concessional resident, then that person has not got a financial contribution to make to a facility. All the concessional places are taken up. The ACAT team is then going to have to assess what other region it can look at to transfer that person to. I would see that, for a person at that time of life entering a facility in such acute need, as a very poor reflection of Australia's respect for our elderly people and our need to access acute care. It is a very unfair situation to place ACAT teams in at that point.

CHAIR —We are told that people will not have to sell their house to pay the accommodation bond. But what other options do you think are realistically available?

Mr Herbert —The issue of whether or not people sell their house is not a main focus in our submission. As I said, our concern about the user-pays system is the impact on those who have no house to sell. I think we have to remember that a user-pays system has its main impact not upon those who have something, but upon those who do not. That seems to be often forgotten. But I think the prices will be set. The accommodation bonds, as they are at the moment in hostels, are set. If you are not a concessional resident and you have a house to sell, then obviously you will have to sell it. I do not think there is any way around that.

CHAIR —The group I am thinking of are those who are on full pension and their only asset is a house which they have taken their whole working life to pay off; they may or may not have had a car at some stage, but that would have been the maximum of their assets. They probably are a married couple, and one has to go into a nursing home and the other one is quite well and able to stay at home.

Mr Herbert —They will be concessional under the legislation. That would be a concessional person.

CHAIR —But, once the spouse dies, the single person then may well, shortly after the spouse's death, be facing not only the loss of a spouse and going into a nursing home, but--

Mr Herbert —Well if there is no remaining spouse, yes. If a person is concessional, they will be treated in one way--and we fear they may have a long queue. That is the problem there. If they are not concessional, I have to say that, from my perspective in the Uniting Church--and we do not like the user-pays system; we have made that clear--if this system is introduced in order to enable our system to work, we will have to take from people the accommodation bond which will meet our needs. I have indicated to you that my belief is that $80,000-odd will be the minimum. It will not be for us to tell people to sell their home. They will have to make that decision. We will of course be telling them, as often as we can, that it is not us that has imposed the system, it is the people in Canberra. Nevertheless, that is the fact.

The issue of selling your home is not a matter for us. We will set the bond according to the capital needs that we envisage and, because the church wants to take as many concessional people as we can, we will want to exceed whatever ratio we are given for concessionals. At the moment, for example, you are supposed to take a minimum of 20 per cent in hostels. We have been taking over 30 per cent in New South Wales. We strive to exceed the ratio. To exceed it, you have to take from those who can pay. So we will be setting fairly high accommodation bonds, there are no two ways about that.

Senator WOODLEY —My question is for Ms Davies. I am concerned about people going into nursing homes who have special needs, such as elderly people with drug or alcohol dependency, or young people who are still accessing nursing homes. Do you see the reforms taking account of those kinds of issues?

Ms Davies —Thank you, Senator, for raising that. It is a very critical issue. This act replaces the Aged and Disabled Persons Care Act. You will note that in the objects of the act there is no reference to people with disabilities. There is an increasingly higher proportion of younger people with disabilities and with high support needs, for whom there is no other residential care option, being placed in what we would see as defined elderly institutions of residential care. There has been no commitment under this new legislative framework to accommodate those people.

Currently what happens is that, with the Commonwealth-state disability agreements and the nursing home funding at Commonwealth level, there is a shifting of costs between those two program areas for younger people with disabilities. It is an abrogation of civil rights and of our respect for younger people for whom medical advances have created the opportunity to live--although they are living with very severe disabilities--for them to be placed in «aged» «care residential institutions. We would be very concerned that this bill has not in any way accommodated the needs of that group.

Similarly, it has not accommodated the needs of the very elderly--people over the age of 85--whose care needs are slightly different. For example, within that group, there are people who have had very limited access to any type of capital and whose assets are very low. How will they fare under the single classification instrument, the care subsidy that will be attached to them? Also, there are people with drug and alcohol related problems. Many of the Catholic institutions will tell you that they have long lists of people whom they want to move out of rooming and boarding house situations into supported accommodation places. This bill seems not to recognise the placement of those people. Obviously, the concessional resident subsidy which will be attached is critical in how well those people will be accommodated.

Senator WOODLEY —Do you have any worry--I suppose it is not your worry, but this is something that has been raised--about some families transferring assets into family trusts and then seeking to enter as financially disadvantaged?

Mr Herbert —That might occur. The ingenuity of people to organise their affairs is unlimited, as we see mostly in the case of the very rich in Australia. That is the problem. But I would not think that it is a huge problem because the very rich who are likely to do that are the people who will be catered for in the super-duper aged cared facilities, not in the ones that we are concerned with running.

CHAIR —There are no further questions. Thank you both for your attendance here today.

[11.29 a.m.]