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Thursday, 16 May 2013
Page: 3554


Mr FLETCHER (Bradfield) (17:21): I am very pleased to rise to speak on the Aged Care (Living Longer Living Better) Bill and the related bills. Aged care is, of course, an issue that affects all of us. We may have parents or other older relatives and friends needing aged care either now or prospectively. We may ourselves be at a stage of life where we need such care, either in our own home or in an aged-care facility. All of us have an interest in living in a civilised nation where those who have worked and contributed, and after being young and active now come to a stage of their life where they need care, can get the care they need.

The package of bills before the House today deals with a very important subject area. Unfortunately, as is so often the case with this government, the details of the measures in the bills before us do not live up to the soaring rhetoric which we have heard from this government about its plans in this policy area. In the time I have available to me this afternoon I want to make three points. Firstly, the changes contained in this package have a major impact in my electorate of Bradfield, where we have many fine aged-care facilities. Secondly, this bill is in essence a framework and much detail is left to regulation. That puts the parliament in the position of being asked to sign off on a set of policies when the details of those policies are not known. Thirdly, while there are very serious issues facing the aged-care sector, this package leaves most of those issues inadequately addressed.

I want to turn firstly to the impact of this package on my electorate of Bradfield where there are many fine retirement villages and aged-care facilities and services. I will mention just a few that I have had the good fortune to visit in recent times: Fernbank Retirement Village in St Ives; Christophorus House retirement village in Hornsby; the BUPA retirement village in Roseville; KOPWA aged care in Roseville, which used to be the Ku-ring-gai Old People's Welfare Association, KOPWA, but it is now just called KOPWA; the Presbyterian Aged Care Northern Sydney Community Care Service; the Adventist Retirement Village in Normanhurst; the Southern Cross Residential Care Retirement Village in North Turramurra; and the Rohini retirement village in Turramurra.

I regularly find myself very impressed by the quality of the facilities I visit: the caring staff, the cleanliness, the high physical standards in the facilities, the activities, the therapy and the outings available for residents. But achieving this outcome is not easy. I regularly hear from those who operate aged-care facilities in my electorate about the difficulties they are facing in maintaining the economic viability of those facilities. I also hear regularly from families, spouses and others who find themselves urgently looking around for a place in a suitable aged-care facility or nursing home for an elderly relative.

The Gillard government first announced its new approach to aged care, which today's package of legislation is supposed to give effect to, in April 2012. Once the Living Longer Living Better package was announced I started to very rapidly receive expressions of concern from those operating aged-care facilities in my electorate. It soon became clear that the immediate effect of the package was to reduce funding to many aged-care facilities. In fact, there was a total reduction of $1.6 billion in the aged-care funding instrument. I have received complaints that this occurred without a cost-of-care analysis being done. I received complaints about the fact that the government sought to achieve savings of $500 million from this instrument in one year, starting from 1 July 2012. And I received complaints, as have many others, that in the industry's view these changes created a two-class funding system, with a resident arriving in an aged-care facility after 1 July receiving less funding.

The aged-care funding instrument is essentially a formula, into which key parameters are inputted and therefore generates a figure per place in the relevant facility. What the government did at very short notice was to change the formula so that a given facility with a given number of places suddenly received a lower amount of funding. This occurred with very little notice in the middle of the 2012 calendar year. The changes were announced on 21 June and took effect from 1 July. The practical impact was that aged-care facilities, which had budgeted for their operations during the calendar year on a particular basis, now found that their in-year funding was unexpectedly reduced. In one relatively small facility in my electorate, for example, the CEO told me he budgeted on the assumption of indexation of 1.9 per cent, which would have generated an annual surplus of $12,000. But the impact of not having indexation when the funding instrument was suddenly changed was to change his result to a loss of $24,000.

In terms of its broader impact, analysis conducted for the industry by accounting firm Grant Thornton found that these changes were likely to result in funding cuts of between eight and 15 per cent compared to the subsidies that would have applied using the funding instrument in its previous form. Grant Thornton also found that the cuts appeared to be weighed most heavily towards high-care and dementia facilities. So this change at very short notice had a very significant detrimental impact on the profitability of operators of aged-care facilities.

Let me turn now to the proposition that this bill is lacking in key detail and comprises mainly a framework. Largely these bills set out broad principles with detailed rules left to be made by bureaucratic agencies or by the minister on advice from those agencies. For example, under proposed section 52G-4 the Aged Care Pricing Commissioner can approve certain higher prices, under proposed section 96-1 the minister will determine the fees and payment principles, under proposed section 52K-1 the secretary will determine cases of financial hardship and under proposed section 52M there are to be new prudential standards forming part of the fees and payment principles dealing with, for example, the way that approved providers must provide information about their financial management. The point is that these are all issues of great importance but the details will be left to be determined by bureaucrats, and the parliament is unable to assess the full impact of this package. There is, however, every reason to suspect that this is going to be a mechanism for even more detailed, expensive and burdensome regulatory oversight of a sector which is already very extensively overseen.

Let me turn now to the third proposition I want to advance, which is that there are serious issues facing the aged-care sector but, unfortunately, this package, despite the soaring rhetoric from the Gillard government, leaves many of those serious issues unaddressed. The fundamental problem facing the aged-care sector is one of economic viability. It is estimated that only 40 per cent of residential aged-care providers are operating in the black, and that includes both for-profit and not-for-profit operations. The inevitable and unsurprising consequence is that the supply of aged-care places is severely constrained. Providers are in many cases handing back licences because it is simply not viable for them to operate. In each of the last three to four years of funding rounds, a proportion of allocated beds were not taken up or were handed back. In consequence, senior Australians are finding it harder to find a place in an aged-care facility. They need to wait longer or they need to travel further from their present home. It is curious that this is the case when the stated objective of the policy, which this package of legislation purportedly gives effect to, is to expand the number of aged-care places. Certainly based upon the feedback I have received from many operators of aged-care facilities in my electorate, there is very little reason to be confident that this package will achieve its stated objective.

One of the features of this legislative package which is conspicuous is the range of recommendations made in the Productivity Commission report which are not included in the legislation the government has put before the parliament. Labor has ignored the bulk of the Productivity Commission report; it has merely cherry-picked a few recommendations. Let me quote, for example, from a letter I received from the major aged-care provider BUPA, which has a number of facilities around Australia, including a facility at Roseville in my electorate, which I visited last year. BUPA had this to say:

In our view the Living Longer Living Better reform package ... largely ignored the Productivity Commission's recommendation for a personalised care entitlement system that would enable improved customer choice and flexibility. We believe our Older Australians and their families should be able to pick and choose where they receive their care. We therefore urge the Government to proceed with a single entitlement based funding system and to start this process of reform now; not 5 years hence as suggested.

We have the government purportedly introducing a set of reforms designed to address the very serious problems facing the aged-care sector. We have a government purporting to do that in reliance on advice from the Productivity Commission. But those in the sector who have analysed the details of what the government has actually brought forward have pointed out that the measures do not address many of the fundamental problems which are faced by the industry and do not to a very large extent give effect to the recommendations of the Productivity Commission. What we have seen, however, in this package, which is not at all surprising given the track record of this government, is the introduction of extensive new mechanisms for detailed bureaucratic regulatory oversight. We have seen the addition of new bureaucratic machinery, such as establishing the Aged Care Funding Authority.

Let me quote from one local aged-care provider responding to the statement in the minister's press release of April last year that the new package would 'set stricter standards, with greater oversight of aged care'. He had this to say in a letter he wrote to me:

The aged care industry is one of the most highly regulated industries in Australia. The requirement to meet the 4 accreditation standards and 44 outcomes, with two annual audits and a major one each three years; and with numerous regulations and requirements at all levels, begs the question, why even more scrutiny? What is prompting these kinds of statements?

The frustration which is evident in that letter speaks volumes for the mismatch between the approach that this government has taken and what is likely to be required to solve the difficulties that we all agree are facing the aged-care sector, with a significant constraint on the availability of places in aged-care facilities where Australians of older years can go to receive the care that they rightfully expect and that we would all want them to have.

The inept approach of this government on this complex issue stands in contrast to the clear principles which have been articulated by the coalition both at the previous election and in remarks made and policies laid down, principles articulated by the coalition spokesman in this area, Senator Concetta Fierravanti-Wells. We have made it clear that we have a very different approach. We intend to establish a four-year aged-care provider agreement with the intention of providing greater certainty over a longer period of time. Because what we on the coalition side of this parliament understand is that the crucial thing is to create an environment in which those who are operating aged-care facilities have the right incentives and right support to go out and do the good job they need to do to serve the interests of older Australians.

The government's performance in this area, regrettably, shows a gulf between reality and rhetoric. This is an important policy priority and, should we win government, it is one we will give clear attention to. (Time expired)