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Wednesday, 4 November 1992
Page: 2606


Mr ROBERT BROWN (Minister for Land Transport) (8.11 p.m.) —I move:

  That the Bill be now read a second time.

The Bill proposes a significant amendment to the National Health Act 1953. There are two main parts to the Bill. Firstly, a fundamental change to the payment scheme for Commonwealth nursing home benefits is proposed, to enable the recovery of overadvanced benefit. Secondly, the Bill proposes the introduction of a series of measures designed to further protect the rights of the Commonwealth and of purchasers when a nursing home is sold or transferred.

  The nursing home funding system has always embraced an element of cost reimbursement. That is, funds are advanced to proprietors during the year and then at the end of the year that advanced funding is acquitted against the costs actually incurred by the proprietors in providing nursing home care. This means that, where a proprietor spends less on providing nursing home care than was advanced during the year, the amount of unspent or overadvanced funding must be repaid to the Commonwealth.

  By virtue of the existing legislation, such overadvanced funds are not legally characterised as debts to the Commonwealth and can only be recovered by an offset or `negative fee loading' to the approved daily nursing home fee and, by extension, the amount of Commonwealth benefit otherwise payable each month.  That amounts of overadvanced benefit are not recoverable debts has caused some difficulty. For example, where a proprietor accrues a liability to the Commonwealth for overadvanced funding and then sells the home, that proprietor cannot be pursued for the money after sale. Rather, the Commonwealth is obliged to recover the money from the benefit paid to the purchaser.

  The industry is well aware of such arrangements and makes appropriate provisions in contracts for sale. Further, following an amendment to the National Health Act 1953 in the autumn 1992 sittings of the Parliament, financial information about a home can be disclosed to potential purchasers without having to rely on the cooperation of the proprietor to obviate the secrecy provisions. Purchasers are, therefore, generally protected and able to make informed decisions when buying a home. Nonetheless, problems still occur.

  The proposed amendment changes the nature of the funding system so that the person who accrues the liability can be pursued for the money—overadvanced benefit will be legally characterised as a debt to the Commonwealth and will be recoverable through the courts. However, this Bill only changes the system prospectively. Benefits paid prior to the introduction of this change are not subject to its provisions and the existing system of recovery by fee loading will continue to exist in respect of benefits paid up to 1 July 1993 and until proprietors' claims for funding for those earlier periods are finalised.

  There are some other aspects to the current scheme which offer problems for both the Commonwealth and purchasers when a nursing home is sold or transferred. There is, for example, no real requirement for notice of sale to be given by either party. Where the Commonwealth gets any notice at all, there may be little time in which to finalise funding for the home, determine overpayments, ensure that prospective purchasers understand the funding system and are as far as possible able to make an informed decision about their purchase and to do those other things to ensure a smooth transition in ownership.

  Further, the amount owed to the Commonwealth is not able to be recovered at the point of sale, but must be recovered from the purchaser after sale, although this will be partially addressed by the proposed changes to the benefits payment system already described. This Bill introduces a mechanism for the sale or transfer of nursing homes which addresses these problems.

  Proprietors, the vendors in the transaction, will be required to give notice of sale and will be deterred from completing the sale within 90 days of giving notice. Purchasers will also be required to give notice of their intent. The period of notice will enable the vendor's claims, books and records to be scrutinised so that, prior to completion, a fair estimate may be made of any overpayment and any anticipated fee loading which relate to the period up until sale.

  Prior to or at completion of the sale, the purchaser will be required to pay to the Commonwealth from the purchase price the amount of the estimated overpayment. Such payments will be deemed to be paid to the vendor as consideration under the contract of sale. If the amount paid by the purchaser is less than the estimated overpayment, the vendor will be required to make up the difference.

  Any amounts paid by the purchaser or vendor prior to completion will be held in trust by the Commonwealth pending final determination of the overpayment. The amount of any anticipated fee loading will be advised to both parties so that appropriate provisions can be made.

  Immediately after completion of the sale, the actual overpayment relating to the period up until sale will be determined. Any amount held in trust by the Commonwealth will then be acquitted against the actual overpayment. If a greater amount is held in trust, the balance will be paid to the vendor. If a lesser amount is held, the outstanding amount will be recoverable as a debt.

  This mechanism is also flexible enough to address varying circumstances. Three separate approaches are provided for three different degrees of notice of the sale: more than 90 days, less than 90 days and no notice. In addition to imposing statutory obligations on both parties to a sale, as well as the Commonwealth, the amendments provide for the imposition of penalties for failing to comply with certain obligations.

  These changes afford greater protection of the rights of the Commonwealth to money owed to it, and the rights of purchasers to information about the home they are buying and to a home unencumbered by liabilities accrued by the previous owner. On behalf of the Minister, I commend the Bill to the House and  I present the explanatory memorandum to this Bill.

  Debate (on motion by Mr Jull) adjourned.