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Wednesday, 2 December 1998
Page: 1040


Senator CHRIS EVANS (10:44 AM) —I thank Senator Hill for giving me the opportunity to speak much earlier than I had planned. I was assured that the previous debate would go for some hours. It is just as well my staff and I are, as always, prepared for battle.

I wish today to speak on the Aged Care Amendment (Accreditation Agency) Bill 1998 , and I indicate on behalf of the opposition that we are opposing the passage of this bill. We do so not because we are opposed to the accreditation system but because we have serious concerns about the method that the government has used in consulting with the industry about the implementation of these measures and about the lack of knowledge that still exists about how the accreditation system payments are to be calculated. So we are using our opposition to the bill as a means of raising those concerns, rather than attacking the issue of accreditation.

This bill would insert into the Aged or Disabled Persons Care Act a facility for the minister to set a schedule of fees that the Aged Care Standards and Accreditation Agency would charge when processing applications from aged care facilities for their accreditation under the act. Accreditation under the act will be a prerequisite for receiving government subsidies from January 2001, so the actual accreditation is vital for all providers because without it they will not receive government funding. Therefore, the issues about whether facilities can cope with the accreditation system and afford the costs associated with it are vital to the future of aged care.

The Labor Party supports any initiative that seeks to improve the standard of aged care. It was for this reason that in 1987 we introduced the inspection system for nursing homes, and extended it to hostels in 1991. Between that period and 1993-94, both nursing homes and hostels showed an improvement against all quality standards. That of course is very pleasing and reassuring for the Australian community. However, that inspection system, which is still operating, is wholly funded by the Commonwealth. We as a parliament took the decision that we ought to fund the system that ensured that standards were met in aged care facilities in Australia. It is because of our concern for those standards that we oppose these proposed amendments.

Providers in the aged care industry have genuine concerns about the transfer of responsibility that the bill represents and the implications for standards of care. The providers are also concerned about the lack of information available on the government's proposals for the fees. We seem to be getting mixed messages from the government on just what the proposed fees will cover. The minister in the other House has indicated that fees proposed in the amendment would `reflect the cost of the accreditation service'. This leaves open full recovery of the costs of running the accreditation agency—that is, they are proposing the complete transfer of funding of this responsibility from Commonwealth consolidated revenue to the actual providers, the facilitators of aged care. They will have to meet the costs of providing community assurance of standards in their own facilities.

The reality is that, under the proposed amendment, all these costs will be transferred to those providers from as early as 1 January 1999. The budget funding of the accreditation agency is subject to review and may be withdrawn, leaving the agency dependent upon fees charged to providers. It is unclear to us what the cost of the accreditation service will eventually be. Industry providers estimate the costs of actually carrying out the accreditation in each facility to be of the order of $5,000 to $10,000. If full recovery of costs is the government's intention, an additional $5.5 million would be added to the overall amount charged to the aged care industry. The accreditation agency's budget is $5.5 million, as reported in the last annual report.

When the budget of the agency is added to the possible costs of the accreditation process, each facility may be liable for a fee of $7,000 to $12,000. With approximately 3,000 facilities, this adds up to a potential $36 million worth of fees across the industry. As the fees that providers can charge residents are fixed by the government, along with the number of beds that the facilities can provide, the only option that facilities have for raising the money for these additional fees will be to make cuts in their running costs and service standards.

By transferring the fees of the new accreditation agency and the costs associated with accreditation to the nursing homes, providers can only recover the costs by reducing the standards of care and by reducing the services they provide to residents. A large number of these facilities are not-for-profit providers. They are not people who have huge reserves or who have the potential to eat into profit margins. They are not-for-profit providers; they are community organisations, and the only way they can absorb these fees is by reducing the services.

There is real concern in some sections, and it is shared by the Labor Party, that this will have a very adverse effect on the small providers. There is no doubt that larger providers will be able to absorb these costs. They have the management systems and the computing systems in place that will ensure they are able to deal with the accreditation process. But 50 per cent of nursing homes have fewer than 41 beds. Many of these smaller facilities are located in rural and remote areas—a development we encouraged because we wanted older people to be able to move into facilities close to their families and close to where they have lived all their lives.

We have serious concerns that this sort of development, with the passing on of accreditation fees to small providers, might affect the viability of those services. So there is a real issue here, one that Ms Moylan, the former minister, highlighted in her speech in the House of Representatives. But it is an issue that the minister has failed to address other than by providing vague assurances that `it will all be alright, don't you worry about that'.

We can only estimate the potential scale of any fee. Providers have made repeated requests for some indication of the size of any fee that we impose on the sector as a result of the bill, yet the government have failed to provide any proper information. In fact the accreditation kit that they provided has a blank page with the heading, `Accreditation fees and charges'. But there is no information in it. They provide you with a kit with all the information about what you have to do, but there is no indication of how much they are going to charge you.

The government has not been honest enough to state what accreditation fees would be introduced, and the providers have not been able to assess properly what impact the fees would have on their operations. It must also be remembered that the fee proposed by the amendment is not the only cost incurred by providers. Facilities may need to introduce new quality control and management systems, provide training to staff, and purchase new IT systems.

A recent survey of providers in my state indicates that the total cost of accreditation may be in the order of $50,000 per facility. This is a very real issue of viability for small providers. It would be tragic if the implementation of an accreditation system designed to ensure the maintenance of standards in the aged care industry was responsible for the erosion of those standards of care by forcing facilities to devote funds to the process of gaining accreditation under the government's new system.

The opposition is concerned that this measure represents another step in the government's attempt to cut funds to the residential aged care sector and pursue its policy of user pays in aged care. The government imposed fees on the residents in 1997, and it is now seeking to impose user-pays fees on the providers. It is shifting responsibility for the cost of aged care from the Commonwealth onto both the providers and the clients of aged care services in this country.

At the time the new charges were introduced in 1997, the government claimed that they were intended to cover capital improvements in the industry. The money raised by the infamous $12 a day accommodation charge will not raise the funds necessary for capital improvements in the aged care sector. Providers indicate that the amount raised by this charge is in the order of $240 million over five years, yet the minimum funds required for capital improvements are in the order of $400 million to $500 million. There is a shortfall of over $250 million in the funding that will be provided for the capital improvements that everyone accepts are necessary in the industry.

This shortfall is exacerbated by the actions of the government which, in 1998-99, cut funding for capital assistance to residential aged care facilities by approximately $13 million—a 29 per cent cut in funding for this item. The government has also failed to highlight that funding for services to rural, remote and other special groups was cut by $5.4 million in the 1998-99 budget, which represented a 27 per cent cut in funding for this item.

If the government members who spoke in support of this bill in the House are true to their commitment to a user-pays system in the aged care sector, they will clearly have to support moves to increase the $12 per day accommodation charge. One of the reasons why we are expressing concern today is that we fear that the government will again seek to make amendments to the accommodation charges for aged care in this country. They are faced with the realisation that the funding measures they have introduced will not meet the capital needs of the industry. They know that the political settlement they reached late last year—in the final announcement prior to the election—will not meet the capital shortfall needs of the industry.

We are concerned that the government are actively reconsidering upping those charges. The whole logic of their approach of user pays, reflected in this bill, means that they will once again have to consider the issue of funding for nursing homes in this country and, if they are true to their user-pays approach, they will have to increase the charges for residents to meet those capital improvements. We are concerned that this is a continuation of the trend of shifting the costs onto the users of aged care services in Australia. However, it may also represent a reconsideration by the government of the charges that will need to be made, because they have pulled the accreditation issue out of the aged care reform package that we were promised in legislation, and have sought only to introduce this measure at this time.

We believe the charges will need to be increased if the government's intention of using the accommodation charge to fully fund capital improvements is to be achieved. The shortfall is obvious, the problem is obvious, and the government's failure to provide any information on this issue in recent months is cause for great concern. We know that the providers are lobbying the government for an increase in the accommodation charge. The fact that the aged care amendment bill has not been introduced and that this bill has been introduced in a piecemeal way gives us real concern that the government is actively reconsidering increasing the charges.

Given all these concerns, I am not sure why the Aged Care Amendment (Accreditation Agency) Bill 1998 has been rushed into this place in this way. There should have been more time for the government to make clear what fees were to be introduced. The accreditation charges to be levied could have been put out as a discussion document and there could have been proper consultation with the industry. We could then have had this debate today in the context of knowing exactly what charges were to be levied on the industry. That could have formed part of the debate.

We do not have that information, and yet we are looking at introducing enabling legislation that allows the government to charge fees to providers without any real idea of the level of fee to be charged, without any real idea of the impact on the industry, and without any real idea of the impact, therefore, on the services provided to clients. As I say, of particular concern to us is the impact on small providers as they try to deal with the accreditation system.

We think the government should continue to provide funding for the accreditation agency, at least for the first round of the accreditation process. This would allow many providers to go through that first round of accreditation, but would not require them to pay a potentially crippling fee on top of the many other expenses that will be incurred in trialling the new accreditation regime. It must be remembered that this is very much a trial of a new scheme. We support the move to accreditation, but we think we will have to monitor its effectiveness, and it is very much a question of seeing how it goes.

The issue of any fee that might be charged by the accreditation agency should be re-examined in the light of the first accreditation round and after the impact of the many other changes that this sector has recently faced have been taken into consideration. This sector has been badly knocked around and, in suffering reform fatigue, it is in need of some stability and surety. We think that this bill, by forcing them into unknown territory without proper consultation and without proper reassurance about the level of fees, is a very unwise move.

We support the maintenance of standards in aged care. We are opposing the bill on the basis that we think that the requirement that the industry pay perhaps over $30 million to administer the standards is not a reasonable impost, given the history of developments in this industry in recent times. We think that the transfer of responsibility for this process to the providers will lead to a reduction in the funds available to provide services to residents. It will particularly be a problem for small providers, and it may lead potentially to a reduction in the standard of care provided to residents.

Until our concerns about those matters can be addressed, we will be opposing the bill. We think it more appropriate that the government provide a draft schedule of fees, discuss the issue widely with the industry and then bring the bill before the parliament rather than seek to have the parliament give it a blank cheque to say, `Yes, you can set whatever fee level you think appropriate,' and hope that it all works out fine—hope that the agency does address the concerns of small providers and hope that the agency does provide a system which is not going to be a burden on industry. We think we would be abrogating our responsibilities if we took that approach. We think it far more appropriate that the government do the job first and then introduce the legislation in the parliament when it has a full knowledge of what the impact of the move will be.