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STANDING COMMITTEE ON FINANCE AND PUBLIC ADMINISTRATION
07/04/2009
Residential and community aged care in Australia

CHAIR —Good morning and welcome to the representative from National Seniors Australia. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. The committee has your submission. I invite you to make a short opening statement. At the conclusion of your remarks, we will put questions to you.

Mr Versteege —As a consumer organisation, the priority of National Seniors is for an inquiry into the adequacy of aged-care funding to consider the relationship between funding and aged care quality and the quality of life in aged care. These are fundamental questions: what are we getting for our dollar, what do we want and what can we afford? Aged-care providers and the federal Minister for Health and Ageing alike describe what we are getting for our dollar as ‘world class’. Aged-care facilities that have been found wanting are usually described by them as ‘exceptions to the rule’. The question is how the aged-care industry can reconcile what appear to be two contradictory claims, namely that the industry provides world class service and that the industry is on its knees financially. You would expect that only one of those two claims can be true. The government’s position—that the aged-care industry is world class and doing well financially—has at least this fact going for it: it is a logical combination of claims.

But the truth is that no-one is able to say objectively how the aged-care industry as whole is performing. Although industry performance is measured against 44 aged-care standards as part of periodic audits, these standards are so vague, and as a consequence compliance measurements just as vague, that the question, ‘What are we getting for our dollar?’ is currently unanswerable. Assuming that the answer is ‘world class service’ is just as wrong as assuming that service is necessarily bad, predominantly or across the board.

If the current government were to review the aged-care standards and the accreditation process for aged-care facilities that is based on these standards, that would be a good thing. However, National Seniors remains concerned that neither the government nor the aged-care industry want to look the issue of the relationship between funding and quality of service squarely in the eye and that the consumers of aged care could be the victims of this reluctance.

In summary, aged-care funding should be adequate to fund the quality of care needed. Currently, we do not know what quality of care we are paying for, just as we do not know if we are paying enough or too much for what we are getting. National Seniors calls for a comprehensive review of both funding and aged-care standards in tandem. Funding increases for aged care should be made conditional upon transparency of performance and upon targets set in meaningful consultation with the people who use aged care.

Senator HUMPHRIES —I am going to take up the point that you were making, a point that you made in your submission on page 5. You say that it is difficult to find the necessary evidence to take an approach on whether standards are high enough. You say:

The reason for is that the current aged care industry regulatory framework lacks a uniform financial reporting system and a uniform aged care service outcomes measurement and reporting system ...

I understand that that is actually not true. There is a uniform standard reporting system to the Department of Health and Ageing. The problem is that for about five years it has not published that data. I assume that you do not have any misgivings about the quality of the information that the department requires from the providers. I assume that when you say that we look a reporting system it is the lack of evidence available to the general public, providers and the sector in general of the results of that reporting that you have a concern about.

Mr Versteege —I do not believe that the reporting is actually uniform. It is not uniform as is financial reporting against the Australian Accounting Standards, for example. So there are differences which make it difficult apparently, because we have not seen the information for some time, as you pointed out—

Senator HUMPHRIES —Can I just clarify what we are talking about. You say the framework lacks a uniform financial reporting system. In terms of the providers reporting on their financial operations, are you saying that that has gaps in it or inadequacies?

Mr Versteege —I think the evidence given by Grant Thornton here also points to the fact that the financial information provided to the department by aged-care providers is probably accurate on a facility or company basis, but when you want to make judgments about the industry as a whole and consolidate those reports, more or less, you run into trouble and it becomes very difficult to make any firm statements about the financial performance of the industry as a whole. What we have seen, certainly over the past 10 years, is that the aged-care industry claims that its financial performance is probably good but that they lack funding, and they have never been able to provide the public with conclusive evidence that that is indeed the case.

Senator HUMPHRIES —It might be a question of semantics but I am not sure that it is accurate to say that we do not have a picture of what is happening in the sector. Surveys like those of Grant Thornton and so on are quite clear that there is a significant problem. There is a summary of what all the published surveys say about the sector, and one of them refers to a ‘dismal picture’. They are all fairly uniform in making those comments.

Mr Versteege —Well, they make the same claim. They are not uniform, I am sure.

Senator HUMPHRIES —The effect of them is uniform. Stewart Brown, for example, says that the report for the year ended 30 June 2008 shows a ‘fairly dismal picture for operators’ and that the average operating result for both high care and low care is an operating deficit. Grant Thornton says:

Providers of residential aged care services are experiencing low and deteriorating financial returns at a time of unprecedented demand for high care services. This is particularly the case for the modern, single room facilities most preferred by consumers.

The other published survey, Bentleys, says: ‘We also urge participants to exercise caution when comparing data. We advise participants that our data analysis indicates that, on a macro level, profitability for the sector is trending downwards compared to last year.’

So the published surveys are all quite consistent in terms of what they are saying and the industry, with respect, has been very consistent in their message to us. Nobody has come forward and said that things are looking good. They are all talking about a deteriorating situation. I accept that these are all surveys which are analyses of a certain number of respondents to those surveys. The only uniform financial reporting system, which is what you refer to in your submission, which covers everybody is the department’s own survey—

Mr Versteege —Yes.

Senator HUMPHRIES —and we do not have the data from that because the department does not publish it anymore. It did once, but it is not doing that anymore.

Mr Versteege —That is regrettable.

Senator HUMPHRIES —You say in the submission:

… it seems fair to assume that the top quartile performers are still doing well and that any crisis of financial viability in the aged care industry does not necessarily have anything to do with how the industry is funded …

That is not the evidence we have been getting from other providers. Can you flesh out what you mean by saying that the question of poor performance is not to do with how the industry is funded?

Mr Versteege —Of course, providers who are dependent on government subsidies are unlikely to come out and say that they are well funded. They are—

Senator HUMPHRIES —That does not necessarily mean they are not telling the truth.

Mr Versteege —That is true, but they are always likely to make claims that they are underfunded or that the funding is misdirected. The reason why we assume that the industry is not doing as badly as its representatives often say publicly is that they are still around. They have been saying for a long time that their financial viability is at risk, that they are about to go to the wall, and it just does not happen. There are a few providers who have left the industry, but they have been replaced by other providers.

I recall a TV report on the ABC not all that long ago which made, again, the claim that the aged-care industry is underfunded. But the story was shot in a brand-new nursing facility which had a cafe and a hair salon. The question then, obviously, is: if you are doing so badly, how come you can put up a facility like this? I make this point: this is a question that we ask. We are not saying: as an industry you have nothing to complain about. The aged-care industry may be doing very badly, but there is really no objective way for us to say: yes, these people need more taxpayer dollars.

Senator HUMPHRIES —With great respect, there is, and it is the information which is being supplied by all providers in Australia to the Department of Health and Ageing. That is the objective evidence. If the evidence can be tabled, we can see whether there is declining profitability and a crisis of profitability on the part of the sector. I agree with you when you say there is no published objective evidence, but it is not true to say that there is no evidence when the sector itself has drawn these conclusions. The department, which has the evidence—if it wanted to—to disprove that, might provide that evidence.

Mr Versteege —I am astounded that you really want to go on the evidence of providers alone.

Senator HUMPHRIES —No, I want to go on the evidence of the independent surveys like those of Stewart Brown, Grant Thornton and so on; the evidence of the Productivity Commission, which is certainly independent and which has also suggested a decline in profitability and viability; and on the evidence of Professor Hogan, who conducted the most comprehensive analysis of the aged-care sector in the last five years or so and who has reaffirmed today that the crisis is indeed worsening. That is evidence I am relying on. With respect, the evidence you have cited as an alternative to that is the supposition that the providers must be gilding the lily because it is in their interests to get more money. You cited a report on ABC TV which featured a facility with a cafe and a hairdressing salon; with respect, is there anything more objective you can table on the part of National Seniors which indicates that the crisis we are being told is in existence is not actually there?

Mr Versteege —That is not a claim we have made.

Senator HUMPHRIES —So you are saying there is no correlation between any crisis in financial viability and how the industry is funded and that it is first and foremost between the business model adopted by providers and their ability to adopt a financially viable business model. Where is the evidence of that assertion?

Mr Versteege —The latest Grant Thornton survey, if you want to know go by those surveys, says the same thing—that there are still aged-care providers which are, on their own evidence, financially viable, and that would have something to do with their business model.

Senator HUMPHRIES —That is not what I got out of Grant Thornton. They are suggesting that, as is always the case, there is some room to restructure but that the fundamental problem is inadequacy of government financing. That is what Grant Thornton says.

Mr Versteege —Sure, but they have also said that there are still providers that are financially viable.

Senator HUMPHRIES —Yes, of course. But the fact that there are some providers who are financially viable does not undercut the case that there is a serious crisis in the industry. Let’s suppose that only one-third of providers are financially unviable. What kind of aged-care sector are we going to have in Australia if one-third of all the providers of 200,000-odd beds across Australia disappear because of their lack of viability? It is going to be a massive crisis if 50,000, 60,000 or 70,000 beds disappear from the system because the providers cannot be financially viable.

Mr Versteege —Absolutely. Perhaps there should be more transparency from the providers so that we can actually form a picture. It is in their own interests, if they are so financially unviable as an industry. The industry should get together and not publish piecemeal surveys. Even the Grant Thornton survey that was published in January refers to a problem that the survey might not be completely representative.

Senator HUMPHRIES —Sorry. It does not make that point—

Mr Versteege —You seem to—

Senator HUMPHRIES —It acknowledges that it is a cross-section of years, but you heard Professor Hogan a minute ago saying that the Grant Thornton survey is a reliable indicator of what is going on in the sector. He disagreed with the department’s view that there was something wrong with its assessment of the picture.

Mr Versteege —Well, there you have it: there is a disagreement between the department and Professor Hogan. But, really, we are not saying that the aged-care industry does not need extra funding. It is not in our submission; it is not in my statement. We are simply saying—and this is the main theme of our submission—that there should be an excess between any funding increases and the quality of aged care that is provided. What we are saying is that, if we can start with defining standards of aged care, we might be able to quantify in dollar terms what it might cost to provide that to the Australian population, now and in the future. As a result of that, we might come to the conclusion that there need to be funding increases. But, in the absence of standards that are not clear, we really do not know what we are paying for, and that is what we need to find out first. With respect to the committee, none of the terms of reference really go into the aged-care standards. That is not a criticism; that is simply how it was phrased. But you cannot really look at one thing and ignore the other.

Senator HUMPHRIES —With great respect, that is not what your submission says. Your submission expressly says that you do not believe there is a connection between how the industry is funded, and what people are saying is a crisis in viability you are saying is to do with financial or business models that the sector is using. Can I put this another way to you? Supposing that there are some operators who are making a profit, Grant Thornton says that the return on investment is 1.1 per cent.

Mr Versteege —On average—industry average?

Senator HUMPHRIES —At the moment. That is the case. That is obviously an average, so some will be doing better than that and others will be doing worse. Is the issue not whether they are keeping their head above water at the moment but whether or not there is the profitability in the sector to allow it to expand and to build the new beds which the ageing population in Australia is going to demand. If indeed, the average return on investment is 1.1 per cent, does that not suggest that there is not the capacity across the sector as a whole for providers to actually put the new beds in place, build the new beds, that the ageing population will demand?

Mr Versteege —You mentioned that average return for the industry. Would you be able to quote a figure for let us say, coffee bars?

Senator HUMPHRIES —According to the evidence we heard earlier today, the average return on investment expected across industry generally is something like 10 per cent.

Mr Versteege —Sure.

Senator HUMPHRIES —So presumably it is somewhere in that vicinity. People do not set up coffee bars to be charitable; they set them up to make a profit.

Mr Versteege —Yes. What I am getting is that there is really no comparison. There is an average for a number of industries but obviously there are aged-care providers that do keep afloat and the proportion of the industry that is claimed that is about to go out of business may well need more funding, but why put funding as a separate issue from what we are actually getting for it?

Senator HUMPHRIES —I am not talking about staying afloat; I am talking about having the capacity to invest in new beds. Unlike coffee shops, where we will not all die if we do not have more of them, we do need a huge expansion in the number of aged-care beds in this country if we are to cope with the predicted rapid growth in the numbers of aged in the Australian community.

Mr Versteege —Absolutely, and we do not—

Senator HUMPHRIES —So the question is not just whether the industry is breaking even but whether it has the levels of profitability to give it the confidence to go ahead and build new beds.

Mr Versteege —Yes. And we do not disagree with that. But, again, we are saying, if you are looking at funding, also look at standards in aged care, because the quality of aged care, as I pointed out in my statement, cannot really be measured. You would not stand for it in other industries. I will not keep quoting other industries because you will quote them right back to me.

Senator HUMPHRIES —We do actually have that evidence. That evidence has been collected. But I agree to differ on whether or not we can rely on the fact that it has not been published by the department. You go on to say:

… anecdotal evidence suggests that by complying strictly with the aged care accreditation standards—

and I think the chair of the agency is actually here—

some providers are able to keep costs down and improve returns, while providers who go beyond strict compliance have higher costs and, therefore, lower returns.

You are suggesting there that some people are doing more than they are required to meet the accreditation standards and they are the ones who have their backs to the wall. Do you have any statistical evidence to back up that assertion?

Mr Versteege —Not statistical evidence, but there are places where residents are looked after better than at other places. I think that is the thrust of that statement, which was phrased, by the way, as something that may well be, not as a flat statement of fact.

Senator HUMPHRIES —Are you implying that the nursing home facilities which do have hairdressers and coffee shops are more likely to be unprofitable than the ones that do not?

Mr Versteege —I do not think I have covered that in my submission.

Senator HUMPHRIES —I did not say that you had, but you were implying it by your comments earlier on when you suggested that the story on the ABC about aged care being unprofitable was shot in a home where they had those facilities. If you are not referring to that particular thing then what are you referring to when you suggest that ‘providers who go beyond strict compliance have higher costs and, therefore, lower returns’? Others would assert that the ones that achieve higher standards in the provision of services and so on, particularly when they have been provided by the for-profit sector, are actually the ones that are doing better. What is your evidence that that is not the case?

Mr Versteege —The thought behind that statement is that better staffed facilities deliver better care. That is really what I was thinking when that was drafted. There is evidence internationally that that is the case, and of course it is also a common-sense thing—if you have more nurses around, you have better care.

Senator HUMPHRIES —Yes, better care—

Mr Versteege —I am just clarifying my submission.

Senator HUMPHRIES —but what do you mean when you say ‘providers who go beyond strict compliance have higher costs and, therefore, lower returns’? Aren’t the ones who provide higher staffing ratios and more nurses examples of ones who have higher costs and therefore lower returns?

Mr Versteege —Yes.

Senator HUMPHRIES —Are you suggesting, then, that the ones that have lower profitability are providing a better quality of care?

Mr Versteege —No, that is not what I am suggesting. I am saying there that that may well be behind it—that people who cut corners, if you want to put it that way, are better able to stay profitable than people who try to do better, who go beyond compliance.

Senator HUMPHRIES —Can you give us any evidence of that? With respect, it is not consistent with what the industry has been telling us. What is the evidence you have that that is the case?

Mr Versteege —Anecdotal evidence. National Seniors is not an agency that has a huge budget and can go out to collect statistical evidence on its own.

Senator HUMPHRIES —Then give us the anecdotal evidence. What evidence do you have?

Mr Versteege —The anecdotal evidence from many callers is that they have relatives in an aged-care facility or in aged-care facilities and they basically have to make sure that they are there at meal times, because they cannot otherwise be sure that their relatives are going to be fed properly.

Senator HUMPHRIES —But how do we know whether the facilities where that is happening are profitable or unprofitable facilities?

Mr Versteege —We cannot know that for sure. That is why it says in the submission that it may well be—I think that those are the words; I have not got the submission in front of me, but I think that those are the words that were used there. We have to form an opinion on lack of information. We have to go by what people tell us, which is only proper for a grassroots organisation, as you would agree.

Senator HUMPHRIES —But you really have no evidence for the assertions that you have made, and you are putting that to us—

Mr Versteege —Are you suggesting that the people who ring us up are making it up?

Senator HUMPHRIES —No, I am suggesting that you have misread what they are telling you. If people are ringing up and telling you that they have to go into the home their family member in that home, to draw any conclusions from that you need to find out whether the home that they are complaining about is one which is reporting as being profitable or unprofitable. You are assuming that a home which is cutting corners must be more profitable than the ones that do feed their residents. With respect, that is drawing such a long bow as to be completely meaningless and of no value to this inquiry.

Mr Versteege —If National Seniors shared the focus of this committee, you would be correct. But we do not. What we are saying is that there should be a nexus between aged-care funding and aged-care quality. That is our focus.

Senator HUMPHRIES —We all agree on that. But that is not the point that you were—

Mr Versteege —I doubt it. If this committee was so convinced that aged-care quality was important, that would be in the terms of reference, and it is not.

Senator HUMPHRIES —We are not inquiring into aged-care quality; we are inquiring into the financial viability of the sector. That is what the inquiry is all about.

Mr Versteege —Absolutely, and our main point is that that is not a viable way of looking at the industry.

Senator HUMPHRIES —Okay. Thank you.

Senator BOYCE —Continuing on with that, you have mentioned here that you think that the industry should be developing an across the sector financial reporting system. Does the government already have that?

Mr Versteege —There are financial reporting requirements at the moment, yes.

Senator BOYCE —So the government already collects financial reporting from across the sector, doesn’t it?

Mr Versteege —Yes. As I said in my answer to one of the questions from Senator Humphries, there is a reporting system. But the way facilities, corporations and charities report is not uniform. It is—

Senator BOYCE —To the department?

Mr Versteege —Yes.

Senator BOYCE —I understood that it was quite a standardised procedure that the organisations in the aged-care industry had to follow in reporting to the government. In fact, the fact that they have to rearrange their financial reporting to suit government requirements was one of the problems that they have raised.

Mr Versteege —Right. My information is that that is not the case. It is not a uniform thing; it is not something that is able to be consolidated across the industry so that we can have a black and white answer to the question that basically this committee is asking: whether the industry is currently underfunded or not.

Senator BOYCE —So you are saying that the information that the government currently collects is not useful?

Mr Versteege —We do not know. We have not seen it.

Senator BOYCE —Have you asked them for it?

Mr Versteege —No, we have not asked them for it.

Senator BOYCE —Why is that?

Mr Versteege —Why would we ask for that information when they are not going to publish it?

Senator BOYCE —Perhaps you could ask them to publish it.

Mr Versteege —Okay.

Senator BOYCE —You are saying here that the industry should spend its time developing a whole new financial reporting system across the whole sector when one already exists even if it has flaws in terms of its standardisation, as you suggest—although that is not the evidence we have been given; it has flaws in terms of its usefulness, but not in terms of its standardisation. Why would we want to replicate that?

Mr Versteege —If it is not useful, perhaps we need to have a look at it.

Senator BOYCE —Absolutely. But it currently exists, so why would you start again from scratch? Why wouldn’t you urge the government to publish the currently existing across-the-sector financial reporting and then look at how we might fix that if it needs fixing?

Mr Versteege —Senator, we will write a letter to the government as soon as I come out of this hearing.

Senator BOYCE —I am just intrigued as to why you would expect the industry to develop a whole new system when one—with or without flaws—already exists.

Mr Versteege —It does not say that there. It does not say that there should be a totally new system.

Senator BOYCE —You said:

… the aged care industry should take the lead in promoting and developing an across-the-sector financial reporting system …

Mr Versteege —Yes.

Senator BOYCE —There is an across-the-sector financial reporting system.

Mr Versteege —Which, as you pointed out, may not be useful, and it needs to be further developed.

Senator HUMPHRIES —In what way? What is wrong with it?

Mr Versteege —As I pointed out earlier, the information that is provided to the government is not able to be consolidated across the industry to give a meaningful answer to the question that this committee is—

Senator HUMPHRIES —Only because it is not published, not because it is not capable of being consolidated. It is not published; that is the only reason it is not useful.

Mr Versteege —Does this mean that this committee has simply been established to get the government to publish something?

Senator HUMPHRIES —No. We are just asking you a question. You say in your submission that the industry should go away and develop a whole new reporting system.

Mr Versteege —No, it is—

Senator HUMPHRIES —We are pointing out to you that there is already a reporting system in place.

Mr Versteege —There is already a reporting system, but I am not saying that there should be a totally new one.

Senator BOYCE —So what you are really saying is that the industry should just shadow the government. Is that what you are saying? They have to give all these figures to the government anyway—

Mr Versteege —No—

Senator BOYCE —but none of this is consolidated and reported. How likely is it that competitors in an industry would share figures for the purpose of allowing those to be consolidated? Surely a government department is the place where that information should be reported so that it can be consolidated in such a way that any commercially sensitive information in it is not broadcast publicly?

Mr Versteege —The financial information at the moment is not available. The thing that we are hearing—

Senator BOYCE —But that is because the department will not publish it, not because it does not exist.

Mr Versteege —Yes, you keep saying that. It is not available—

Senator BOYCE —Sorry, do you not agree with that?

Mr Versteege —Well, yes, I do, but—

Senator BOYCE —Thank you.

Senator HUMPHRIES —If it is there, why do you suggest or recommend in your submission that ‘the aged-care industry should take the lead in promoting and developing an across-the-sector financial reporting system and an across-the-sector service outcomes measurement and reporting system’ if effectively you already have that data collected by the department?

Mr Versteege —From memory, Senator, it said that the government and the industry should take the lead.

Senator HUMPHRIES —Your memory fails you. It says ‘the aged-care industry’. That would not normally include the government.

Mr Versteege —Obviously the aged-care industry would need to engage with government. It is in their own interests to get properly consolidated information out there because it would strengthen their case.

Senator BOYCE —You would get complete agreement, I think, from the industry on that point, but they make the point that the system already exists and is done by the department and that it should be shared back with the industry. It is one of their biggest complaints that none of this information is shared back in a format that allows them to take any lessons from the information. It just seems a little unusual to expect the industry to do what the government is already doing in both cases but simply not sharing back with the industry.

You have mentioned here that some of the providers, as you said, make a profit—I think the top quartile are doing quite well. Does the National Seniors organisation have a view on what constitutes good accommodation in a residential aged-care facility?

Mr Versteege —As I said in my opening statement, it is not clear what quality of service we are getting.

Senator BOYCE —I am not talking about the service; I am talking about the actual accommodation. What I mean is: do you think that a single ensuite room is preferred accommodation compared to a four-bed unit or whatever?

Mr Versteege —It is obviously up to consumers to choose where they want to live.

Senator BOYCE —Do you have any evidence about where people choose to live?

Mr Versteege —The evidence—and it is anecdotal evidence—is that people do not really have all that much choice.

Senator BOYCE —Why is that?

Mr Versteege —Because there are no places available.

Senator BOYCE —You do not think there is any preference amongst people for accommodation?

Mr Versteege —I am sure there are preferences.

Senator BOYCE —What would those be?

Mr Versteege —I know, for example, of a lady who at 102 had to finally go into a nursing home. She was obviously a very independent person who valued her privacy, and she ended up in a room with four people. I have not asked her whether she would have preferred to be in a room on her own because I think I know the answer and I did not want to embarrass her. Obviously people have preferences.

Senator BOYCE —But you have no sense of what those might be?

Mr Versteege —If I say that I do have a feeling for it, you will ask me what the statistical evidence for that is. I can only quote—

Senator BOYCE —No, I was not going to ask you that—

Mr Versteege —That is very comforting. Anecdotal evidence—

Senator BOYCE —but I was going to make a further point to you.

Mr Versteege —Anecdotal evidence suggests that people do not really have choice, and that is why they defer going into aged-care facilities for as long as they can. When the moment comes, they have to take what is available.

Senator BOYCE —I continue to be a bit surprised that you are not aware of what the preference of most people would be for accommodation. None of your members discuss this with you at all? It is not something that is known to the National Seniors association?

Mr Versteege —We take phone calls from our members and from people who are not members but are concerned. Those conversations are usually about care that is failing, but we do not discuss what they would have liked in terms of the accommodation arrangements.

Senator BOYCE —So none of your members has asked you to advocate for more four-bed wards or more single ensuite rooms?

Mr Versteege —No, I cannot recall any inquiries of that nature.

Senator BOYCE —And National Seniors do not do anything at all about the type of accommodation that is available? You do not have an opinion as an organisation?

Mr Versteege —We feel that aged-care quality has two components. One is the clinical care, the clinical aspect of it, and the other component is the quality of life, and—

Senator BOYCE —And wouldn’t that include the type of accommodation?

Mr Versteege —That is what I was getting to. Yes, it would involve the type of accommodation, but we do not have statistical information or a feel for what people would actually prefer—whether they would prefer to live in an apartment, whether they would prefer to be in a retirement village, whether they would prefer to be in their own home and looked after or whether they would prefer to be in a low-care hostel facility. Some people actually prefer that. There are a lot of possibilities in terms of aged-care accommodation. We have not quantified what the demand might be. It is probably an industry function.

CHAIR —Just on that issue: does your organisation support the government funding single-bed accommodation residential care, or are you advocating that there should be more accommodation that the government funds in the four-bed ward?

Mr Versteege —Sorry, I do not understand the question.

CHAIR —Is your organisation supportive of the government being responsible to fund single ensuite rooms for residential care, or is your organisation happy to support a proposition whereby the government would be responsible primarily for four-bed wards rather than single ensuites?

Mr Versteege —The answer I just gave is that there are a range of possibilities in accommodation. We are not going to say that we are going to support single beds or we are going to support four-bed wards. That is a bit of a stark choice.

CHAIR —Is there a baseline for which you believe the government should be responsible for residential care, and what level of residential care is that?

Mr Versteege —What currently does not happen in aged care—and this goes right back to the aged-care standards—is that people are not asked what their preferences are. As part of audits, people are interviewed to see how happy they are where they are, but there is no real attempt to find out what people’s preferences are. We are realistic; that has to do with funding, because the lack of choice probably has something to do with funding.

Senator BOYCE —My last question follows on from that. The Grant Thornton report, as you know, suggests that those profitable organisations in the top quartile would in many cases involve older facilities that are four-bed wards, and, obviously, it is cheaper to service four people in one room than four people in single rooms or ensuites on the basis of not just the capital but also the actual service provision. If you were to suggest that that business model be used as the paradigm, would that not lead to a profusion of four-bed wards rather than more single ensuite rooms?

Mr Versteege —Yes, but I do not think that we are saying that that should be done.

Senator BOYCE —But you are suggesting that the business model that is currently used by the providers who make a profit should be the business model adopted by the industry, aren’t you?

Mr Versteege —No, that is not what we are saying. We are saying that those business models are more successful, not that they should be adopted industry-wide.

Senator BOYCE —But surely the outcome of that success, if it were to be used across the industry, would be more four-bed wards and fewer single ensuite rooms. Is that something that National Seniors want?

Mr Versteege —No, it is not. That is not what we are saying at all. We are saying that aged-care quality, which includes the accommodation that people live in, should be more closely defined—and it should be more closely defined in consultation with the people who actually use the service. We are not saying that a business model that is profitable should be replicated just because it is profitable.

Senator BOYCE —Okay. Thank you.

CHAIR —As usual, we have run out of time, so I just want to thank you very much for appearing before us today and also for the submission on behalf of your organisation. Thank you.

[11.47 am]