Bills Digest no. 56 2008–09
Aged Care Amendment (2008 Measures No. 2) Bill 2008
WARNING:
This Digest was prepared for debate. It reflects the legislation as introduced
and does not canvass subsequent amendments. This Digest does not have
any official legal status. Other sources should be consulted to determine
the subsequent official status of the Bill.
CONTENTS
Passage history
Purpose
Background
Financial implications
Main provisions
Concluding comments
Contact officer & copyright details
Passage history
Date introduced:
16 October 2008
House:
House of Representatives
Portfolio:
Health and Ageing
Commencement:
1 January 2009
Links: The relevant
links to the Bill, Explanatory Memorandum and second reading speech
can be accessed via BillsNet, which is at http://www.aph.gov.au/bills/. When Bills
have been passed they can be found at ComLaw, which is at http://www.comlaw.gov.au/.
The Bill seeks to amend the Aged
Care Act 1997 (the Act) and the Bond Security Act 2006
(the Bond Security Act) to strengthen the aged care regulatory framework
so that it reflects the current structure and nature of the aged care
industry.[1]
Aged care in Australia is largely regulated by the Commonwealth
government, which funds the provision of aged care services through subsidies
of the costs of residential care, as well as capital grants.[2]
However, State, Territory and local government regulation
also affect the provision of aged care services through regulations about
matters including:
- building planning and design
- occupational health and safety
- food preparation, and
- consumer protection.[3]
This Digest focuses on the Commonwealth Government’s role
in regulating aged care.[4]
The Act is the main legislation relating to the regulation
of aged care in Australia.[5]
The Act replaced provisions in the National Health
Act 1953 and the Aged or Disabled Persons Care Act 1954, which
had previously provided for the administration of hostels and nursing
homes. The Act changed the regulatory framework, as well as some financial
arrangements.
The purpose of the Act was to:
- enable the Commonwealth government to reduce its capital funding
involvement in the aged care industry
- align the classification and funding arrangements for nursing homes
and hostels with a view to improving the standard of accommodation
and care, particularly in respect of nursing homes
- place a greater onus on older people with higher income and assets
to make a greater contribution to the cost of their care. This is
achieved, at least to a large extent, by:
- imposing income testing on all people who receive residential
care, and
- allowing residential care services to negotiate with care recipients
for the payment of accommodation bonds by recipients
- establish an accreditation system for residential care facilities.[6]
The Act’s objectives are also reflected in its 23 Aged
Care Principles, which include:
- Approved Provider Principles
- User Rights Principles
- Accountability Principles, and
- Sanctions Principles.[7]
The main areas of regulation by the Government are:
- allocation of aged care places to approved providers of aged care
(approved providers)
- assessing client eligibility to access those places
- funding services
- setting prices, and
- quality control.[8]
Every year, the Government allocates new places to broadly
match the target population,[9]
attempting to balance the provision of aged care between:
- metropolitan, regional, rural and remote areas within each State and
Territory, and
- needs for different levels of aged care.[10]
Once places are allocated, the Government has an open
tender to allocate those places to approved providers, who then have two
years to make those places operational. According to the Productivity
Commission, approved providers are also expected to ensure that a certain
percentage of the places allocated to them are accessible to residents
who cannot afford to pay an accommodation bond.[11]
The Government funds State and Territory governments
to operate Aged Care Assessment Teams (ACATs),[12] staffed by health professionals, to assess the aged care needs
of frail aged people and determine most appropriate care based on legislation
and guidelines.[13]
Residential aged care is largely publicly funded.[14]
In other words, the Government provides most of the recurrent
funding (with State and Territory governments contributing to the overall
costs) and user contributions (by way of residents’ fees and charges)
providing the rest of the revenue.[15]
Government funding of residential aged care is mainly
determined by residents’ assessed care needs, using the Aged Care Funding
Instrument (ACFI).[16]
The Government regulates the amount that aged care recipients
pay for subsidised aged care.[17]
According to the Productivity Commission:
As of 1 July 2008, the three main daily user fees
and charges for new non-pensioner residents receiving standard
care in residential facilities that are 2008 compliant are the:
- basic daily care fee, up to $32.05 a day
- asset tested accommodation charge, for high care residents with
assets worth more than $34 500, the rate increasing from zero to $26.88
a day when assets exceed $90 410.40
- income tested fee, with residents being charged up to $56.57 a day
or the cost of their care, whichever is the lesser.[18]
Aged care recipients may also have to pay accommodation
bonds to enter low care or extra service residential facilities.[19] Although accommodation bond
amounts are not capped, approved providers cannot levy an amount leaving
an aged care recipient with assets worth less than the threshold amount.[20]
When an aged care recipient leaves an aged care facility, the balance
of the bond amount is refundable to that recipient.[21]
The Quality
of Care Principles 1997[22]
set out standards relating to the quality of care in aged care facilities,
the compliance with which is assessed by the Aged Care Standards and Accreditation
Agency (the Agency).[23]
Non-compliance with standards results in sanctions imposed
on the non-complying approved provider, which may include suspension of
funding and revocation of approval.[24]
The Office of Aged Care Quality and Compliance (OACQC)
investigates aged care services funded by the Government under the Act
and oversees the following:[25]
- the Aged Care Complaints Investigation Scheme;
- police checks for relevant aged care staff and volunteers in Australian
Government-subsidised aged care services;[26]
- compulsory reporting of sexual and serious physical assault in residential
aged care, with protections for approved providers and staff who report;
- compliance and sanctions action; and
- prudential regulation.
In 2007, there were around 2872 residential aged care
providers in Australia.[27]
Of these, approximately 61.4 per cent are private not-for-profit, 26.9
per cent are private for-profit and the remaining are government providers
(11.75 per cent).[28]
The aged care industry has undergone significant change
since the Act was enacted. A recent report has noted that the number of
people receiving subsidised care has doubled in that time.[29] In addition, the nature of the aged care industry
has changed significantly.
The current legislative framework reflects the ‘cottage
industry’ nature of the aged care industry that was present when the Act
was introduced.[30] Since
then, the trend in the industry has been a separation between the owner
and operator of aged care venues.[31]
In addition, the industry is moving towards a ‘campus’ model of care,
whereby a broad range of services are being provided on the one site or
by the one facility.[32]
The Australian population is ageing.[33] Currently, older Australians (aged 65 years
and over) make up 13.4 per cent of the population (2.8 million) or one
in seven Australians.[34] By 2050, the Productivity Commission estimates
that one in four Australians will be aged 65 years or over.[35]
As individuals age, some form of assistance with personal
and everyday activities is usually required.[36] The latest available data indicates that 32 per cent of those
aged between 65-74 years and 86 per cent of those aged 85 years and over
require some form of assistance.[37]
Consequently, there has been an increase in the numbers of people seeking
to access aged care.
A further trend relating to an increase in numbers of
people seeking to access aged care is that family structures have changed,
whereby the family unit may no longer be a primary source of aged care
for increasing numbers of people, as it has been in the past.
Another emerging trend is that people are entering residential
aged care requiring a higher level of care.[38]
Many of the provisions contained in the Bill were announced
by the Minister for Ageing on 22 March 2008 as part of the Better
protection for frail aged Australians package (the reform package).[39] The reform package, to be administered
by the Department of Health and Ageing (DOHA), sets out a range of measures
to improve quality and to protect frail aged people. These measures include:
- increased visits of aged care facilities by the Agency,[40] an independent ‘watchdog’
- increasing the powers of the Agency
- expanding the requirement for all aged care employees to undergo
police checks, irrespective of whether they have supervised or unsupervised
access to residents[41]
- requiring investigation staff to check on both residents and paperwork
in a facility, and
- reviewing the Act to fill in gaps in the legislation, as well as improve
quality of aged care.[42]
The reform package is consistent with the Government’s
pre-election commitment in relation to aged care.[43]
The Bill has been referred to the Senate
Community Affairs Committee (the Committee) for inquiry and report
by 20 November 2008.[44]
The Committee has called for submissions by 5 November
2008.
Although the Government
has stated that it did consult with stakeholders in relation to the Bill,[45] there has been limited public
commentary on the Bill—which perhaps reflects the relatively uncontroversial
nature of the Bill.
However, it is noted
that the Bill has been criticised for focusing too much on compliance,
as opposed to alleviating the ‘already overburdened regulatory system
on the aged care industry’, which continues to be insufficiently funded.[46]
Similar sentiments
about the current aged care industry have been reflected in research showing
that many aged care providers have been incurring ‘unsustainable operating
losses’ and could hardly afford to keep existing facilities running.[47] Such research indicates that high consumer
demand for aged care facilities is not being matched by investor interest
due to low returns, with recommendations for a review of funding and regulatory
arrangements so as to boost investment:
The regulatory and pricing framework now threatens
the viability of the aged care sector by suppressing incentives to invest
in modern aged care infrastructure. This decline in investment severely
limits choice for consumers of aged care services.[48]
Although there has been little public comment on the
Bill, it had been previously noted that there was a need for consistent
regulation of the sector as well as the capacity to be flexible and responsive.[49]
In a recent survey of the aged care sector, Professor
Hogan (who completed a review of the aged care sector in 2004) noted that:
…it is imperative that the review of our aged care
regulatory and funding arrangements are revisited. In particular, careful
scrutiny must be given to those aspects of regulation which limit consumer
choice and investment in modern infrastructure.[50]
It could be argued that this Bill does increase the regulation
of the aged care industry, however, the proposed amendments do not appear
to limit consumer choice. Equally, it could be argued that the proposed
amendments are necessary for accountability of the aged care sector as
the current corporate structures do not reflect what is articulated in
the Act.
Although outside the scope of the Bills Digest, the over-regulation
of the aged care sector has been a concern for some time. The case for
less regulation was made in the ‘Hogan Review’ in 2004 and most recently
in the Productivity Commission’s report on aged care services (2008).
The Grant Thornton Aged Care Survey (2008) found that the regulatory and
pricing framework decreased the viability of the sector. Although this
Bill addresses some of the inconsistencies in the Act, it does nothing
to address the fundamental concern of over-regulation and the need for
regulatory reform.
According to the Government, there would be no financial
implications on the Budget.[51]
However, it is expected that there would be additional financial burdens
on approved providers in complying with their new and amended obligations
under the Act. Additional and amended obligations proposed by the Bill
may also affect investor confidence in the aged care industry.[52]
It is expected that there would be some additional regulatory
burdens on current approved providers, especially in relation to matters
such as additional police checks and additional lump sum payment[53] obligations.
Until now, those approved providers, whose approved provider
status cease (former approved providers), have been excluded from the
regulatory regime. Proposed amendments in the Bill would include those
former approved providers in the aged care regulatory regime, in so far
as their former provision of aged care services has ongoing implications,
for example, obligations under the Bond Security Act.
As the Explanatory Memorandum provides a comprehensive
explanation of the proposed amendments, this Digest will focus on the
major themes rather than the detail of individual provisions in Schedule
1 Part 1 of the Bill.[54]
As mentioned earlier, when the Act was initially enacted,
the typical business structure was one where the owner of the aged care
facility was also the operator of those facilities and the regulatory
regime in the Act reflects that type of structure.[55] On the other hand, the owner and operator of a facility now
have distinct and, at times, separate roles and responsibilities. In addition,
there has reportedly been an increase in:
- the level of investment into aged care services by large corporate
entities, and
- aged care services being combined with other kinds of services within
the same facility.[56]
Consequently, the aged care regulatory regime provided for
in the Act does not adequately address these changes.
The Bill proposes amendments to the Act to address the different
business structures currently involved in providing aged care services,
to improve and extend the regulation of aged care providers.
First, the Bill proposes to amend the Act to clarify
that the Act regulates aged care services and that approved provider status
relates to:
- approval given for the type of aged care and specific services provided,
and
- the allocation of places.
For example, item 1 proposes to amend section
7-1 of the Act, to the effect that subsidy payments under Chapter
3 of the Act can only be made to a person for providing aged care if:
- that person is an approved aged care provider under Part 2.1, and
- the approval is in force with respect to:
- the type of aged care provided, and
- the aged care service through which aged care is provided
at the time in which such care is provided.
In addition, item 2 proposes to amend
subsections 8-1(2) and (3) of the Act to ensure that approved
provider status does not become effective until the successful applicant
has an allocation of places, and then, only in relation to the type of
aged care and aged care service(s) for which an allocation has been granted.
Other proposed amendments reflect those proposed in items
1 and 2.
Second, the Bill proposes to amend the Act by expanding
the entities involved in providing aged care which are subject to scrutiny
and regulation, thereby trying to address:
- the current limitations on the Secretary[57] to consider the record of:
- related entities, and
- those who influence executive decision making of the aged care
facility
- the current situation where obligations under the Act cease when approval
status is no longer in force, thereby excluding former approved providers
from the regulation regime, and
- the inclusion of an entity whose approved provider status is not
yet in force because the entity has not yet been allocated any places,
into the regulatory regime.
- For example, item 3 proposes to insert new paragraph
8-3(1)(ga) into the Act to the effect that where:
- the Secretary is deciding whether an applicant is suitable to provide
aged care, and
- the applicant has relevant key personnel in common with another current
or former approved provider (see item 6),
the Secretary would have to consider the financial and
managerial performance, and criminal records of that other current or
former approved provider.
In addition, item 6 proposes to insert new
subsection 8-3(6) into the Act, defining the term ‘relevant key personnel
in common’ with a current or former approved provider as follows:
- at the time the current or former approved provider provided aged
care as approved, another person was one of its key personnel (see item
7), and
- that other person is a key personnel of the applicant.
Item 7 proposes to insert new section 8-3A
into the Act defining ‘key personnel’ of an entity, which would include
those persons who, at the relevant time, are:
- responsible for the entity’s executive decision making
- authorised or responsible for (or having significant influence over)
the entity’s planning, directing or controlling activities
- either:
- responsible for the nursing services provided by, as well as the
day to day operations of, the aged care service conducted by the
entity (irrespective of whether that person is employed by the entity),
or
- likely to be responsible for the nursing services provided by,
as well as the day to day operations of, the aged care service proposed
to be conducted by the entity (irrespective of whether that person
is employed by the entity).
The reference to persons responsible for the entity’s
executive decision making would include:
- if the entity is a corporation under the Corporations Act 2001—the
director of that corporation, and
- in any other case—a member of the entity’s governing body.
Under proposed subsection 8-3A(3), people
who are, or are likely to be, responsible for nursing services in an entity’s
aged care service, would have to hold recognised nursing qualifications.
The proposed definition in item 7, applying throughout
the Act, would effectively increase the number of people involved, or
likely to become involved, in providing aged care who are regulated and
monitored.
Other proposed amendments reflect those proposed in items
3, 6 and 7.
Third, consistent with the aim to extend the regulatory
regime to reflect the increasingly diverse business structures involved
in providing aged care, the Bill proposes amendments relating to notifying
the Secretary of material changes related to the ongoing suitability of
an approved provider to provide aged care.
For example, item 11 proposes to insert new
subsections 8-5(3)-(5) into the Act to ensure that the Secretary may,
when notifying an applicant of approval of the applicant’s aged care provider
status, also notify the applicant of any circumstances that the Secretary
is satisfied materially affects the applicant’s suitability to provide
aged care. An example of such circumstances is the applicant’s engagement
of a management company to manage the delivery of aged care services.
Such proposed amendment is related to item 114,
which proposes to insert new section 63-1C into the Act, directly
related to situations where approved aged care providers engage a management
company to manage the delivery of aged care services. If an applicant
for approved provider status relies on the management company to demonstrate
skills and experience in providing aged care, the use of that management
company should be an ongoing requirement and any change should be approved
by the Secretary.
In addition, entities that have applied for approved
provider status but have not yet been allocated any places would also
be regulated.
For example, item 15 proposes to insert new
subsection 9-1(3B) into the Act, to ensure that where an entity has
been approved as an aged care provider under section 8-1 but has not yet
been allocated any places, that entity would have to comply with the obligations
under section 9-1. This means that during the two year period in which
an applicant may acquire an allocation of places, thereby bringing their
approved provider status into effect, the applicant would have to notify
the Secretary of those changes that could affect their suitability to
be an aged care provider if they acquire allocation of places.
In addition, item 25 proposes to amend subsection
10-3(1) of the Act by changing the reference to ‘approved provider’
with a reference to ‘person’ in relation to when the Secretary must revoke
an approval. This proposed amendment means that an entity whose approved
provider status is not yet in force because that entity has not yet been
allocated places, would be covered by the subsection. Note that a revocation
of an approval would be reviewable under Part 6.1 and may also occur as
a sanction under Part 4.4 of the Act.
There has been an increase in the value of accommodation
bonds that are held by aged care providers.[58]
In addition, it has been reported that situations have
arisen in which there have been negative outcomes for aged care recipients,
reflecting gaps in the current protection regime.[59] An example is that the Accommodation Bond Guarantee
Scheme does not apply to lump sum payments made by aged care residents,
for entry into care, to an entity that is not an approved provider at
the time of payment but subsequently becomes an approved provider. One
problem arising from that situation is that if the approved provider becomes
insolvent, the Government cannot pay those lump sums through the Accommodation
Bond Guarantee Scheme.[60]
The Government states that it is committed to improving
consumer confidence, and increasing corporate investment in aged care
services[61] and that the proposed amendments
aim to ensure that accommodation bonds would be better protected under
the Accommodation Bond Guarantee Scheme (accommodation bonds must be refunded
if the approved provider becomes insolvent).[62]
Examples of such proposed provisions are as follows.
Items 17 to 19 propose to amend subsection
9-3A(1) of the Act. These proposed amendments have the effect that
the requirement to provide the Secretary with specific information under
section 9-3A, about such matters as accommodation bonds and entry contributions,
would apply to both current and former approved aged care providers. In
addition, the list of information that the Secretary may request from
the provider would be extended to:
- unregulated lump sums paid to the current or former provider, and
- the amount of one or more unregulated lump sum balances at a particular
time.
Item 21 proposes to amend subsection 9-3A(3)
of the Act, to the effect that where the approved provider is a corporation,
failure to comply with the Secretary’s request for such information within
the specified time, would be an offence with a penalty of an amount ranging
from $3 300 to $16 500.[63]
These proposed amendments are consistent with attempts
to bring former approved providers into the regulatory regime (see above).
Subsection 14-5(4) lists examples of the matters
that conditions, under which allocations are made, may relate to and item
42 expands that list to include treatment of ‘pre-allocation lump
sum’ (or part thereof) paid or payable to the person to whom a place is
allocated, by a recipient of care in particular circumstances specified
by proposed subsection 14-5(6). This means that the Secretary may
impose the following additional conditions on allocation that:
- the entity, to whom places are allocated, refund any pre-allocation
lump sum to residents, and
- if, as a consequence of such refund, an accommodation bond agreement
is entered into, the conditions and entry into force of such agreement,
or
- the forgiveness of any obligation in relation to the pre-allocation
lump sum (or part thereof).
Proposed subsection 14-5(5) provides that if the
above condition(s) applies and the recipient of care remains in care with
the same residential care service from the date the allocation was made,
then both the aged care recipient and provider may enter into an arrangement
for payment of an accommodation bond or charge under the Act. In such
circumstances, both recipient and provider would have the same rights,
duties and obligations in relation to the accommodation bond or charge
as if the recipient entered the service on the day that the allocation
was made.
Item 96 proposes to amend subsection 57-14(1)
of the Act, enabling the Secretary to determine that, in accord with User
Rights Principles,[64]
a person must not be charged an accommodation bond, or an accommodation
bond of more than a certain amount, if payment would cause that person
financial hardship.
Refusal by the Secretary to make such a determination
of financial hardship is reviewable under Part 6.1 of the Act.
A similar amendment is proposed by item 108 in
relation to accommodation charges.
The Bill also proposes amendments to the Act to ensure
that obligations with respect to bond repayments (and interest thereof)
would also apply to former approved providers who have outstanding bonds.
Item 102 proposes to insert a new section 57-21AA
into the Act, requiring an approved provider, who ceases to be approved
for a particular residential or flexible care service, to refund any accommodation
bonds paid to that provider by aged care recipients for entry to that
residential or flexible care service to the respective aged care recipients,
within a time specified by proposed subsection 57-21AA(2).
Under proposed subsection 57-21AA(3), if the former
aged care provider is a corporation, failure to comply with proposed
subsections 57-21AA(1) and (2) would be an offence with a penalty
of an amount ranging from $3 300 to $16 500.[65]
According to the Government, this amendment would address
the current gap in protection of bonds under the Act as statutory obligations
on aged care providers cease when providers cease to be approved under
the Act.[66]
In addition, items 103 and 104 propose
to insert new subsections 57-21A(1A) and 57-21B(1A) into
the Act, which would have the effect of requiring aged care providers
(current and former), who would be subject to refunding accommodation
bond amounts or entry contributions, to pay interest on those amounts.
The Bill also proposes amendments expressly focused on
the protection of the needs of the aged care community, as well as aged
care recipients’ health, welfare and interests.
Examples of such proposed provisions are as follows.
Item 66 proposes to insert new section
16-13, which would provide for specific conditions to be met before
the Secretary can approve the transfer of provisionally allocated places.
These include conditions that the Secretary must consider under proposed
section 16-16, when deciding whether the needs of the aged care community
in the particular region would best be met by the transfer.[67]
Item 112 proposes to amend subparagraph 62-1(b)(iv)
to allow for personal information about an aged care recipient to be released
for the purpose of complying with obligations under the Act or any Principle
made under section 96-1. Proposed amended subparagraph 62-1(b)(iv)
would mean that in the event of a situation occurring where an aged
care provider had to inform the Secretary that a resident is absent from
the aged care facility without explanation, the aged care provider would
not be in breach of non-disclosure provisions in the Act.[68]
Items 115 to 118 propose to amend section
65-2 of the Act in relation to matters that the Secretary must consider
when deciding the appropriateness of sanctions on approved providers for
non-compliance with responsibilities under Parts 4.1 to 4.3 of the Act.
In particular, items 116 and 117 propose
two additional matters that the Secretary would have to consider under
new subsection 65-2(1):
- whether the non-compliance would threaten future recipients’ health,
welfare or interests, and
- the desirability of deterring future non-compliance.
Item 18 proposes to insert new subsection 65-2(2)
into the Act to clarify that the Secretary’s paramount consideration,
when deciding the appropriateness of imposing sanctions under subsection
65-2(1) of the Act, must be whether non-compliance threatens or would
threaten current and future aged care recipients’ health, welfare or interests.
Within the context of increasing numbers of people seeking
to access aged care, the Bill proposes amendments to streamline assessments
by the ACATs, allowing for more timely and consistent assessments for
aged care.
Examples of proposed provisions are as follows.
Items 69 and 70 propose to amend section
23-3 of the Act to address the situation where aged care recipients’
assessments are reviewed unnecessarily or too often for administrative
reasons rather than because of a change of the recipients’ aged care needs.
Section 23-3 currently provides for the lapsing of approvals for certain
types of care if care is not received within a certain time.
Item 70 proposes to insert new subsection 23-3(1A)
into the Act, whereby approval would not lapse under the following types
of aged care:
- residential care provided as respite care. or
- residential care not limited to low level of residential care, or
- flexible care (specified in the Approval of Care Recipients Principles).
These proposed provisions may improve the costs of the
ACAT system, a concern which appears to be consistent with the Government’s
announcement that it will also provide $72.16 million to the States and
Territories for the Aged Care Assessment Program for 2008-09, as part
of its commitment to streamline and improve the aged care assessment process.[69]
Items 120 to 129 propose amendments
to section 85-1 of the Act (which includes a table setting out what
decisions are reviewable by the Administrative Appeals Tribunal (AAT)),
many of which are consequential to other proposed amendments in the Bill.
In particular, items 124, 125, 127 and 129
propose that particular decisions would be reviewable by the AAT, such
as decisions to:
- reject an application for transfer of provisionally allocated places,
as well as those allocated places other than provisionally allocated
places
- approve (or to reject an application to approve) a day as being a
transfer day for transfer of provisionally allocated places, as well
as those allocated places other than provisionally allocated places,
and refuse to make a financial hardship determination under proposed
paragraphs 57-14(1)(b) and 57A-9(1)(b) (see items 96 and
108).
The Bill proposes amendments to the Bond Security Act
to ensure that the Bond Guarantee Scheme would apply in relation to both
current approved providers, as well as former approved aged care providers
who continue to have outstanding bonds.[70]
Other proposed amendments relate to provision for unregulated
lump sums and unregulated lump sum balances.
Item 157 proposes to insert a new definition
‘unregulated lump sum balance’ into subsection 6(1) of the
Bond Security Act. Unregulated lump sum balance would be defined as an
amount, at a particular point in time, which is equal to the difference
between:
- the unregulated lump sum amount, and
- any amounts that had been, or was permitted to be, deducted at that
particular point in time, under the Agreement under which the lump sum
was paid.
Item 161 proposes to insert new subsection
6(3) into the Bond Security Act, explaining the meaning of ‘unregulated
lump sum’ as an amount of money paid by an aged care recipient to a person
called the ‘unregulated lump sum holder’ (the amount), in circumstances
specified in proposed subsection 6(3). These circumstances include:
- the amount is paid under a written Agreement for the aged care recipient’s
entry into either:
- a residential care service, through which residential care—that
is not respite care—is or will be provided by the unregulated lump
sum holder, or
- a flexible care service through which flexible care is or will
be provided by the unregulated lump sum holder
- the amount does not accrue on a daily basis
- under the Agreement, if the unregulated lump sum holder ceases to
provide the relevant aged care to the aged care recipient, the amount
must be refunded to the aged care recipient
- the unregulated lump sum holder is an approved provider immediately
before 1 January 2009
- the amount was paid to the unregulated lump sum holder before:
- 1 January 2009, and
- unregulated lump sum holder became an approved provider
- the amount is not an entry contribution, and
- the aged care recipient continued to be provided with the relevant
aged care after the amount had been paid and before the unregulated
lump sum holder became an approved provider.[71]
Other examples of proposed amendments that include unregulated
lump sum and unregulated lump sum balances being given into protections
under the Bond Security Act include items 144, 145, and
156.
Items 162 to 185 propose amendments to
the Bond Security Act specifically in relation to insolvency events.
Item 162 proposes to insert new section 6A
into the Bond Security Act, dealing with transitional issues. Proposed
section 6A exempts certain people for a certain period of time, from
the operation of the Bond Security Act in relation to certain insolvency
events.[72]
The Government states that this proposed provision would
ensure that the Commonwealth Government will not be responsible for bonds
held by aged care services that never held an allocation of Commonwealth
funded places.[73] It
is noted that the Government offers an assurance that:
Current approved providers whose approval will lapse
as a result of the requirement to have an allocation of places (which
occurs on 1 July 2009), will be covered by the Guarantee Scheme for
a period of 12 months from 1 July 2009. The period of coverage of the
Guarantee Scheme will cease on 1 July 2010. This will provide care providers
and their residents with time to make any necessary adjustments to their
contractual arrangements.[74]
However, this does raise the question of what would happen
to bonds held by aged care providers that do not receive Commonwealth
funding, although it is expected that the number of such providers would
be relatively low.
Item 169 proposes to substitute section 9
of the Bond Security Act, to the effect that former approved providers
would have the same obligation under proposed section 9 to notify
the Secretary of first occurrences of insolvency events, which are set
out in the definition of ‘insolvency event’ in section 6 of the Bond Security
Act.
Item 176 proposes to amend paragraph 12(2)(b)
of the Bond Security Act, to the effect that the Secretary would be able
to consider any amount that may have been refunded up till the time the
refund amount is determined and that should be considered in determining
that refund amount.
Item 181 proposes to insert new section 13A
into the Bond Security Act, providing for the Secretary to make an additional
amended refund declaration in circumstances where:
- a current or former approved provider refunds part of a bond balance
(the initial refund)
- after that initial refund, the Secretary determines the amount considered
equal to the outstanding amount of bond balance as at the time of that
determination
- the Secretary makes a refund declaration under section 13 of the
Bond Security Act, and
- the current or former approved provider’s initial refund is void
or voidable under the Corporations Act 2001 or the Bankruptcy
Act 1966 (depending on whether the current or former approved provider
is a corporation) to the effect that the person, to whom the initial
refund of the bond balance was made, does not retain the value of that
refund.
The formal requirements for the additional refund declaration
would be similar to the requirements for current refund declarations under
section 13 of the Bond Security Act.
Concluding
comments
This Bill is largely
uncontroversial and seeks to ensure the provisions of Act accord with
changes in the aged care industry, as well as addressing certain gaps
in the current aged care regulation framework.
However, Parliament
may wish to consider the extent to which additional and amended obligations
proposed by the Bill would affect investor confidence in the aged care
industry, especially in the context of increasing demand for aged care
services.
[71]. Note that the Bill proposes
that the following terms have meaning given by the Dictionary in Schedule
1 to the Act: ‘entry’ in relation to a person and an aged care service
(item 146); ‘aged care service’ (item 143); ‘residential
care service’ (item 154); ‘flexible care service’ (item 148);
‘respite care’ (item 155); ‘residential care’ (item 153);
and ‘flexible care’ (item 147).
Rebecca de Boer and Sharon Scully
11 November 2008
Bills Digest Service
Parliamentary Library
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