House of Representatives

Second Reading Speech

Today I am delighted to introduce five Bills that give effect to this Government's $3.7 billion commitment to aged care - a commitment described in the Living Longer Living Better aged care reform package that the Prime Minister and I announced in April last year, that provides a 10 year plan for building a new aged care system - a system for a 21st century Australia.

This Government has recognised that we must address head-on the challenges and opportunities of an ageing population - that we must implement reforms now that prepare the aged care system for the needs of the future generations of older Australians.

These Bills deliver on these reforms.

This is not change for change's sake - but change that will make a real difference to older Australians, the people who love them, the people who care for them, and the aged care workers who look after them.

Since the Government asked the Productivity Commission to report to us on caring for older Australians, I have consulted widely with consumers, workers and industry. I have talked and I have listened, so that we can build a better, fairer and more nationally consistent aged care system. Getting the right aged care will no longer be left to chance. People will be able to get the aged care they want and need, no matter where they live and what their financial means.

People will have more choice, more control, more support and more independence. They'll be helped to stay in their own home for as long as they can and will have better access to residential care should they need it. They'll be able to make their way more easily through what, to now, has been a complex, fragmented system.

Older Australians will be able to make more informed decisions knowing the aged care services that are available, the fees they may be expected to pay, and the quality of services they can expect to receive.

They will be serviced by a stronger workforce - a skilled, well qualified workforce, and, so importantly, an appropriately paid workforce. There will be better access and support for people with dementia and veterans with certain mental health conditions and a range of people with special needs.

We are supporting aged care providers to deliver the quantity, the quality and the diversity of care that we need now and that we're going to require even more of into the future.

With these Bills we are laying the foundation for a new era of aged care delivery for this nation.

Since the Aged Care Act 1997 first came into effect, the needs, demands and expectations of Australia's ageing population have changed markedly. So too has the network of aged care providers across residential and home care.

The pressures on the system to provide quality, affordable and appropriate care are far greater than ever before and will only increase over the coming decades. The system is now at a tipping point, faced with the pressure that comes from a population that is ageing and one which, quite rightly, has significant expectations and ideas about the aged care services they will receive. Doing nothing is not an option.

Making these changes to aged care legislation will better enable aged care providers to tackle these pressures and prepare with certainty for the future. It establishes the foundation that enables older Australians and their families to enter aged care, knowing that what they get will be quality care at the right price, and delivered where they want it - either in the home or in a residential setting.

These five Bills comprehensively address the major areas of change.

The changes included in the Aged Care (Living Longer Living Better) Bill 2013 and related Bills implement reforms in four key areas:

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reforms that focus on end-to-end aged care

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reforms that provide greater choice and control for consumers

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reforms that provide more sustainable and modernised financing arrangements, and

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reforms that ensure independent advice and oversight to support the changes.

Starting with the focus on end-to-end aged care.

During my extensive conversations with older Australians, their families and carers - more than 4000 of them - one of their clearest messages was that we need a system that serves them consistently and seamlessly across the spectrum of aged care.

We need an end-to-end aged care system.

When the Aged Care Act 1997 was introduced over 15 years ago it recognised the emergence of community care as a viable alternative but residential care was one dominant form of care. 21st century consumers now have a clear preference for care delivered in their home and tailored to their needs, care that is consumer directed and that enables and supports recovery as well as long term care needs. And if, or when, the time comes, they want to be able to move to residential care with minimum fuss.

This is why we have established a new type of care - home care - to replace community care and certain types of flexible care delivered in the home. As part of these reforms, this Government has already increased the number of home care places - with over 5,800 additional places available this year. This will continue to increase each year with the total allocation of home care places rising from around 60,000 to almost 100,000 over the next five years.

From 1 July 2013, four levels of home care will enable consumers to access the packages that best suit their needs. In addition, there will be two new supplements - a dementia supplement and a veterans' supplement. These supplements will be available across all care levels for consumers whose care needs might be greater due to dementia, and for veterans with mental health conditions who may also need greater support.

A new workforce supplement will also provide additional funding to eligible home care providers so that the workforce can better meet the needs of consumers. The new supplement will mean more workers can access more appropriate pay and improved training and development. The aged care workplace will be better and safer.

We will seek to ensure that the increasing numbers of elderly people remaining in their homes are not socially isolated - by extending the Community Visitors Scheme from residential care to home care.

Whilst Australians have sent us a resounding message of wanting to age at home, the need for residential care will continue to grow. To support this, from 1 July 2014 the different treatment for low level and high level residential care will be removed. There will only be one type of approval for permanent residential care.

Anyone assessed as needing permanent residential care will be able to access any residential care service that meets his or her needs at the time of entry into care. These approvals will not lapse, unless expressly time limited, so there will be fewer reassessments and it will be easier for consumers to access the care that they need.

These changes will mean continuity of services being available from home care to residential care. They will make it easier for people to move through the system.

Turning now to the second major area of reform - Greater choice and control for consumers

As I've mentioned, the message I received from consumers was that they really want to be able to exercise choice and have control as their care needs change with age.

In this context, I will highlight a few major reforms.

First - we are ensuring, by 1 July 2013, that all new home care places allocated to providers are offered on a consumer directed care basis. And from 1 July 2015 all new and pre-existing home care places will be offered on this basis. Consumer directed care is the future of aged care. This means that consumers will work with their home care provider to choose the elements of care that best suit their needs and their home care package budget. This doesn't require legislation but will be a condition of the allocation of home care places.

Second - in residential care, care recipients and their families will be able to purchase additional amenities or supplementary care.

Through the Bills, we will continue to allow residential care places to be offered on a dedicated extra service basis, whereby an agreed set of extra services are paid for under one fee. Importantly care recipients, whether or not they are in an extra service place, will also be able to opt in and out of additional amenities offered by the provider.

Third - the Bills change the arrangements relating to accommodation payments for residential care. For the first time, consumers will have real choice and control.

Approved providers will continue to be required to enter into an agreement with each care recipient in relation to accommodation payments.

Importantly, care recipients who can afford to contribute to their accommodation costs will have real choice regarding how they pay for their accommodation. They will be given the choice to pay either, a fully refundable deposit, a periodic payment, or a combination of both. They will also be able to draw down periodic payments from their refundable deposit. The amounts of the refundable deposits and periodic payments will be financially equivalent from a provider's perspective.

From 1 July 2014, aged care providers will not be able to distinguish between care recipients on the basis of how they elect to pay for their accommodation. Instead, care recipients will have 28 days upon entering the aged care service to decide how to pay their accommodation payment or contribution. Providers will be paid the agreed periodic payment during this election period.

If a care recipient can't make a contribution towards the cost of their accommodation, the Government will contribute the amount of the accommodation supplement applicable to the facility.

The next major area of reform is the creation of more sustainable and modernised financing arrangements.

Older Australians and their families have clearly told me that fees and charges across the aged care system are complex, confusing and often lead to inequities. Understanding how much they have to pay, for what and why, is a major concern for them.

It is also true that the current arrangements for Government subsidy and user contributions for home care and residential care differ greatly.

The Aged Care (Living Longer Living Better) Bill moves to better align these arrangements. For both residential care and home care, the maximum amount of Government subsidy will comprise calculation of a basic subsidy amount plus any supplements.

Three new supplements will be available in residential care - these are the dementia supplement, veterans' supplement and workforce supplement. I mentioned these supplements in the context of home care and I am pleased to confirm that they will also be available in residential care from 1 July 2013.

In addition to reforming the way that Government subsidy is calculated, the reforms also herald greater clarity in relation to the fees payable by consumers. Care costs and accommodation costs are much more clearly delineated.

In relation to care costs, the Bills ensure a more sustainable future for aged care funding by reforming the means testing arrangements. People who can afford to help pay for their care will be asked to do so, and those who can't afford to pay will still be able to access care.

In home care, the Bills introduce new income testing arrangements from 1 July 2014. In summary, all home care recipients may be asked to pay a basic daily fee of up to 17.5 per cent of the single basic age pension amount as is the case now. In addition, those who can afford to may also be asked to pay an income tested care fee. There is already an income tested fee in community care. The new arrangements will ensure consistency and embed protections for consumers.

While some home care recipients will need to contribute more to the cost of their care through an income tested care fee, safeguards are being introduced.

For example:

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No full rate pensioner will pay an income tested care fee.

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No care recipient will be asked to contribute more than the cost of their care.

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No care recipient's home or other assets will be included in assessing their capacity to pay an income tested care fee for home care.

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There will be both annual and lifetime caps on income tested care fees. Once a person reaches the applicable annual or lifetime cap, they will pay no more income tested care fees. The annual cap in home care will be $5000 or $10,000 (depending on the income of the person) and the lifetime cap will be $60,000 (all caps will be indexed).

Appropriate changes will also be made, in line with the changes to home care, to implement new and fairer means testing arrangements in residential care from 1 July 2014.

The standard resident contribution to cover meals, utilities and the like of 85 per cent of the basic age pension amount, will continue. In addition, a new means-tested care fee will replace the existing income tested care fee. This addresses current inequities in the system and ensures that people with similar means are treated alike regardless of whether their wealth lies in income or assets.

As for home care - important safeguards will exist in residential care.

For example:

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Full rate pensioners will not pay a means-tested care fee.

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We will maintain current arrangements to exempt the principal residence from means testing if occupied by a spouse or other protected person.

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Here too there will be annual and lifetime caps on means tested care fees payable by the care recipient. An annual cap of $25,000 (indexed) on means tested care fees will protect care recipients with higher than average care fees. A lifetime cap of $60,000 (indexed) will protect care recipients who receive care for a longer than average period of time. These caps apply across both residential and home care, so any fees paid in home care count towards the lifetime cap.

A hardship supplement will also be available to care recipients who are unable to pay their fees in either home care or residential care.

So how will all of these changes to subsidy, fees and payments affect people who are in care when the changes take effect?

If a person is in residential care on 30 June 2014, there will be no change to the way their fees are calculated.

If the person moves to another aged care service (within 28 days of leaving the first service), their fees will continue to be calculated in accordance with the methods and calculators as at 30 June 2014 unless the person chooses to have the new rules apply to them. Again, this offers real choice and control for consumers.

These changes reflected in the Bills provide for a much fairer system. They will address the issue of asset-rich, income-poor residents paying for all of their accommodation and none of their care, and income-rich, asset-poor residents paying for their care but not for accommodation. They will also ensure equitable payment for care received at home.

Independent advice and oversight

I am pleased to advise that the Bills introduce a new Aged Care Pricing Commissioner. The Commissioner will make decisions where required on pricing issues, for example, regarding accommodation payments and extra service fees. This will increase the level of transparency and ensure that aged care recipients are charged fairly for their accommodation.

Further, and consistent with the Government's commitment to increase transparency in the quality of aged care, I commend to you the two new Bills establishing a new Australian Aged Care Quality Agency.

This body will replace the existing Aged Care Standards and Accreditation Agency from 1 January 2014. The new Quality Agency will be established under the Financial Management and Accountability Act 1997 in line with the recommendations of the Uhrig Review. It will be a single body to assess quality across home care and residential care leading to greater efficiencies, reduced costs and a further commitment to an end-to-end aged care system.

Finally, the Bills require an independent review of the reforms within five years. This ensures that the momentum is maintained in these areas identified by the Productivity Commission as essential reform foundations. The review must include consultation with a broad range of people, including approved providers, consumers, workers, carers and families of care recipients. We want to know what works and what doesn't. The review will need to consider whether further steps can be taken to move the system more towards a consumer entitlement model.

Given the significance of the amendments to the legislation that are required by the reforms, this Government is also taking the opportunity to make minor and technical changes to the legislation. This includes, for example, improving terminology or consistency, repealing redundant provisions, and consolidating existing delegated legislation, so the regulatory framework is more readily accessible and able to be understood. Even these minor changes have been the subject of consultation with stakeholders.

Subject to the passage of the Bills through Parliament and the development of associated changes to delegated legislation, it is proposed that the first package of reforms take effect from 1 July 2013, with a subsequent package effective from 1 January 2014, and the final package effective from 1 July 2014. This graduated introduction will ensure that aged care providers and consumers are able to prepare for, and become familiar with, the changes. It will also give certainty to the industry to assist in business planning knowing well in advance the changes that will take effect in mid-2014.

For some years now the sector has come together under the rubric of the National Aged Care Alliance (NACA) and has worked together to present to the Parliament, the community, the Productivity Commission and others, a united view about the major building blocks of aged care reform. The NACA, as well the expert group of people in the Productivity Commission, whom I must thank for having conducted such a comprehensive inquiry, helped frame the conversations I held directly with older Australians. This consultation has helped shape these Bills.

Consultations and collaborations will continue through the strong governance structure the Government has developed to support and guide the implementation of the Living Longer Living Better aged care reforms. As you can see, these are historic changes - changes that aged care recipients, workers and providers alike, want and need to develop a modern, fit for purpose, aged care system.

This is just the start. We are building a new system that will have the capacity to provide quality, affordable, accessible and appropriate care to a rapidly growing population of older Australians over the coming decades. These changes will benefit both those who provide aged care and those who receive it.

They strike the right balance: They support aged care providers to deliver the right quality, quantity and type of care. And they meet the increasing expectations of older Australians and their families to be cared for as long as possible in their own homes, moving into residential care if they need to - and all the time having choice and control over their decisions.

These Bills will fundamentally help to define our nation in the 21S t century:

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a decent, dignified Australia

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a socially inclusive Australia

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an Australia that truly cares about its older citizens.