BILLS DIGEST NO. 66, 2015–16              19 January 2016

Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015

Alex Grove
Social Policy Section 

Date introduced: 25 November 2015

House:  House of Representatives

Portfolio: Health

Commencement:  The day after Royal Assent.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website.

Purpose of the Bill

The purpose of the Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015 (the Bill)[1] is to amend the Aged Care Act 1997 (the Act)[2] to:

•       change the process for transferring places between aged care providers from an approvals process to one where the transfer will be deemed as approved unless it is vetoed and

•       increase the timeframe for providers to make provisionally allocated places operational from two to four years, while also limiting the number of extensions to this period.

Background

The Australian Government subsidises aged care services for older people who cannot live independently in their own homes.[3] The Act and associated Principles provide the regulatory, funding and quality framework for residential aged care, home care and flexible care services.[4]

As at 30 June 2015, under the Act there were:

•       72,702 operational home care packages providing tailored personal care, support and clinical services to older individuals in their homes[5]

•       192,370 operational residential care places providing permanent and respite care for older people in aged care homes[6] and

•       7,629 operational flexible care places.[7]

The majority of Australian Government expenditure under the Act in 2014–15 was for residential care ($10.6 billion), with $1.28 billion spent on home care packages and $407.5 million on flexible care programmes.[8]

Responsibility for the operation of the Act was transferred to the Department of Health (DoH) from the Department of Social Services (DSS) in September 2015 as a result of Machinery of Government changes.[9]

Planning and allocation of aged care places

The Australian Government controls the supply of subsidised aged care places. The Government planning framework aims to grow the number of aged care places in line with the ageing population, and to balance provision of places across metropolitan, regional, rural and remote areas, including for people with special needs.[10] The Government is aiming for an aged care provision ratio of 125 aged care places per 1,000 people aged 70 years or over by 2021–22.[11] As at 30 June 2015 there were 111.5 operational aged care places (composed of 81.1 residential and 30.4 home care) per 1,000 people aged 70 years or over.[12]

Aged care places are allocated to providers of aged care who are approved under the Act, rather than directly to consumers (although the Government has announced its intention to allocate home care packages directly to consumers from February 2017).[13] Existing places held by providers generally continue from year to year. For new places, the Minister determines the number of additional residential, home care and flexible care places to be made available in each Aged Care Planning Region each year, in accordance with the planning framework. Prospective and existing approved providers then compete for the majority of these places (with the exception of some flexible care places) through the open Aged Care Approvals Round (ACAR). The 2014 ACAR was very competitive for home care (with approximately 17 new places sought by providers for every place available), and moderately competitive for residential care (approximately two new places sought for every place available).[14]

Aged care places can be provisionally allocated, for example if they require the building of a new aged care facility or the extension of an existing facility, but the provider will not receive a subsidy for the place until it has become operational and there is a care recipient in place.[15]

Red tape reduction

Prior to the 2013 federal election, the Coalition announced its aged care policy, which included a commitment to cut red tape and streamline the administrative burden for service providers:

The complex regulations that plague the sector are not only costly and onerous but inhibit providers from delivering even higher levels of quality care. It has been reported that nursing staff spend at least a third of their time simply doing paperwork. Reducing compliance burdens will also drive greater efficiencies which will allow better flexibility to enhance quality of care provided.[16]

As part of this commitment, the Coalition pledged to ‘reduce the complexity for providers seeking aged care places’, noting that at that time a ‘provider who transfers approved places to another approved provider’ had to fill out a 39 page form.[17]

Following its election win, the Coalition Government established the Aged Care Sector Committee (ACSC) to provide advice to Government on aged care policy and reform. The Committee includes ‘representatives from across the aged care sector, including peak bodies, large for-profit and not-for-profit providers, consumers, workforce, the National Aged Care Alliance and the Department.’[18] The ACSC worked with the Government to develop a Red Tape Reduction action plan, which was approved by former Prime Minister Tony Abbott in 2014.[19]

The Red Tape Reduction action plan ‘sets out a range of actions that can be taken to reduce unnecessary red tape for aged care providers and consumers’.[20] Item 11 of the plan proposes a review of places management, including:

-              reviewing and revising all places management forms so that they only seek information that is legislatively required;

-              reviewing and revising the requirements in relation to the transfer of places to ensure that the requirements are fit for purpose; and

-              reviewing and revising the requirements in relation to managing provisionally allocated places to ensure that the requirements are fit for purpose.[21]

The intent of these proposed changes to places management is to ‘lessen the red tape burden on providers and ensure that the Department is able to more efficiently and effectively manage aged care places.’[22] The first change, the streamlining of places management forms, has already been made with new forms released in 2015.[23] This Bill implements the next two changes by revising the legislative requirements for transferring places and managing provisionally allocated places.

Committee consideration

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills had no comment on the Bill.[24]

Policy position of non-government parties/independents

Shayne Neumann, the Shadow Minister for Ageing, has indicated that the Australian Labor Party will support the Bill because Labor is in favour of red tape reduction, and because approved providers of residential care should not be able to retain provisionally allocated places for an indefinite period.[25]

No statements by other non-government parties and independents specifically relating to the Bill have been identified.

Position of major interest groups

No statements by major interest groups specifically relating to the Bill have been identified. However, given that the Bill implements elements of the Red Tape Reduction action plan developed by the Government and the ACSC (including representation from peak bodies, aged care providers and consumer groups), the changes are likely to be supported by the aged care sector.

The Minister has also stated that the proposed changes to the transfer of places between providers were provided to the ACSC and selected providers for feedback, and that ‘the response to this measure from the aged-care sector was positive’.[26]

Financial implications

The Explanatory Memorandum states that the Bill has no financial implications.[27]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible ‘as it does not raise any human rights issues’.[28]

Parliamentary Joint Committee on Human Rights

The Parliamentary Joint Committee on Human Rights concluded that the Bill does not raise human rights concerns.[29]

Key issues and provisions

Transferring places between aged care providers

Aged care providers may make a business decision that they are no longer in a position to deliver care for some or all of their allocated places, and therefore seek to transfer these places to another aged care provider.[30] Currently, a proposed transfer of places must be approved by the Secretary in order to take effect.[31] Applications for transfers are routinely approved in around 80 per cent of cases.[32] The Bill replaces this application process with a veto process, under which transfers will be deemed to be approved unless vetoed by the Secretary.

Item 1 in Schedule 1 repeals Division 16 of the Act, which sets out the application and approval process for transferring places between providers, and replaces it with new Division 16 which outlines the veto process for transfers. The new Division has two subdivisions: proposed Subdivision 16-A deals with the transfer of places that are not provisionally allocated, and proposed Subdivision 16-B deals with the transfer of places that are provisionally allocated.

Proposed sections 16-2 and 16-13 provide that an approved provider wishing to transfer a place may give a transfer notice to the Secretary advising of this intent, and set out the information to be included in the transfer notice. The information required is similar to that currently required in the application for approval to transfer places.[33]

Proposed sections 16-3 and 16-14 set out the requirements that the Secretary must be satisfied of when considering the transfer notice. This includes:

•       whether the proposed transfer would meet the objectives of the planning process

•       whether the proposed transfer would meet the needs of people with special needs (where the places have been allocated on this basis)

•       the suitability, financial viability and adequacy of care of the provider receiving the places (the transferee)

•       the history of satisfactory conduct of the transferee and their staff and

•       that the location of the place will not change as a result of the transfer (for provisionally allocated places).

Whilst these considerations are very similar to those currently prescribed in the Act, the Secretary would no longer need to be satisfied that the transfer was justified in the circumstances (for non-provisionally allocated places), nor that there were exceptional circumstances justifying the transfer and that the needs of the aged care community in the region would best be met by the transfer (for provisionally allocated places).[34] Thus, the Secretary would still be concerned with the distribution of the places under the planning process and the quality of the transferee, but not with the justification for the transfer. This appears consistent with the Government’s stated intention to limit its involvement in a ‘business decision between two already approved providers of residential care’ while still ensuring ‘that a high-standard and quality aged-care service can be delivered’.[35]

The Secretary may currently make a request for further information in order to decide whether to approve a transfer.[36] This is replaced in the Bill by proposed sections 16-4 and 16-15 which provide for the Secretary to issue a notice to resolve any issues relating to the transfer which are of concern to the Secretary. The notice to resolve must specify the issue of concern and the action to be taken by the specified person to resolve the issue. Both parties to the transfer may make submissions to the Secretary addressing the concerns.

The Secretary must currently either approve or reject a transfer application.[37] Under proposed sections 16-6 and 16-17, the Secretary may give a veto notice rejecting the proposed transfer if they are not satisfied that the transfer meets the requirements set out in proposed sections 16-3 and 16-14, if issues raised in a notice to resolve remain of concern, or if the transfer would result in the places being transferred to a different State or Territory. Other circumstances in which the Secretary may veto a transfer may be set out in the Allocation Principles.[38] If no veto notice is issued, under proposed sections 16-8 and 16-19 the transfer takes effect, generally on the day specified in the transfer notice (so long as the transferee is an approved provider on that day).

The replacement of an approval process with a veto process does not appear to greatly alter the transfer requirements for providers, nor does it materially lessen the powers of the Secretary. The removal of the requirement for providers to justify the case for the transfer is perhaps the most significant change.

Timeframes for provisionally allocated places

Aged care places, especially for residential care, may be provisionally allocated to providers, for example if they require the building or extension of an aged care facility. The Act currently provides for such places to become operational within two years after allocation.[39] In practice, the time taken can be longer as the provider may be reliant on ‘acquisition of land, finance, planning and construction approvals, and the availability of builders’.[40] The median time for providers to make such places operational is around four years, with 80 per cent operational within six years.[41] As at 30 June 2014, there were reportedly more than 7,000 provisionally allocated places that have still not become operational six or more years after allocation.[42] The Act does not currently specify an upper limit on the number or duration of extensions that can be granted to the provisional allocation period.[43]

Item 1 in Schedule 2 changes the provisional allocation period from two to four years.

Item 3 in Schedule 2 provides that the Secretary must approve two applications for an extension of the provisional allocation period if justified, but that the Secretary only has to approve a third or subsequent application for extension in exceptional circumstances.

Item 4 in Schedule 2 allows the Minister to specify by way of the Allocation Principles[44] matters which the Secretary must consider when determining what constitutes exceptional circumstances.

Item 8 in Schedule 2 has the effect of fixing the period of each extension at 12 months.

The increase in the provisional allocation period from two to four years would appear to align the Act with the average time taken to build or extend an aged care home and start providing care. The changes to the extension rules are intended to ensure that after six years ‘an extension to the provisionally allocated residential aged-care place will only be made in exceptional circumstances’ so that providers are not holding on to places indefinitely without providing care.[45] However, it appears that the Secretary still retains a more general power to make extensions in other circumstances.[46]

Concluding comments

This Bill makes changes to the way in which aged care providers manage their allocated places. The changes appear to reduce red tape and increase certainty for providers, without significantly lessening the powers of the Secretary. Any effect on the supply of new residential aged care places is not as simple to predict, as the Bill doubles the default time to make a provisional place operational, but tightens restrictions on extensions. The Bill has been developed in consultation with the aged care sector and is supported by the Opposition. The proposed changes are relatively minor in nature and unlikely to be controversial.

Members, Senators and Parliamentary staff can obtain further information from the Parliamentary Library on (02) 6277 2500.

© Commonwealth of Australia

Creative Commons

With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.

In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.

To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.

Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.

Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.

Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library’s Central Entry Point for referral.

[1].              Parliament of Australia, ‘Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015 homepage’, Australian Parliament website, accessed 9 December 2015.

[2].              Aged Care Act 1997, accessed 9 December 2015.

[3].              Department of Social Services (DSS), ‘Using the Guide to Aged Care Law’, Guide to Aged Care Law, version 1.09, released 4 January 2016, DSS website, last updated 9 February 2015, accessed 9 December 2015.

[4].              Department of Health (DoH), 2014–15 Report on the operation of the Aged Care Act 1997, DoH, Canberra, 2015, p. 2, accessed 9 December 2015. The Principles are made under section 96-1 of the Act.

[5].              Ibid., pp. 36–37.

[6].              Ibid., p. 49.

[7].              Ibid., p. 70. Flexible care includes transitional care (to assist people to return home after a hospital stay), aged care provided by a Multi-Purpose Service (a service in a rural or remote area that also provides health and community services), and innovative care (a small number of grandfathered places left over from a previous home care pilot).

[8].              Ibid., p. xiii.

[9].              Ibid., p. xii.

[10].              DSS, ‘3.3.2 How does the Commonwealth plan its allocation of places?’, Guide to Aged Care Law, version 1.09, released 4 January 2016, DSS website, last updated 19 September 2014, accessed 9 December 2015.

[11].              DSS, Expansion of flexible care initiatives, 2015 Budget fact sheet, DSS, 2015, accessed 9 December 2015.

[12].              DoH, 2014–15 Report on the operation of the Aged Care Act 1997, op. cit., p. 13.

[13].              Ibid., p. 42.

[14].              Ibid., pp. 14–16; DSS, ‘2015 Aged Care Approvals Round’, DSS website, last updated 2 October 2015, accessed 9 December 2015.

[15].              DoH, 2014–15 Report on the operation of the Aged Care Act 1997, op. cit., p. 14.

[16].              Liberal Party of Australia and the Nationals, The Coalition's policy for healthy life, better ageing, Coalition policy document, Election 2013, p. 5, accessed 10 December 2015.

[17].              Ibid.

[18].              DSS, ‘Aged Care Sector Committee’, DSS website, accessed 10 December 2015.

[19].              S Ley (Minister for Health, Minister for Sport and Minister for Aged Care), ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, House of Representatives, Debates, 25 November 2015, p. 13641, accessed 10 December 2015.

[20].              Aged Care Sector Committee (ACSC), Red Tape Reduction Action Plan, DSS, 2015, p. 1, last updated 3 August 2015, accessed 10 December 2015.

[21].              Ibid., p. 5.

[22].              Ibid.

[23].              S Ley, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, op. cit.

[24].              Senate Standing Committee for the Scrutiny of Bills, Alert digest, 14, 2015, The Senate, 2 December 2015, p. 1, accessed 15 December 2015.

[25].              S Neumann, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, House of Representatives, Debates, 2 December 2015, pp. 14541–43.

[26].              S Ley, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, op. cit., p. 13642.

[27].              Explanatory Memorandum, Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015, p. 1, accessed 30 November 2015.

[28].              The Statement of Compatibility with Human Rights can be found at page 2 of the Explanatory Memorandum to the Bill.

[29].              Parliamentary Joint Committee on Human Rights, Thirty-second report of the 44th Parliament, 1 December 2015, p. 1, accessed 15 December 2015.

[30].              S Ley, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, op. cit., p. 13641.

[31].              Aged Care Act 1997, section 16-1.

[32].              S Ley, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, op. cit.

[33].              Aged Care Act 1997, sections 16-2 and 16-14.

[34].              Aged Care Act 1997, sections 16-1, 16-4, 16-13 and 16-16.

[35].              S Ley, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, op. cit., p. 13642.

[36].              Aged Care Act 1997, sections 16-3 and 16-15.

[37].              Aged Care Act 1997, sections 16-5 and 16-17.

[38].              Allocation Principles 2014, accessed 18 January 2016.

[39].              Aged Care Act 1997, section 15-7.

[40].              DoH, 2014–15 Report on the operation of the Aged Care Act 1997, op. cit., p. 14.

[41].              S Ley, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, op. cit., p. 13642.

[42].              R Ramsey, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, House of Representatives, Debates, 2 December 2015, p. 14548.

[43].              Aged Care Act 1997, section 15-7.

[44].              Allocation Principles 2014, accessed 11 January 2016.

[45].              S Ley, ‘Second reading speech: Aged Care Amendment (Red Tape Reduction in Places Management) Bill 2015’, op. cit., p. 13643.

[46].              Aged Care Act 1997, paragraph 15-7(2)(a).