Introductory Info
Date of introduction: 2024-09-12
House introduced in: House of Representatives
Portfolio: Health and Aged Care
Commencement: On the earlier of proclamation or 1 July 2025
Purpose of the Bill
The purpose of the Aged Care Bill 2024 is to establish a new Aged Care Act 2024 to replace the Aged Care Act 1997, Aged Care (Transitional Provisions) Act 1997 and Aged Care Quality and Safety Commission Act 2018 (ACQSC Act).
Structure of the Bill
The Bill has 8 chapters. A detailed break-down of the content of each chapter is available in the Explanatory Memorandum (pp1–4).
Chapter 1 contains the objects of the Bill (cl 5) as well as the new Statement of Rights (cl 23) and Statement of Principles (cl 25) central to its ‘people-centred’ theme. The critical role of ‘supporters’ in aged care is legislated for the first time (Part 4).
Chapter 2 changes access requirements for federally funded aged care. Clause 58 sets the minimum age at 65, with some exceptions. Part 2 legislates a single assessment pathway for approvals (cl 61-64), replacing the various different methods currently used. Part 3 requires a ‘classification assessment’ of the level and type of care needed by individuals. Under Part 5 Commonwealth funded places will be allocated to individuals (rather than providers) with some exceptions.
Chapter 3 sets out the registration process and eligibility requirements for providers to deliver funded aged care services (Parts 1 & 2); as well as the obligations of registered providers (Part 4) and aged care digital platform operators (Part 6).
Chapter 4 sets out new arrangements for paying for aged care services. Part 2 explains what the Commonwealth will contribute. Part 3 sets out the methods for calculating fees and contributions people will pay. Part 5 sets out means testing arrangements. See ‘Key Issues’ below.
Chapter 5 gives an overview function to the System Governor (i.e. Department Secretary) (Part 2). In a change from the ACQSC Act, Part 3 creates both the Complaints Commissioner and the Quality and Safety Commissioner as separate statutory appointments; and requires an aged care worker screening database. Part 4 creates the Aged Care Quality and Safety Advisory Council. The Inspector-General of Aged Care is also part of this governance framework under separate legislation.
Chapter 6 sets out a regulatory system intended to meet the safety and quality aims described by the Minister in her second reading speech, namely ‘strong regulation and complaints mechanisms that prevent mistreatment, neglect, and harm from poor-quality and unsafe care’ (p 66).
Chapter 7 contains similar provisions to current legislation for protecting personal information of aged care recipients (Part 2). It also contains important new whistleblower protections for those who report failures in care at Australian aged care services.
Chapter 8 permits reconsideration of ‘reviewable decisions’ made by officials (Part 2) and provides for delegation of decision-making and other powers (Part 3).
Background
Who and what is covered by aged care?
Aged care refers to the system of funding and regulation to ensure that Australians are cared for in their old age. Currently there is no minimum age. Under the Bill, people will be eligible for aged care funding if aged 65 or over, or 50 years or more for Aboriginal and Torres Strait Islander people.
Currently, Commonwealth subsidy plus individual means-tested contributions provide funding for aged care in Australia. Under the Bill, the Department of Health and Aged Care will oversee Commonwealth funded aged care, with the Aged Care Quality and Safety Commission and the Complaints Commissioner as the main regulatory bodies.
Both the current and proposed aged care systems differentiate between care provided in a person’s home or community setting, and care provided in a residential aged care facility (i.e. a nursing home) in terms of funding and regulatory processes.
Responsive regulation
The extensive loss of life in aged care facilities across Australia during the COVID-19 pandemic provides a yardstick for Parliament to consider the effectiveness of proposed measures in the Bill intended to protect a large and vulnerable section of the Australian population.
As the leading global medical journal The Lancet noted in 2020, ‘For the first few months of the COVID-19 pandemic, Australia stood out as an exemplar of how best to respond’. However, ‘as time went on, a major weakness emerged: residential aged care homes’. The journal noted the many hundreds of deaths in aged care homes, mostly in Victoria. As The Age said, Australia’s ‘deadliest coronavirus outbreak’ occurred at St Basils Fawkner residential service in Melbourne where 50 residents died. The Royal Commission’s COVID special report highlighted the ‘under-resourced’, ‘overworked’ and ‘traumatised’ aged care workforce (p1).
Effective regulation requires both suitable legal tools and a willingness to use these expeditiously and appropriately. The Commissioner acknowledged the ACQSC first knew of the St Basils COVID outbreak on 10 July 2020. However, it was not until 26 July 2020 that St Basils was given a notice under section 63U of the ACQSC Act (log p112) requiring action in response to the ‘immediate and severe risk’ to residents at the service. As The Lancet commented, ‘that 75% of the country's deaths have occurred in such facilities gives Australia one of the highest rates worldwide of deaths in residential aged care … It has left families grieving and experts angry that their pleas to reform the sector had long been ignored’.
Royal Commission into Aged Care Quality and Safety
The Royal Commission into Aged Care Quality and Safety (hereafter; the Royal Commission) was established on 8 October 2018 and presented its final report on 1 March 2021.
This Royal Commission is notable in that some recommendations, predominantly regarding funding models and regulator independence, were not endorsed by both Commissioners (Final Report, Vol. 1, p 3). The Commissioners were in agreement that the new Aged Care Act should have a rights-based approach, providing a basis for a focus on people (Final Report, Vol. 1, pp 14, 35), and both Commissioners proposed models for governance and funding for the aged care system (Final Report, Vol. 1, pp 15–20, 50–51, 55–57).
Recommendations for a rights-based aged care system
The Commissioners recommended that a new Aged Care Act be enacted, focusing on protecting and promoting the rights of older people (Recommendations 1 and 2, pp 205–206). This includes ensuring access to quality, safe, and timely support, facilitating social participation and dignity, allowing for self-determination, and providing freedom from harm, mistreatment, and neglect (Recommendation 3, p 206). The Act would clearly define the rights of older individuals to receive care, signalling a major change from the existing ration-based system (Final Report, Vol. 1, p 12).
Recommendations for quality and safety governance
The Commissioners proposed various strategies for the future governance of the aged care system. Commissioner Pagone advocated an independent statutory body, the Australian Aged Care Commission, to serve as the system governor, administrator, and regulator (Recommendation 5, pp 209–212). In contrast, Commissioner Briggs prefers a government leadership model where these roles remain within a reformed department (Final Report, Vol. 3A, p 4). The Commissioners called for an independent review of the Aged Care Quality and Safety Commission by May 2021, with the results to be addressed by January 2022 (Recommendation 104, p 275). They also recommended increased public reporting from the Commission or its successor body (Recommendation 105, p 275).
Recommendations for funding aged care
Commissioner Pagone recommended a Productivity Commission inquiry into the financing of the aged care system through a levy (Recommendation 138, p 301), while Commissioner Briggs recommended instituting a 1% levy on taxable personal income by July 2022 without further inquiry (Recommendation 144, p 309). The Commissioners also presented differing proposals for co-contribution and means testing for individuals accessing residential aged care (Recommendations 128 (pp 294–295), 129 (pp 296–298), 140 (pp 304–305), 141(p 306)). Both Commissioners agreed that individuals assessed as needing certain clinical support should not be required to contribute to care-related costs (Recommendation 125, p 292).
Exposure Draft and Aged Care Taskforce
On 14 December 2023, the Labor government released an exposure draft of the Bill and invited responses. The exposure draft did not contain many of the details and chapters found in the current Bill, including Chapter 4 on new arrangements for paying for aged care services.
Advocacy bodies COTA and the Older Person’s Advocacy Network (OPAN), in partnership with 10 other aged care organisations, released a joint issues paper in response to the exposure draft, identifying key concerns including a rights-based approach, a statutory authority to deal with complaints and wait times of no longer than 30 days for access to aged care:
To enable older people to assert their rights, and have breaches of their rights addressed, the Act must establish an independent statutory Complaints Commissioner appointed by the Minister. (p. 4)
The Aged Care Taskforce was launched by the Albanese government to review funding arrangements for aged care in response to the Royal Commission and make recommendations to the government.
The pivotal outcome of the taskforce final report is that a personal income tax levy was not recommended (Recommendation 2, p 12) (the Coalition government had already rejected it). Instead, the taskforce proposed further refinement of the means-tested user-pays approach whereby users of aged care and the Commonwealth fund services jointly (Recommendation 3, p 12). The Government’s response to the taskforce’s final report ‘ruled out a specific tax or levy to fund aged care’ (p. 1).
Monitoring of implementation
The Office of the Inspector-General of Aged Care released a progress report on the implementation of the Royal Commission recommendations in June 2024, based on the exposure draft of the Bill. The report notes that progress has been made on enacting recommendations, in particular, recommendations that do not require legislative action. The report highlights a need for more ambitious action and concerted effort by the government to address ease of access to the system. Regarding wait times for aged care the report observes:
Under the new Act proposed in the exposure draft, there is nothing to prevent a continuation of the current situation, where around 50,000 people approved for Home Care Packages (HCPs) are on the waiting list. Some are having to wait for up to 12 months. This is in addition to an unknown, but significant, number of people who are unable to access Commonwealth Home Support Programme (CHSP) services for which they have been assessed. (p 7)
Policy position of non-government parties
Prior agreement between major parties
The Bill has received prior agreement between the Government and the Coalition, with negotiations occurring in the party room with the Shadow Cabinet. Senator Anne Ruston, Shadow Minister for Aged Care, published a media release outlining some of the negotiating points between the Government and the Opposition. The Minister highlighted:
To be clear, this is Labor’s package of reforms. This has not been a co-designed process but, within the Government’s reform framework, the Coalition fought for dignity and clarity for older Australians and future generations.
Australian Greens
Greens Older People spokesperson, Senator Penny Allman-Payne, released a statement about the Bill calling for further scrutiny. The Greens emphasised that quality and standards of care must take precedent over profits in the new legislation:
The key driver for aged care reform was never ‘budget repair’ or provider profitability, it was the urgent need to improve care, quality and enforcement in the sector after the shocking revelations of the Royal Commission.
We have seen appalling behaviour from industry consultants, lobbyists and aged care providers trying to game the system for financial gain. Older people must have certainty that they will no longer suffer exploitation and abuse at the hands of these predatory operators.
Key issues and provisions
Delegated legislation
It is a significant achievement to produce a single Aged Care Bill supported by one set of new Aged Care Rules (as yet, unavailable). The current multiple sets of primary legislation with, at times, over 20 subordinate regulations or ‘Principles’ make navigating Australia’s aged care system difficult even for experts, let alone the average person.
That said, there are over 600 references in the Bill to the new Rules. These will be in a disallowable instrument required to be tabled in both Houses of Parliament (cl 602). Examples where important detail has been left to the subsidiary Rules include:
- where funded aged care services are delivered: cl 10(4)
- Aged Care Code of Conduct: cl 14
- Aged Care Quality Standards: cl 15
- reportable incidents: cl 16 and cl 166
- restrictive practices: cl 17
- period of effect of classification levels: cl 80
- priority categories and urgency ratings for classification types: cl 87
- methods or procedures for allocating funded aged care places to individuals: cl 93
- transfer of places: cl 98
- exemption of providers from registration and renewal requirements: cl 109(4)
- audit requirements: cl 110
- advisers for providers facing revocation: cl 133(4)
- conditions of registration: cl 142
- access by supporters and advocates to individuals, settings and records: cl 156
- exemption from requirement for a registered nurse to be on site and on duty at all times at residential services: cl 175
- prescribing aged care digital platforms: cl 187(4); and their obligations: cl 189
- primary and secondary person‑centred supplements: cl 196 & cl 197; and provider-based supplements: cl 205
- assistive technology and home modification supplements: cl 213 & cl 222
- maximum accommodation payment amount: cl 289
- daily payments: cl 302
- payment of interest on return of refundable deposit balances: cl 313
- dealing with complaints: cl 361
- publication of the banning order register: cl 507(6).
In addition, there are nearly 200 references in the Bill to delegating functions and powers. Examples include those under the Regulatory Powers (Standard Provisions) Act 2014 (Regulatory Powers Act) (clauses 410, 411, 425, 426); and general powers of the System Governor, Commissioner and Complaints Commissioner (see Chapter 8, Part 3).
A rights-based Act
The Royal Commission recommended the new Act enshrine the rights of older people who are seeking or receiving aged care, with ‘any rights-based approach [having to] guarantee universal access to the supports and services that an older person is assessed as needing’ (Final Report, Vol. 3A, p 17). While the Royal Commission made a formal recommendation to this end (Recommendation 2), it did not propose that these rights be supported by an enforceable duty, with the exception of the right to freedom from restraints (Final Report, Vol.3A, p 19).
In her second reading speech (p 66), the Minister said she was introducing ‘the new rights-based Aged Care Bill [that] puts older people, and the services they need, front and centre’. This is reflected in the objects of the Bill (cl 5), the Statement of Rights (cl 23) and the Statement of Principles (cl 25). The priority to ‘put people first’ can already be found in the objects of both the current Aged Care Act (s2-1) and ACQSC Act (s5). However, the new Bill more exhaustively lists the different rights and principles. In future litigation, a court will be required by s15AA of the Acts Interpretation Act 1901 to find an interpretation that would best achieve the ‘people-centred’ purposes or objects of the new Bill. Moreover, while the current User Rights Principles 2014 includes a Charter of Aged Care Rights for care recipients, the new Bill elevates this to the primary legislation.
The Bill requires the Commissioner, Complaints Commissioner and System Governor to uphold the Statement of Rights (clauses 265, 349, 358).
The current aged care legislation has been criticised for providing ‘a regulatory regime that does not even have high quality care as an objective’ (Charles Maskell-Knight, 2024, p 4). A shift towards a rights-based approach as proposed in the Bill needs regulatory powers which enable regulators to prioritise high quality care outcomes. As discussed below under ‘Safety Compliance’, there are some improvements in the Bill assisting a regulatory focus on remedial action.
The right to freedom from restraints is not expressly referred to in the Bill and would need to be implied from more general statements. For example, under cl 17 and 18 any Rules which are made relating to restrictive practices must require these to be used ‘only as a last resort’. Under cl 23(4) an individual has the right to ‘be free from all forms of violence, degrading or inhumane treatment’. Under cl 179(1) a registered provider has a duty not to ‘cause adverse effects to the health and safety of individuals’ to whom it is providing services in so far as it ‘is reasonably practicable’.
Funding model
Rejection of a levy
The Royal Commission made various recommendations for establishing (Recommendation 144, p. 309) or inquiring into establishing (Recommendation 138, p. 301) an income tax levy for aged care funding. A levy was considered not viable by both the Morrison government (pp. 91 and 95) and the Albanese government (p. 1). The Bill contains no provisions for a levy, and instead proposes to shift to a means-tested funding model with co-contributions from aged care users and the Commonwealth.
On the rejection of a levy, aged care expert Professor Kathy Eager, UNSW, writes of a funding model for aged care as a social insurance device as achieved with Medicare and the NDIS, which is not implemented by the Bill:
Instead of aged care being framed as a competitive for-profit market, Labor [could] reposition aged care to sit alongside Medicare:
- A national universal access program in which older people are entitled to care based on their needs.
- A publicly funded and regulated aged care system that is agnostic about the legal status of providers. Providers may be government, not for profit or for-profit organisations.
- While consumer co-payments will continue to be paid, the significant majority of costs are, and will continue to be, met by taxpayers.
- A national social care program with public accountability.
Positioning aged care alongside Medicare is an essential step in making aged care sustainable into the future. Medicare is a national publicly funded and regulated program with mixed providers (government and non-government) and some co-payments. Medicare is understood and supported as a public program and enjoys overwhelming public support. This extends to support for paying a ‘Medicare levy’ and a willingness to pay more for better health care. While there are many private providers, no one would conceptualise Medicare as a private market. Aged care should be no different.
Refundable Accommodation Deposits
A detailed outline of the case for and against removing refundable accommodation deposits (RADs) has been provided in a recent Parliamentary Library Flag Post.
In the Royal Commission final report, Commissioner Briggs proposed RADs be replaced by a capital funding entity, with the goal to incentivise providers to develop small household models of accommodation (Recommendation 144, p. 307):
Small household models usually involve housing eight to 10 people receiving aged care services, and sometimes up to 16 people, within a home-like environment. Common features of small household models include ‘a focus on domestic, homelike, familiar or normalised environment with medical equipment hidden’. Regular staff are employed and they do not wear uniforms. Residents are able to choose the structure of their day and are given the opportunity to engage in domestic or regular duties such as food preparation. Smaller-scale housing can be constructed as standalone facilities or operate in cottage-like clusters as part of a larger development. (Final report, Vol. 3A p 226, references removed)
There is no decisive action to phase out RADs in this Bill, and no provisions that require providers to use capital funds towards small household models. The Government proposes an independent review of sector readiness in 2029–30 to consider phasing out RADs by 2035.
Not only will RADs remain in place, but the Bill proposes they will no longer be fully refunded. Ministers Wells’ second reading speech states that providers may retain 2% of the RAD per year for a maximum of five years. Providers will be entitled to retain a percentage of the RAD each year which will be determined under rules (see cl 307 and cl 308).
Under the existing guidelines, providers must seek approval to charge above $550,000 for a room (via RAD or other means). From 1 January 2025, this will increase to $750,000 and will be indexed every year according to the consumer price index. Such an increase is significant, with the Bill proposing (as set out above) that providers have the right to retain 2% per year of RADs for up to five years. This change was not recommended by the Royal Commission.
When commenting on the exposure draft of the Bill, Professor Kathy Eagar, UNSW observed that this additional income for providers will not be required to be spent on improved care services:
There are no proposals for a policy on profit and no requirement for providers to spend the extra money that people will have to pay on more or better services.
A new means-tested user-pays model
The aged care funding system employs a means-tested co-contribution model based on income and assets. Current users will continue on this system under the Government’s ‘No worse off’ principle.
The Bill proposes a new system for means-testing to determine co-contributions that aged care users will pay alongside subsidy from the Commonwealth. The new means-testing is also based on income and assets, but with greater nuance and four new levels of thresholds.
The Bill proposes different means-testing methods based on whether someone is in a home or community setting (e.g., their own home) or in residential aged care. Both settings are subject to the Rules, however the extent to which the method draws on Rules or on primary legislation differs slightly depending on the living arrangements of the aged care user:
- Means testing in a home or community setting (Support at Home) will be prescribed according to a method in the rules for determining an individual contribution rate (cl 314).
- Means testing in a residential aged care setting is set out in a method in cl 319. Key parts of this method will be provided for in the Rules, such as the four tiers of asset thresholds and four tiers of income thresholds (cl 319(4)), and the asset free area (cl 319(3)).
Categories of care
There will be three new categories for Commonwealth contributions and user-pays contributions. These are termed means testing categories in the Bill:
- clinical care
- independence support
- everyday living (cl 8(4)).
The departmental fact sheet on the changes to co-contributions in the Support at Home program states that:
The government will cover the full cost of your clinical care, with your contributions going towards things you would typically pay for your whole life, like everyday living expenses and services to maintain your independence (p. 2, emphasis added)
What constitutes clinical care, independence support and everyday living support are not included in the Bill but will be contained in the rules. Cl 8 prescribes that the rules will list and describe each service type and specify the means testing category for each service type.
Commonwealth to fully fund clinical care services
The Minister’s second reading speech states that aged care users will pay no contribution to clinical care costs, with these services to be fully funded by the Commonwealth. The Explanatory Memorandum states:
This responds to the recommendations made in the final report of the Taskforce and by the Royal Commission, that individual contributions be targeted more towards services that support people’s independence and everyday living costs and that no contribution be required for clinical supports. It is intended that the rules will prescribe different amounts for different kinds of services and support the Government’s commitment to reform in-home aged care in a fiscally sustainable manner. (p. 267)
Lifetime contribution cap
A Departmental fact sheet and the Minister’s second reading speech state that there will be a $130,000 lifetime cap on the Non-Clinical Care Contributions (everyday living and independence), or cessation of contributions after 4 years:
Individuals will no longer contribute to the Non-Clinical Care Contribution when they reach $130,000 in total contributions, or after 4 years, whichever occurs first. Any contributions for supports made by a resident in Support at Home before they enter residential aged care will count towards the $130,000 lifetime cap. (Departmental fact sheet, p.2 )
Cl 7 of the Bill defines the term lifetime cap as the amount prescribed by the Rules.
Fees that residential providers can charge
Under cl 276 a residential care provider can require a person to pay a ‘resident contribution’, with a maximum daily limit (cl 277). The resident contribution comprises a basic daily fee and means-tested hotelling and non-clinical care contributions. A new ‘higher everyday living fee’ can also be charged by a provider (cl 284) in a separate ‘higher everyday living agreement’.
According to the EM (p 251), the new fee replaces ‘the previous Additional Service Fee and Extra Service Fee arrangements’ and will provide ‘more consumer protection for the fees that providers can charge for services that are additional to, or of a higher quality than, those required on the current schedule of specified care and services (e.g. wine with meals, subscription tv)’. The EM says cl 284 addresses issues raised in Regis Aged Care Pty Ltd v Secretary, Department of Health [2018] FCA 177.
In Regis the Federal Court emphasised that people access aged care services in a variety of circumstances, sometimes involuntarily, in great urgency, or with real geographic constraints; and that ‘what may occur in reality’ is that a prospective resident may have no ‘freedom of contract’ and ‘must agree to pay [an] additional (non-care related) fee’ to gain entry to a service. The Bill attempts to address this issue by prohibiting a provider from offering a higher everyday living agreement before a person starts receiving residential care – see cl 284(5).
While the requirement for a separate contract for additional services which can only be offered after entry to a residential care service may address the type of ‘take it or leave it’ approach of providers criticised by the Federal Court in Regis, Parliament might also note that under cl 276(2) the new ‘higher everyday living fee’ is in addition to the ‘maximum’ resident contribution set in cl 277 and has no upper limit. Effective regulation will be required to avoid the new fee being unilaterally imposed on people urgently seeking residential care.
Safety compliance
The EM states the Bill will “introduce a new risk-based regulatory model” (p 1).
Like the ACQSC Act, the Bill enables use of the monitoring and investigation powers in Parts 2 and 3 of the Regulatory Powers Act, including entry, search and seizure powers (modified for aged care).
There are also additional powers in the Bill specific to aged care. Clause 474 introduces a new ‘required action’ notice that can be given to a registered provider if it is not complying with the new Act. This is similar to current s 63U of the ACQSC Act, but focusses on the key priority for remedial action; and removes the threat in s 63U to revoke the provider’s aged care approval if the notice is not complied with. A civil penalty can be imposed for non-compliance with the new notice.
In another change, under cl 481 and 482 a registered provider can be given a ‘compliance notice’ for any breach of the new Act. In contrast, under the ACQSC Act (s74EE), such notices could only be issued for breach of the provider’s specific responsibilities listed in Chapter 4 of the Aged Care Act. A civil penalty can also be imposed for not complying with the new compliance notice.
Clause 484 allows the Commissioner to refer in a compliance notice to a provider’s ‘significant failure’ or ‘systematic pattern of conduct’ which can lead to its managers or owners being subject to a civil penalty (cl 179 and 180). This may help address the type of situation which occurred in 2019 with systematic failures in care across Bupa’s nursing homes in Australia.
To allow an immediate response in serious situations, clause 125 allows the Commissioner to vary or revoke a condition of the provider’s registration, or impose a new condition, without notice if the Commissioner reasonably believes that if the action is not taken there will be ‘an immediate and severe risk to the safety, health or well-being of one or more individuals’ to whom the registered provider is delivering services. Clause 427 also allows an authorised Commission officer to enter a residential care facility without the occupier’s consent or a warrant if there is ‘an immediate and severe risk’ to people at the facility; and to give directions to the provider to address the risk. However, as the EM says (p 344), this power ‘can only be exercised in very limited circumstances’ with several pre-conditions in cl 427(2) before it can be used.
While a ‘banning order’ could be obtained under the ACQSC Act excluding an individual from aged care (s74GB), cl 497 of the Bill extends this also to organisational entities that are or were registered providers. As the EM says (p 332), this ‘goes further than the legislative amendments introduced by the Aged Care Act (Royal Commission Response) Act 2022’.