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$148 million boost for nursing homes - government responds to productivity commission inquiry

Federal Minister for Aged Care Bronwyn Bishop today released the Government's response to the Productivity Commission's Inquiry into Nursing Home Payments.

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BB118/99
6 December 1999

$148 million boost for nursing homes - government responds to productivity commission inquiry

Federal Minister for Aged Care Bronwyn Bishop today released the Government's response to the Productivity Commission's Inquiry into Nursing Home Payments. The Inquiry was established by the Government in 1998 to consider the issue of managing change from different payment rates in each state to a uniform national payment for nursing home (high) level care.

The Government's decision is supported by Catholic Health Australia, Uniting Community Services Australia (Uniting Church) and Baptist Care Australia.

The existing coalescence policy will be replaced with a Funding Equalisation and Assistance Package, under which States will reach uniform national rates at different times, over different periods, to give an equitable outcome.

The response provides for an extra $148 million over 6 years to 2005-06 in recurrent payments:

  • Queensland will gain $83.6m, South Australia will gain $14.7m, Western Australia will gain $3.5m and the Australia Capital Territory will gain $0.3m

For these states, this new money will dramatically accelerate their increase in funding. This response clearly addresses the issue of equity between states and provides for uniform national rates to be achieved two years earlier on 1 July 2002; and
  • Victoria will gain $39.6m and Tasmania will gain $6.3m.

For these states, this will ensure ongoing annual increases in funding, each year. The response will also enable more time for the sector to manage the transition, as uniform national rates for Victoria and Tasmania will instead be achieved two years later on 1 July 2006.

The Government will also commit $1 million to help address aged care workforce issues by, for example, promoting the aged care nursing workforce, assisting with retention of the existing workforce and assisting to attract new entrants to that workforce.

"I think it is very important to support measures to encourage a strong and committed workforce for aged care. I'll be looking to a steering committee of industry, consumers, staff and the professional colleges to support development of this initiative," Mrs Bishop said.

The Government's response has been based on lengthy consultations with peak industry bodies (including major owners), consumer groups and others. Their views have been taken into account, along with broader whole-of-government policy on a number of key funding and industrial relations issues.

"I appreciate the way in which the industry leaders have worked with me over this difficult issue. This can only strengthen the partnership between Government and industry in providing high quality aged care services."

The $148 million boost is new money, in addition to the substantial increases in funding delivered by this Government since coming to office.

"Commonwealth payments for residential aged care beds have increased from an average of $18,135 per bed in 1995-96 (Labor's last year in government) to $23,648 per bed in 1999-00.

"These increases will continue into the future. Over the next six years, funding for nursing home (high) care is projected to grow at an annual average of over 5 per cent nationally.

"In addition to providing new beds to meet the demands of our ageing population, this funding will allow an average annual increase of $800 per bed per year across residential care. Average growth in each state, as well as nationally, will be well in excess of predicted CPI increases.

"These increases in funding mean that the industry is faring far better than it would have if Labor's previous funding system had remained in place.

"The Commission's Report, and this response, have been about this Government fixing yet another of Labor's legacies in aged care - an out of date, unfair and inequitable funding system.

"We are fixing these inequities, but ensuring that funding for all states continues to increase substantially. Quality of care for individual older Australians in need of care is the most important issue for me, and this decision will ensure that we continue to improve quality of care and quality of life," Mrs Bishop said.

Media Contact:
David Learmonth (02) 6277 7280, 0419 637 434.