Keynote Address to the Aged Care Association Australia's 2005 Annual Congress
Julie Bishop, the Minister for Ageing, presented the Keynote Address to the Aged Care Association Australia's 2005 Annual Congress in Brisbane.
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24 October 2005
Ladies and Gentleman, I am delighted to be here today.
I'm particularly pleased to talk today about future directions for aged care. In order to do that we have to look at where we've come from, where we are now and where we're going.
By any measure, the aged care sector has been transformed over the last nine years. I think it's fair to say the current Government inherited a system that had suffered from years of neglect on the part of the then government. Standards left a lot to be desired. They were patchy at best. There was chronic under investment in the sector. Morale was low. There was no incentive to innovate and worst of all there was a 10,000 place deficit according to the independent report of the Auditor-General.
So when we came into office in 1996 we introduced the Aged Care Act the following year, and that's when the transformation began. It hasn't been easy but much has been achieved. Accreditation lifted standards and there's absolutely no question that across the country standards have been lifted enormously. There is now a culture of continuous improvement across the aged care sector, with 90% percent of all homes accredited for the full three year period. Currently, 99.9% percent of homes are compliant - only 0.1% percent of homes have a sanction. That's three homes out of three thousand.
Certification was introduced with a ten year plan from 1998 through to 2007 to improve building standards, the built environment and surroundings in which old people live. And we've seen a massive program of rebuilding, refurbishing, extensions and new buildings. In fact, there’s currently about $2 billion of building works in the aged care sector. That represents about five percent of the non-residential building work in this country. Since 1997 the Government has provided $220 million in direct capital grants plus $200 million a year in the concessional resident subsidy.
In relation to staff and the morale problem, we've made staff a priority to ensure that the aged care industry can attract and retain and maintain a professional workforce. A focus on education and training has meant we are now attracting such people. We've got a National Aged Care Workforce Strategy to continue this good work into the future. The aged care industry is now the ninth largest employer in Australia, representing some two percent of our workforce.
In terms of funding, there's been a massive increase in tax-payer funding in aged care, a 140% percent increase since 1996. Some $3 billion was invested in aged care in 1996. This year is will be about $7.3 billion. And in terms of subsidies, $2 billion was invested by way of direct subsidies in 1996, and that has grown to $5.2 billion. Every single month $400 million dollars goes out of Treasury in Canberra into the bank accounts of aged care providers across Australia - $400 million dollars a month to aged care.
In terms of places, we've worked to correct the 10,000 place deficit in 1996. From the period 1996 to 2007 about 96,000 new places will have been allocated across Australia, residential and community. In 2001, we said we'd aim for 200,000 operational aged care places by 30 June 2006. With less than 12 months to go, I can confirm that as at 30 June 2005 we were well on track with 193,753 operational aged care places.
In the two years that I've been minister, I have detected a growing sense of pride in the aged care industry, particularly amongst those who are working as employees in aged care. I travel around the country, I've visited literally hundreds of homes, I've met hundreds of people both in residential and community care - workers, employees, resident, families, friends - and the pride amongst the age care workers is palpable. They've got pride in the quality of care they deliver, in the surroundings in which they now work, in the models of care they deliver and in the professionalism they are now bringing to clinical care.
It was most recently on display for me at the Ministerial Awards for Excellence in Aged Care held in Canberra just two weeks ago. We had 150 nominees for these Awards in seven categories including two new categories we introduced this year in food innovation and resident lifestyle. The judging panel was chaired by Ita Buttrose and included Rosemary Stanton the nutritionist, and Jo Harding, one of the former ministerial award winners. The finalists came from every state - 22 finalists were flown to Canberra and the feeling in that room as the award winners came to the stage was just so uplifting, I wish I could bottle it and I would release it to every media outlet in the country, I would certainly send it to the Opposition for a good start, and to the doubters in the industry.
Aged Care is the Cinderella of the health care system and it is now on a sustainable footing with a bright future. Once a chronic industry, it is now an increasingly mature and sophisticated industry. Once an afterthought in terms of career choices, it is now a career choice attracting people from a range of backgrounds and qualifications. Once slow to embrace change; now ready to innovate.
Last Friday's front page of the Financial Review took me a little bit by surprise - I'm not used to reading a front page story on aged care! It claimed that aged care was the new darling of the capital markets. Quote "one of the hottest emerging asset classes" end quote. Aged care is now attractive to investors. It's one of the fastest growing sectors of the Australian economy and there's no slow down in sight. With the advent of the baby boomer generation, the largest generation in our nation’s history. They are about to become the next older generation of people in need of care.
Between 2011 and 2030 the baby boomers will progressively turn 65, so we have decades of growth in front of us. The demand for aged care services is expected to double in coming decades. Having put it on a stable footing through the Hogan reforms of last year, it’s now ready for a more flexible and customised system of care. I think it’s time for us - industry, government, community - to reflect if we've got the balance right. The balance between government funding and private funding; between government regulation and self regulation; between government responsibility for older Australians and family and personal responsibility for the care of older Australians. Are we ready for consumer directed care?
Well, that's sort of where we are - post-Hogan Part One. We raised the planning benchmark from 100 places to 108 places per thousand of the population over the age of 70. The increase has been in community care places, which has effectively doubled the number of community care places available. Increasing numbers of older Australians want to remain at home as they age, they want the choice to remain independent and mobile and in a place of their choosing. That’s why we’re now focusing through The Way Forward on community care reform. That's why we're focusing on more funding and more services in respite and more support to carers. Under Hogan Part One we also allocated places in advance, we’ve given indications in advance of how many places would be available in the aged care round. 28,000 new places over the next three years so that providers have the opportunity to plan, to put in place strategies, knowing the number of places that are likely to be available.
We've put in workforce measures of some $101 million dollars. This builds on the 02/03 Budget initiative of $50 million dollars for workforce issues. And now 900 of the 1000 scholarships in aged care that we promised would be in place by 30 June 2006, 100 of those 1000 scholarships are on offer and we're starting to see the graduates from that scholarship program. Also under that 02/03 Budget initiative, 470 homes - and that equates to 5700 workers - have now received opportunities for education and training. Those from smaller retirement homes have had access to some 70 education programs. Under Hogan Part One, 1600 nursing places are now available at universities throughout Australia. 15,750 people can have access to training programs to raise their qualifications to that of enrolled nurses. 5250 enrolled nurses can undertake medication management courses. 8000 carers can undertake English language and literacy courses.
Plus, we've recently announced dementia as a national health priority and within the total $320 million dollar package there is $25 million dollars in extra funding for dementia specific training that will enable 9000 residential care workers and community care workers to undertake dementia specific training. This includes 7000 community workers - who don't come across people with dementia every day and perhaps don't have the skills to manage the situation appropriately, such as police, ambulance drivers, fire fighters and the like.
We also introduced the new RCS pilot, the ACFI pilot. We're looking for the outcome of that trial which is being used in 700 homes with 7000 residents across Australia. We have instigated an e-business culture to ensure that homes are operating on-line. We need to streamline the paperwork, and the administration and the business practices associated with aged care and embrace the benefits that information technology can bring. That’s why we boosted funding to aged care by that extra $152 million dollars in June, calculated on the basis of $1000 dollars per resident. That is designed to ensure that aged care providers focus on the benefits that information technology can bring. I opened a home recently in New South Wales and they had just implemented their on-line system with the use of palm pilots and all carers and nurses had palm pilots. I asked the director of nursing if it took long to implement. She said it involved a about a six month program but that everybody, even those who'd never turned on a computer before, had undergone training and were now using the palm pilots. I asked her how much time she saved using on-line care plans and the like and she estimated it was saving her three hours a day in administration time. We've now put aged care in a position where it can embrace information technology and the benefits are there for greater efficiency in the aged care sector.
We also, in the Hogan reforms, made a payment of $520 million dollars in a one off capital payment and as I travel around the country I can see the good use to which that money has been put. And importantly we introduced the Conditional Adjustment Payment. This will assist in the viability of the aged care sector, improve the financial management of the sector, the corporate governance and the strategic outlook. Essentially, in the first year, providers were required to confirm that education and training opportunities were provided to staff. In the second year, this year, we've introduced the General Purpose Financial Reporting requirement. This will build integrity into the aged care sector, financial management will improve, the shoebox accounting mentality will be a thing of the past and it will be an attractive industry for financial investment. The Conditional Adjustment Payment is cumulative. It started at 1.75% percent of the annual index subsidy, and it is now 3.5%, next year 5.25% percent, the year after 7% percent and is then up for review.
Also significantly we introduced a new prudential scheme for the holding of bonds. This was designed to strengthen the existing provisions, improving the management and holding of bonds, increase the level of information that is available to consumers and put in place guaranteed repayment of bonds. I like to think of it as strengthening the fence at the top of the cliff, putting in place the three standards of record keeping, disclosure and liquidity and then having a safety net at the bottom of the cliff in case something falls over. So the Government is guaranteeing the repayment to residents or their families of a bond balance should there be a default through liquidation, bankruptcy, inability to refund repayment. Now this is a huge step forward in putting confidence in the sector.
So the industry has in place the building blocks. Much has been achieved, but much is still to be done. One danger that we must avert is that of complacency. In business speak, unless there's a sense of urgency to continue to reform, to continue to change, to respond to the changing environments, it leads to complacency. And in this context I'm talking about complacency on the part of industry. For the last nine years, the Government has set the reform agenda. The Government has been the initiator and the implementer of change. If there's a problem, the Government must fix it. If there's a crisis, the Government must respond. If change is needed, the Government must drive it. It's been seen to be more productive to spend your money on a fighting fund to take on the Government rather than investing in change from within.
I think the new prudential scheme was an example. The industry was taking advantage of the ability to charge bonds, interest free - unsecured loans in effect. While prudential arrangements were in place, they did need review as Professor Hogan recommended the need to strengthen the arrangements to respond to the rapidly increasing value of bonds held across the aged care sector, now some $3.7 billion dollars. Imagine the impact on the industry if there'd been a default. To date, there's not been a default and I can put that down to a lot of good management and behind the scenes work rather than any other particular factor. But just imagine the impact on this industry if there'd been a default. Yet no action came from the industry. There was no industry solution to maintaining the confidence in the sector. There was little attempt to self-regulate or self insure and Government has come to the party and put in place a guarantee that if a provider defaults for whatever reason and goes into bankruptcy or liquidation, the Government - the tax-payer - will pick up the tab. Now I'm not trying to be overly critical here, I'm just stating a fact. That is why the aged care sector is one of the most highly regulated sectors in the entire Australian economy, heavily regulated in terms of quality and quantity and price and I fear it will continue to be so unless industry leads change. We need to identify leaders within industry who will innovate, who will find solutions, who will set standards, who will be the role models, and who will be the forces for change in the future.
The next challenge that the aged care sector faces is the baby boomer generation, no question. It is the generation that will have greater wealth and assets than any previous generation. It will certainly have higher expectations. They are lovers of choice. They are averse to one size fits all solutions. They are averse to institutionalised thinking of any kind. The Government and industry are focused on the level of demand that’s ahead of us. The types of services that people will be seeking, how they will be delivered, who will deliver them, who will pay and where the services will be delivered.
Now the opportunity to focus on these challenges will come about through what I will call Hogan Part Two. It's a discussion paper that's being drafted and will be released shortly. It's based on the Hogan Review, essentially the recommendations and the longer term options that were not covered in the first response from Government. The themes that emerge from the balance of the Hogan Review include more choice, more competition and greater fairness. More particularly, the discussion paper gives industry and the wider community the opportunity for discussion amongst themselves and dialogue with Government as we tackle issues such as providing care recipients and their families with greater choice and more control over their care.
How can choice be increased whilst ensuring that aged care remains affordable for recipients and taxpayers? How can care recipients and their carers be helped to make more informed choices about their care options? How can choice be increased without adversely impacting the viability of existing service providers and ensuring continuity of care? How can competition between service providers be promoted? How can aged care subsidies be better targeted? How can we improve fairness and transparency and the simplicity of aged care fees? How can the fairness of them be improved? Can the rules governing aged care fees and subsidies be simplified and the aged care retirement income support systems be better aligned? We have had the opportunity to address those issues through the course of the discussion paper. I would encourage at every opportunity your involvement in the consultations that will follow the release of the discussion paper. The answers will come from you. The Government has no set position on the options in the policy paper so we will be looking for responses from the broader community, from the financial markets, from consumers generally and from the industry itself.
My final thought for the day on aged care. I believe that we still suffer from an image problem and there are many complex reasons for this. Some of them are quite out of our hands but they are matters that we can seek to address. Aged care essentially means people are confronting their own mortality. It can often be a traumatic experience for people who have to come to terms with the fact that they need care or if their loved one or family members needs care. We like to think we live forever. We want to maintain our independence and our mobility and our dignity and our choice. And the moment we feel that's been taken away from us it can be very traumatic. It brings a whole range of deep family issues to the fore. There's a lot of guilt - a lot of guilt surrounding aged care. From the industry's perspective there has been a problem with the historical image. Institutionalised care? People still think of eight bed wards and Nurse Ratchet administering medications. The image, no question, is perpetuated by the media. They unashamedly look for horror stories. And in the past, they could find them. One journalist in the Canberra Press Gallery told my new press secretary that unless there's a drama they're not interested in reporting what's going on in aged care. They acknowledge the transformation, they acknowledge privately that the perception is wrong, but are not prepared to do anything about it. The industry's got to stand up for itself. Put together a fund, by all means, but use it for a PR campaign to showcase who you are and what you do. Change community attitudes about the wonderful work that's being done in aged care. Promote the good news, even at a grass root level. I spoke to an aged care provider who told me that when someone says something positive about care they're receiving, or a family makes a positive comment, she asks them to put it in writing and send the letter to the editor of the local newspaper. And they do, and every now and then, it gets reported. If we did that across the country, if people put in place simple changes such as putting it in writing and sending to the media every time there's a good news story, things would change over time.
We also have to respond to negativity as and when we see it, each and every time. When SBS does the Insight program people ought to be writing into local papers or ringing them up demanding that corrections be made and misleading impressions changed. We've got to promote the industry so we get on those programs to put forward the alternative view.
And don't talk the industry down. There's plenty enough people who'll do that. Present the positives and there are so many to present. We'll never attract a skilled workforce if we continually moan about a crisis.
The Government is absolutely committed to our mission of a world class system of aged care that is high quality, affordable, accessible and flexible enough to meet the individual needs and choices of Australians. I will champion your cause at every opportunity and the Government will continue to work in partnership with you as we embark on the second stage of the industry's transformation. But the changing perception about what aged care is and what it stands for will only come if people believe in you and what you do. The industry does have a bright future. I hope that all of you will continue to play an active role in determining its destiny. I wish you well for your conference.