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Home > Ministers > The Hon Justine Elliot MP, Minister for Ageing > Media Hub > Letter from Minister for Ageing Justine Elliot to Approved Providers on the 2008-2009 Budget

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PDF printable version of Letter from Minister for Ageing Justine Elliot to Approved Providers on the 2008-2009 Budget (PDF 28 KB)

13 May 2008

To all aged care providers

Dear Provider

I am writing to you about the aged care measures contained in the 2008-09 Federal Budget.

This budget is about preparing Australia for the challenges of the 21st century and our nation’s ageing population. Australia is facing a demographic shift and we now have the fourth longest life expectancy in the world.

Since our election, the Australian Government has been examining ways to protect older Australians and ensure the long-term viability of the aged care sector.

The Department of Health and Ageing oversees more than 2870 accredited aged care homes with 167,070 aged care beds, providing permanent residential care each year to one in every 10 Australians aged 70 or over.

Currently, there are 2.7 million Australians aged 65 and over. Within 40 years the number of people aged over 65 will almost triple, from 2.8 million today to around 7.2 million in 2047, or from around 13 per cent of the population today to over 25 per cent.

Conditional Adjustment Payment

The Australian Government is delivering a further increase in the level of the Conditional Adjustment Payment (CAP) – which was introduced in 2004-05.

The CAP provided additional medium-term financial assistance to residential aged care providers while encouraging them to become more efficient through improved management practices.

From July 1, we are going to increase the CAP level by a further 1.75 per cent so that it will reach 8.75 per cent. The value of this increase over the four years to 2011-12 is more than $407 million.

Over the next four years, the increase in the CAP announced in the budget will see $2 billion in total CAP payments go to the residential aged care sector.

The Australian Government will undertake a review of the CAP. (The former Government promised a review of the CAP but failed to do so.) This matter is far too important to delay any longer.

The review is expected to be concluded by the end of October 2008. Aged care providers and their representatives will be invited to make written submissions to the review in July 2008.

Aged Care Funding Instrument (ACFI)

The increase in the level of the CAP comes on top of other recent Government initiatives that have seen increased funding to the residential aged care sector. The first Act of Parliament of the new Government, which came into effect on March 20, introduced changes to the funding of aged care in Australia, including the new ACFI (Aged Care Funding Instrument).

These changes will see more than $1.13 billion in additional funding over the first four years invested in the sector.

Once fully phased in, the increases in Government and resident payments will deliver more than $350 million a year in additional revenue, mostly for high care.

Reviews of funding claims

The Government has a responsibility to taxpayers to ensure that aged care residents are getting the appropriate levels of service and care. The Department of Health and Ageing will therefore continue to review the funding claims made by aged care providers.

There will be a temporary increase in the number of reviews of funding claims. The additional reviews will target aged care homes where there were unusual increases in resident classifications prior to the introduction of the ACFI. These reviews are expected to achieve net savings of $18.1 million over two years.

The overwhelming majority of aged care providers are providing top quality care for our nation’s elderly. I have seen world-class facilities and programs in every state and territory, but I have also seen areas where improvement is needed.

I am confident that the aged care industry, and the many older Australians it serves, will see the longer term benefits of a more transparent and accountable aged care industry.

Zero Real Interest Loans

As well as this additional recurrent support, the Australian Government will provide additional support for the construction and expansion of aged care homes in designated areas of high need.

Under a two-part program, access to $300 million in zero real interest loans will be made available to help the aged care sector create up to 2,500 aged care beds where there is a shortage of residential care beds. Applications for the first round will close on 6 June 2008.

Nurses

The Government will make a substantial additional investment to address workforce pressures in the aged care sector. The Government will encourage up to 1,000 nurses to return to residential aged care over five years.
Cash bonuses of up to $6,000 will be available to individual nurses, who have been out of the nursing workforce for more than a year, to return to work in residential aged care. This funding will be offered on a pro rata basis. In addition, $1,000 per re-entry nurse will be provided to the employing aged care home to assist with the cost of re-training and re-skilling the nurse.

The program is part of a larger measure through which the Government will provide $138.9 million over five years across the Health and Ageing and Education portfolios in support of the recruitment and training of a total of 8,750 nurses across public and private hospitals and residential aged care, as well as funding up to an additional 1,170 university nursing places a year.

Transition care places

The Government is addressing the movement between the hospital and aged care sectors by investing an additional $293.2 million over four years to provide an extra 2,000 transition care places to older people who have been discharged from hospital. This will help them recover and regain their independence before making a decision about their longer term care needs.

Planning ratios and improvements to ACAR

The Government will also undertake a review of aged care planning ratios to take into account demographic changes, and improvements to the Aged Care Approval Round (ACAR) process. More details will be available later this year.

The Australian Government is committed to the long-term viability of Australia’s aged care sector and the protection of the nation’s frail and elderly.

This is a responsible budget that meets the challenges of the 21st century. The Government has increased the assistance it provides to those older people who need it.

I look forward to working with the aged care sector to ensure that this additional funding flows into improved care and services for older people.

Yours sincerely

JUSTINE ELLIOT
Minister for Ageing