Australian Government response to Senate Standing Committee on Finance and Public Administration Report: Residential and Community Aged Care in Australia
Response to Recomendations 1 to 10
The Committee made 31 recommendations. The Australian Government response to specific recommendations is provided below.
Recommendation 1
The committee recommends the establishment of a national aged care forum, reporting directly to the Minister for Health and Ageing and coordinated by the Department of Health and Ageing, to consider, on an on-going basis, current and future challenges to the aged care sector.Response
The Australian Government supports Recommendation 1 of the Committee.
The Australian Government established the Ageing Consultative Committee in June 2008 to provide the Minister for Ageing with relevant advice, on an on-going basis, on current and future challenges to the aged care sector. The Committee’s membership includes for-profit and not-for-profit care providers, consumer groups, and professional and union bodies.
Recommendation 2
The committee recommends that the national aged care forum establish a taskforce (or equivalent body) representative of all involved aged care stakeholders including clients to action and where possible implement determinations of the national forum.Response
The Australian Government supports in principle Recommendation 2 of the Committee.
The Australian Government’s Ageing Consultative Committee already has the capacity to establish working groups as needed to address issues that may arise. Recent working groups have developed a Charter of Rights and Responsibilities for Care Recipients in Community Care and a detailed proposal for the phased implementation of consumer directed care into community aged care programs. A Quality in Community Care Reference Group has been established to provide advice on issues related to quality assurance in community care and input, as requested, on specific aspects of the development of enhanced quality assurance mechanisms.
The Australian Government has also established an Aged Care Workforce Committee to assist the Department of Health and Ageing in formulating advice to the Minister on key areas relating to the aged care workforce.
Recommendation 3
The committee recommends that the Department of Health and Ageing, in cooperation with the suggested taskforce and in partnership with all involved stakeholders including clients, undertake an all-encompassing review of the Aged Care Act 1997 and related regulations. The review should:- equally examine the provision of residential and community aged care services in Australia with consideration of both current and future challenges in the provision of aged care services;
- provide future projections to enable both short and longer-term sectoral planning.
The Australian Government supports in principle Recommendation 3 of the Committee.
The Australian Government has commissioned the Productivity Commission to conduct a public inquiry into Australia’s aged care needs over the coming decades. In undertaking the inquiry, the Commission will develop options for further structural reform of the aged care system so it can meet the challenges facing it in coming decades. In particular, the Commission will:
- examine the social, clinical and institutional aspects of aged care in Australia, building on the substantial base of existing reviews into this sector;
- address the interests of special needs groups;
- develop regulatory and funding options for residential and community aged care (including the Home and Community Care program);
- examine the future workforce requirements of the aged care sector;
- recommend a path for transitioning from the current regulatory arrangements to a new system that ensures continuity of care and allows the sector time to adjust;
- examine whether the regulation of retirement specific living options should be aligned more closely with the rest of the aged care sector; and
- assess the fiscal implications of any change in aged care roles and responsibilities.
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Recommendation 4
The committee recommends that the Department of Health and Ageing in association with the suggested taskforce and in consultation with all aged care stakeholders including clients undertake analysis to establish benchmark of care costs.Response
The Australian Government does not support Recommendation 4 of the Committee.
A similar recommendation was made by the Productivity Commission in its 1988 Inquiry into Nursing Homes Subsidies. The Australian Government at that time did not accept the Commission’s proposal as the most appropriate way to assess the adequacy of Government subsidies and resident contributions in meeting average costs.
The Australian Government considers that the sustainability of the industry as a whole is best measured by:
- macroeconomic indicators of viability of the industry such as the level of building activity in the industry, the level of interest expressed by providers in entering or expanding their involvement in the industry, and the prices paid for ‘licences’ to operate in the industry; and
- detailed economic simulations of high care and low care homes to see what factors influence the viability of individual homes.
Recommendation 5
The committee recommends that the Department of Health and Ageing recommence publication of Audited General Purpose Financial Reports as soon practicable and continue to publish such reports annually as a matter of course.Response
The Australian Government supports Recommendation 5 of the Committee.
The Department of Health and Ageing has published the deidentified data sets it has derived from the Audited General Purpose Financial Reports of approved providers of residential aged care for 2006-07 and 2007-08. It will publish the deidentified data set for the 2008-09 Audited General Purpose Financial Reports as soon as it is available.
In addition, through the National Health and Hospitals Network — Aged care — increasing business efficiency measure in the 2010-11 Budget, the Australian Government will provide $7.0 million over the next four years (including $0.3 million in capital) to improve the business efficiency of aged care providers by establishing a new provider benchmarking system. The new benchmarking system will allow aged care providers to compare their operational and service performance with other providers, and identify areas where they can improve their performance. This information will also be available to consumers to inform their choice of an aged care service provider.
Eligible aged care providers will also have access to financial advisory services to improve their operational efficiency. This will include financial advice on strategic planning, business analysis, operational reviews and human resources management.
Recommendation 6
The committee recommends that the Department of Health and Ageing review the Audited General Purpose Financial Reports with an aim to identifying any necessary reporting changes to ensure that the information available provides a clear and comparative understanding of provider performance.Response
The Australian Government supports in principle Recommendation 6 of the Committee.
To satisfy the financial reporting eligibility requirement for the Conditional Adjustment Payment, a residential aged care provider must prepare a financial report that:
- is a general purpose financial report within the meaning of Statement of Accounting Concepts SAC 2 ‘Objective of General Purpose Financial Reporting’;
- is in accordance with the accounting standards;
- gives a true and fair view of the financial position and performance of the entity for the financial year;
- has been audited by a registered company auditor (within the meaning of the Corporations Act 2001), or a person approved by the Department of Health and Ageing.
In addition, through the National Health and Hospitals Network — Aged care — increasing business efficiency measure in the 2010-11 Budget, the Australian Government will provide $7.0 million over the next four years (including $0.3 million in capital) to improve the business efficiency of aged care providers by establishing a new provider benchmarking system. The new benchmarking system will allow aged care providers to compare their operational and service performance with other providers, and identify areas where they can improve their performance. This information will also be available to consumers to inform their choice of an aged care service provider.
Eligible aged care providers will also have access to financial advisory services to improve their operational efficiency. This will include financial advice on strategic planning, business analysis, operational reviews and human resources management.
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Recommendation 7
The committee recommends the establishment of a nationally consistent methodological approach to data gathering and research on the financial status of the residential and community aged care sector. Towards this goal, the committee recommends the establishment of a roundtable of key stakeholders engaged in such research and facilitated by the Department of Health and Ageing to discuss and agree upon common indicators and definitions to enable comparative analysis.Response
The Australian Government supports in principle Recommendation 7 of the Committee.
The Australian Government is currently considering these issues at a whole-of-government level. An overall review of reporting requirements and a commitment to reducing red tape for non-profit organisations has been made by Business Regulation and Competition Working Group of the Council of Australian Governments. This initiative will review: the operating structures for non-profit organizations and supporting legislation; fundraising licensing requirements and supporting legislation; governance and financial reporting; and the role of regulators.
In addition, in its response to the Report of the Senate Standing Committee on Economics’ inquiry into disclosure regimes for charities and not-for profit organisations, the Australian Government indicated that it was considering policy reforms in response to the review by the Treasury of financial reporting by unlisted companies under the Corporations Act 2001. The response also indicated that the Government would develop a Commonwealth grants policy framework, including arrangements to minimise unnecessary red tape for grant recipients. This framework came into effect 1 July 2009 and is referred to as the Commonwealth Grant Guidelines.
The Australian Government has already moved towards consistent financial reporting in the residential aged care sector through the requirement that aged care providers produce General Purpose Financial Statement in accordance with all Australian accounting standards, and audited by a Registered Company Auditor, in order to be eligible for the Conditional Adjustment Payment.
In addition, through the National Health and Hospitals Network — Aged care — increasing business efficiency measure in the 2010-11 Budget, the Australian Government will provide $7.0 million over the next four years (including $0.3 million in capital) to improve the business efficiency of aged care providers by establishing a new provider benchmarking system. The new benchmarking system will allow aged care providers to compare their operational and service performance with other providers, and identify areas where they can improve their performance. This information will also be available to consumers to inform their choice of an aged care service provider.
Eligible aged care providers will also have access to financial advisory services to improve their operational efficiency. This will include financial advice on strategic planning, business analysis, operational reviews and human resources management.
Recommendation 8
The committee recommends that the Department of Health and Ageing in association with the suggested taskforce (or equivalent body) and in collaboration with the Australian Institute of Health and Welfare review and address deficiencies in information in the aged care sector.Response
The Australian Government supports Recommendation 8 of the Committee.
The Department of Health and Ageing will continue to work with the Australian Institute of Health and Welfare to ensure the availability of reliable statistical information on the aged care sector.
Recommendation 9
The committee recommends that the Department of Health and Ageing undertake a 'stress test' of the aged care sector in order to measure the sector's financial wellbeing.Response
The Australian Government supports in principle Recommendation 9 of the Committee.
The Australian Government continually assesses that the sustainability of the industry by monitoring:
- macroeconomic indicators of viability of the industry such as the level of building activity in the industry, the level of interest expressed by providers in entering or expanding their involvement in the industry, and the prices paid for ‘licences’ to operate in the industry; and
- detailed economic simulations of high care and low care homes to see what factors influence the viability of individual homes.
Recommendation 10
The committee recommends that the Department of Health and Ageing, in association with the suggested taskforce, undertake a review:- to identify the costs and resources required to meet new regulation, accreditation and compliance measures with a view to rationalising the administrative processes as required; and
- to identify more cost effective means of meeting the requirements of the compliance framework.
Response
The Australian Government supports in principle Recommendation 10 of the Committee.
The Australian Government considers the costs of compliance when making regulation and the costs of regulation introduced in recent years has been assessed as minor.
The Australian Government currently has a number of processes underway that will examine key aspects of aged care regulation and these will provide opportunities to consider the scope to streamline regulation and reduce administrative and compliance burdens. These include the Productivity Commission’s Caring for Older Australians Inquiry and the review of aged care accreditation standards and processes.
The Australian Government is also currently working to implement recommendations made by the Productivity Commission in its review of regulatory burdens in social and economic infrastructure services.
The development of a nationally unified aged care system will also provide the Australian Government with a platform to streamline provider administrative and compliance processes. Top of page