Now for the future

Several areas need further examination, refinement and reconsideration – including the issues around payment options for residential care – but the important factor is that the reform process has begun, writes Senator Rachel Siewert.

By Senator Rachel Siewert

The final days of the 43rd Parliament were a tense period of time for everyone, particularly for those who have been working on aged care reform for so long.
Along with many older Australians, service providers and aged care workers, I was waiting for the House of Representatives to approve the Senate’s amendments to the Living Longer Living Better legislation.
This wait came in the final critical hour before the House suspended business to deal with the leadership spill, and was a final, dramatic twist on the path to completing these long awaited reforms.
Aged care reform is a significant achievement of this Parliament, and deserves to be held in the same regard as the education and disability reform in terms of its importance to Australia and the long term health and wellbeing of people across the country.
I am proud that the Greens played a role in this process and I am confident that the negotiations we undertook and the amendments we delivered will improve the operation of the package.
The opportunity to consult widely with the community, older Australians, aged care providers and staff was invaluable to me over the many years I have spent working on this issue.
Many positives
As a result of this long campaign, the package delivers a range of positive steps – for older Australians, service providers and sector employees.
There are now more care packages available and people accessing care will have greater control over the services they receive and how they pay for those services.  As well as being more flexible, the system will also be fairer. There will be an expectation that people contribute to the cost of their care if they can afford to do so.
The distinction between high and low care, and the associated restrictions on who could be asked to pay for care, will also disappear. The reforms deliver improved funding for wages- recognising the crucial role played by staff across the sector, and the undeniable links between quality wages and a strong, skilled workforce.
I’m really pleased the Government agreed to add a homelessness supplement to the new supplements for veterans and dementia care, and I welcome the steps to recognise the needs of the LGBTI community, people from culturally and linguistically diverse backgrounds and those with experience of past forced adoption practices.
However the Senate Inquiry and further consultations clearly highlighted areas of concern with the reforms which I sought to address, both through negotiation with the Government and our own amendments.
Provider viability concerns
In order to ensure access and quality of care in the face of rapidly increasing demand, aged care services need to be financial viable and capable of achieving growth. Providers who are already under financial pressure articulated concerns about the transition to new funding arrangements.
Their ability to navigate effectively through the reforms will determine how many more aged care places are available and the quality of those services, and is critical to delivering better aged care for consumers.
For this reason, I paid significant attention to the concerns of industry about the impact of the legislation on their business models.
The most significant change to residential care is focused on the lump-sum payments—formerly accommodation bonds, which are now the RADs [Refundable Accommodation Deposits].
While these reforms put restrictions on the size of the bonds, they increase the total pool of people who can pay their accommodation fee through a lump sum, as well as lift the distinction between high care and low care. It means that more people will potentially be paying for their care via a lump-sum payment.
With this reform, those consumers who may have waited too long to enter care because of the perceived barrier that large, low-care bonds have represented, will have more options available to them, including paying a daily accommodation payment [DAP] (like rent) rather than a bond, and will be able to negotiate combinations of smaller bonds plus daily accommodation payments.
However, as a result, providers have to face less certainty about how consumers will choose to pay their contributions. Evidence to the committee’s inquiry demonstrated that this has implications for their business planning, given that they use that money to build new accommodation. A move away from lump sums will require them to find new ways to attract bank loans to finance their operations and build new facilities and service their debt.
“...short-term liquidity problems will need to be addressed immediately once issues become apparent. We cannot leave those until the general review of the legislation later down the track; we must address these problems as they arise.” 
These are all matters that I have considered very seriously, particularly as there are some very effective and capable providers who run important services for low-income Australians by making low-care beds available or by operating in regional areas. These services have been and will continue performing ongoing juggling acts to make ends meet. These reforms must strengthen, rather than undermine, these services.
The KPMG modelling on the financial implications of this reform has helped resolve some of these concerns by trying to quantify the effects on the capital available to aged-care providers, but I acknowledge that this modelling cannot account for all factors.
The shift in the industry’s financing structures will be gradual, as all existing contracts — in other words, all the people who are currently in aged care— will be grandfathered under transitional arrangements, but short-term liquidity problems will need to be addressed immediately once issues become apparent. We cannot leave those until the general review of the legislation later down the track; we must address these problems as they arise.
This is why one of our key amendments is the establishment of the Aged Care Financing Authority (ACFA) in the legislation to undertake monitoring work with a view to ensuring viability and to provide timely analysis and recommendations to Government about how and when to implement transitional arrangements.
ACFA will serve as specialised body, separate from the Department of Health & Ageing. It remains an independent body, with a similar composition of industry skills and experience to its current membership.
Monitoring closely
I am glad that the government has also responded to our concerns with an up-front commitment to subsidise business advisory services to residential aged-care providers that need assistance to implement the new accommodation payment system.
I have also been concerned about how consumers will be affected by the new co-contribution component, and have paid particular attention to the new home care fees.  While full pensioners will receive greater support under the legislation, part pensioners on low incomes may face some relatively large fee increases, while still facing a range of other cost of living pressures.  This was raised as a potential issue during the inquiry, and is something that ACFA will monitor closely and advise the Government on.
The need to improve the accessibility and quality of care for vulnerable people has been a recurring theme, both through my own consultations and the Senate Inquiry. I am especially pleased of the role of the Greens in ensuring these have been addressed.
Homelessness leads to specialised care needs and complex health issues, including those around mental health. Evidence presented to the Senate Inquiry suggested that facilities offering these care services faced long term viability issues as a result of changes to ACFI and the fact most people in care have considerably less capacity to pay fees.
The Government has agreed provided a funding commitment of $29 million over 4 years for a homelessness supplement payment for providers, along with the fast-tracking of its implementation.
While I welcomed the specialised supplements for veterans and dementia care, I remain concerned by the fact broader mental health needs may be missed and that there is ambiguity as to what access to quality mental health older Australians will have. The review of the legislation should consider the mental health needs of older Australians and consider creating a separate supplement for mental health.
A strong start
The Living Longer, Living Better reforms represent a strong starting point for enhancing Australia’s aged care sector, but the Greens are aware that this will be an ongoing and evolving process.
These reforms only implement some of the Productivity Commission recommendations but the extent of change they recommended is a step further than the Government, and if the truth were told, the Opposition were prepared to go. The inequity about the way RADS and daily payments are treated is a result of this, and I suspect that further work will be needed. Areas will need further examination, refinement and reconsideration, but the important factor is that the process has begun, and the building blocks for reform are in place.
The Greens remain committed to delivering the best outcomes for older Australians and care providers alike, and we will continue to work closely with the sector in the weeks and months ahead.
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