Op Ed: Minister responds to ACFI debate

In this right of reply, Minister for Mental Health and Ageing, Mark Butler, responds to comments made by aged care providers and others concerning recent changes to the Aged Care Funding Instrument.

Above: Minister for Mental Health and Ageing, Mark Butler

Last week, Australian Ageing Agenda published on this website, a satirical opinion piece written by the CEO of Amana Living in WA, Mr Ray Glickman, in which he criticised the Minister and the Government, saying the July 1 changes to the Aged Care Funding Instrument (ACFI) were taking funding from the aged care sector in a deceptive manner and putting the care of frail elderly Australians at risk. The article sparked many angry and emotional responses in the form of comments to the story. In this opinion* piece, the Minister has responded to the debate, denying any ‘smoke and mirrors show’ and urging those concerned to step back from the more emotional claims, focus on facts and consider the reform package in its entirety. [Editor, Keryn Curtis]

By Mark Butler

Growing older in Australia, although easier and more comfortable than it used to be, can still be tough. And making the decision, when the time comes, to seek aged care in a residential facility is difficult and emotional. 

I understand that.

Likewise I respect the hard working aged care workforce. underpaid, they go about their important work day-in, day-out. The overwhelming majority of aged care providers also work hard to provide quality care for older Australians while meeting a range of regulatory requirements.

I am ready and willing to cop the flack for the imperfections in the aged care system. It’s in the job description. 

However the current debate on changes to the Aged Care Financing Instrument (ACFI) is largely based on omission, half-truth and downright mistruth. The article by Ray Glickman in AAA (3 July 2012) is perhaps the worst example.

There are a number issues raised by Mr Glickman which I would like to correct.

Firstly, the Government does not expect providers to do more with less. Aged care funding has grown substantially in recent years. The Accommodation Supplement is around 40 per cent higher than a few years ago, and is set for further growth in 2014. Daily fees have reflected the record increases in pensions under this Government and aged care subsidies have seen unprecedented growth with the introduction of the ACFI – on average by 30 per cent above indexation per resident in just four years. In the next five years, that growth per resident will return to its historical trend of 2.7per cent above indexation, something that was understood at the introduction of ACFI in 2008 and reinforced late last year.

Mr Glickman’s assertion of a ‘cut’Â to care subsidies of $500 million is sheer fiction. The Budget papers show clearly that residential subsidies will grow by $310 million this year, in line with the trend described above. His example of the impact on ‘Enid’ similarly does not reflect in any way the modest changes that have been made to the Instrument.

If providers were unaware of impending changes I would suggest they speak with their peak bodies who were involved in these discussions with Government – as their representatives – since late last year.

There is also clear evidence that the growth in care subsidies is not always being spent on care workers. While median annual ACFI subsidy growth from 2008-09 to 2010-11 was 8.4 per cent, wages growth was reported at 4.2 per cent. Given that ACFI subsidies make up around 70 per cent of provider revenue and wages make up around 70 per cent of provider costs, there is clearly a disjoint between care subsidies and the cost of care. So for all the workers out there, this is a much better deal. That is why aged care unions were so unequivocal in their support of the Living Longer Living Better package – because the $1.2 billion Workforce Compact is a better way to get wages growth and better conditions for workers.

The aged care workforce has been identified as a key component of the Government’s reform package. Unlike some providers who have over-claimed through the ACFI without passing on gains to the workforce, the Government believes additional funding for care should largely go to workers – workforce representing around seventy per cent of care costs. Based on this recognition, the Government will provide $1.2 billion over five years to ensure we have a quality aged care workforce into the future. On top of more than $400 million allocated to training, that’s the biggest investment in our aged care workforce ever announced.

I have committed to convene a group of key stakeholders to meet with the Department of Health and Ageing to monitor the ACFI on a monthly basis. This will ensure that any impacts on providers, particularly those operating in rural and remote areas, are identified early and are able to be addressed in a timely manner. I encourage those in the sector who want to play a constructive role in the implementation of Living Longer Living Better to engage with this process. 

I would urge those who are concerned about aged care funding to take a considered view of the ACFI changes. I would urge them to step back from those who make outrageous claims and to focus on the facts. Finally, I would urge all those with a stake in aged care to consider the reform package as a whole and not just view it through the tunnel of ACFI.

Living Longer Living Better is a once in a generation reform package. There is an historic investment in home care with 40,000 new home care packages provided over the next five years, which will almost double the number of packages currently available. There is $268 million to tackle dementia and providers will realise significant opportunities through the long awaited abolition of the distinction between high and low care accommodation charging.

This is not a ‘smoke and mirrors’ show and the level of debate is lowered by claiming that it is.


* The views represented in this opinion piece belong to the Minister for Mental Health and Ageing. 

Tags: acfi-reform, mark-butler, op-ed, ray-glickman, right-of-reply,

50 thoughts on “Op Ed: Minister responds to ACFI debate

  1. I am pleased to see that Minister Mark Butler has responded to my Op Ed about the cuts to ACFI.

    The Minister makes various points:

    The cuts aren’t cuts
    Funding has grown
    Providers are not passing on funding “improvements” to workers
    LLLB is a good package
    Critics of the ACFI cuts are being emotional

    Cuts aren’t cuts

    The fact of the matter is that organisations like mine will have an effective 8% cut. A three per cent reduction in anticipated funding to meet need and no compensation for a 5% increase in costs.

    Funding has grown

    Yes, funding has grown. But obviously not at the rate required to meet the increasing dependency of rapidly increasing numbers of people needing care. If funding were adequate across the board, WA would not now be 3,500 residential care beds behind target.

    Providers are not passing on funding “improvements” to workers

    My organisation has subsidies at 56% of revenue and labour is 72% of costs on extremely tight margins. This is coupled with providers battling against other significant cost increases , e.g. power, utilities, maintenance, food, insurance, medical supplies etc. If you look at the profitability statistics emanating from Grant Thornton and Stewart Brown you can see that providers are hardly making super-profits.

    My organisation is by policy the highest wage paying provider in WA, so I guess we would be exempt from such criticism.

    LLLB is a good package

    While LLLB has some positive elements without a doubt, the fact remains that there is next to no new money and the funds to pay for workforce are being recycled from much needed funding for care. This package has unfortunately “cherry-picked” from the PC report and it will not generate the investment required to provide a sustainable sector into the future.

    Critics of the ACFI cuts are being emotional

    Yes, there is a lot of emotion out there. It comes from outrage. The staff of aged care providers have been holding this pathetically funded sector together for so long on the back of their own efforts that they are rightly offended when real terms cuts are made to the funding they have been relying upon to keep going. And they ask themselves why? The answer clearly does not result from some assessment by a heartless government that the anticipated level of funding for ACFI wasn’t needed. The answer is that the cuts were necessary for the politics of delivering a surplus budget. Mr Butler, that’s what makes people emotional!

  2. Minister,

    ‘LISTEN’ to those in the aged care indusrty and not your own Government’s and your Department’s reteroic. Try not to be defensive and justify the indefenceable, but rather ‘man up’ to accept you have got it wrong.

    ‘LISTEN’to what the industry is saying about your Government’s failure to deliver effective reform to aged care.

    ‘LISTEN’ to the indusrty’s overwhelming endorsement of the Productivity Commission’s recommendations and ask yourself why your Government chose to ignore the core fundamentals of those recommendations and rather adopt what is a half baked set of unworkable rules to be effective in 2014 and take a decade to bring to full effect.

    ‘LISTEN’ to the messages from the industry on why the investment in the sector has dried up.

    ‘LISTEN’ to the independent expert reports (Grant Thornton and Stewart & Brown) that spell out the financial dire straits this aged care industry and its Providers are in.

    Stop throwing global aggregated numbers around which are ‘smoke and mirrors’ – of course more money is being spent on aged care funding in aggregate. It’s because more people are ageing. It’s the funding per person’s care that is shrinking.

    You say Providers should not focus on ACFI but the total reform package. What a strange comment to make. ACFI is the oil to the whole aged care engine – so what happens to an engine when no one pays attention to the oil? Exactly, it stops!

    There has to be something in the ‘smoke and mirror’ claim when the Government gives with one hand and brags about that and then promptly takes it back with the other (remarkably without fanfare) then makes the claim as you have done above regards Government funding.

  3. Why not target the providers who are over claiming or not using ACFI revenue to pay for care, rather than hitting all providers with the same big stick?

  4. Mr Butler, my dear mother of 86 years is currently living in a residential care facility and it remains very disturbing to her and the family that there may be less staff to provide the care due to staff numbers being cut in line with expected income reductions from government subsidy fees.Of course aged care funding continues to grow to meet the needs of an ageing population, however what your smoke and mirrors trickery does is reduces the rate that aged care providers are to be paid for the same service that attracted a higher rate just a fortnight ago. Your government has proven to be one of the stingiest I have ever encountered. How dare you tell us that you have provided more when you have in fact taken first so you can give some back. That’s Indian Giving is it not? Last week we all saw the introduction of the carbon tax which aged care providers again have not been adequately compensated for and as all the prices increase because of electricity, gas and water charges increase. That’s something else which will bite into the bottom line and impact upon the provider’s ability to continue doing the essential work they do for our elderly. Caring for older Australians is as far from the truth that the Gillard government has been ever about. Shame on you all

  5. It is interesting to see the minister respond to the article and stand committed to the governemnt party line.
    The reality that is sadly being missed is the reality of the impact of the ageing population. More people are moving into the elderly in need of care brackett, and this means an increase to the funding claims.
    It is very interesting to see that the prefered model of delivery that is taking a presidence is community based care. While it is great to see the expressed wishes of the ageing population being listened to when they say they want to live and die at home. The problem with this narrow minded view and philosophy is that we will be neglecting those that are unable to stay at home , can not stay at home or have no home to stay in. The demented will soon be in such large numbers in the community the burden to care and carry the cost will far outway the problems we face today.
    The families in the community will soon be in need to deal with their own social & mental health related issues associated to care of their loved ones. RACFs will be in great demand for short periods of care or end of life processes. the cost to meet the need will be high, and the training needed for the staffing and skills sets will be huge.
    This issue and debate is and will be heavily emotional in regards to aged care needs. The money will be the important issue as it now begins to tap the foreheads of many people, and tap the buckets of unplanned funding scemes, and tap into the percieved inheritence of the younger generations .
    Somebody has to pay for the care, the government seems to be telling older Australians that it wont be them paying, nor will it be the older person paying. In the case of residential care it seems that the provider wont be paying either. the workers are being paid the least and the merry go round is not going to stop.
    I urge the minister to be very holistic and objective to the industry needs now and believe their is stil light at the end of the tunnel…..some real work needs to be done to provide a balanced platform for the future.

  6. $400 million dollars for more training, training providers are rubbibg their hands together with glee. More trained staff and less money to pay them with. Can you see the irony in this Mr Butler?

  7. It is great to see the Minister responded to this debate. He says that the article is largely based on omission, half truth and downright mistruth. I beg to differ Minister Butler. This is about real people getting real care who are getting real funding cuts by your Government. A statistician with his head in the freezer and his feet in the oven will say that, on average, everything is just fine. Minister Butler, you have again used gross generalities to imply everything is fine and we have it wrong. I will take your generalities one by one.
    CARE NOT ACCOMMODATION – This cut is a cut to care funding not a cut to accommodation funding which obviously is not adequate anyway as is evidenced by the lack of investment in residential care beds in our State of Western Australia. You keep using different figures to explain why this cut is not a cut but it still ends up with the same outcomes…less real funding for a real resident with the same care needs than before your cuts. Take a walk through a residential facility of today and compare it to a residential facility of the past and the people are much frailer. They come in frailer, they become frailer while they are with us and of course they should be funded more for that care. To somehow say that it is not reasonable to have growth in funding for this frailty is counter to what ACFI was designed to do in the first place.

    CUT TO CARE SUBSIDIES IS SHEER FICTION – The maths are, if you have care costs that are rising by 5% and the COPO indexation (now announced as 1.6%) has been added, then cut from subsidies, then that = a real funding cut. If you then include a change to the weightings to make it more difficult to achieve funding in the ADL and CHC domains then that = a real funding cut. The net impact on our budget this year is estimated to be $1.5M and we are typical in the industry then that works out at (according to market share) a cut of $500M. DoHA told providers at the meetings cobbled together in late May and early June which we attended that their target was a $500M cut to ACFI. This is not fiction.

    ENID AND MODEST CHANGES – Enid is a real person living in one of our real facilities who will get a real funding cut if she was to go to hospital and require reappraisal on her return. We have 187 real people who would be affected by the funding cut either in the ADL Domain or the CHC Domain or both ADL/CHC Domains as in the case of Enid. This is less subsidy for the same care. Every resident will in effect also have their funding cut by 1.6% because the prices for ACFI have now been fixed at 1 July 2011 prices until 30 June 2013. That is not a modest change.

    CONSULTATION – New proposed weightings were provided via peak bodies to a select group to model (including our organisation) in late May. These were modelled and the figures were catastrophic. Then within days there were two other options put to us which we modelled with a lesser impact but still an impact of at least a $500M cut across the industry. This was not a slow, informed and valid consultation process. It was only in May 2011 that the Government released its report into ACFI which concluded ‘the design of the ACFI is generally working well in meeting objectives to match funding to care needs by identifying the significant drivers of relative costs, with some areas where targeted changes could be considered.’ (DoHA Review ACFI May 2011, p87) Interestingly the targeted changes were about making the tool more flexible for the provider NOT to make it fund the resident less.

    WHERE HAVE THE 11/12 FIGURES GONE? – you have quoted growth averages for 2008/09 to 2010/11 what happened to 2011/12? Those figures are known to have shown a real slow down of ACFI growth.

    SUBSIDIES, COPO AND WAGES – Indexation has been removed from ACFI for 2012/13 with the announced cuts, how do we fund wages growth? Our subsidies are 56% of revenue and our wages are 72% of costs, not your averages of 70% and 70%. How can your cut of 1.6% to subsidies plus the additional cuts to income associated with weightings make it easier for a provider to pay its staff? It just doesn’t make logical sense.

    OVER-CLAIMING – the DoHA has all the data about claiming behaviour of providers. If DoHA has evidence of over-claiming then we ask you to target those providers and use all the powers you have at your disposal to get those subsidies back instead of getting all providers to pay a levy.

    $1.2B OVER 5 YEARS – This is recycled funding. You have announced you will remove $1.2B from ACFI funding currently within the sector and pay it back to providers under the workforce compact. Same money, same pool, no more investment. On top of this, the extra ACFI clawback from re-weightings and cutting COPO out of the ACFI price in 2012/13 will remove an extra $430M from funding. This is defunding aged care, not boosting funding.

    STAKEHOLDER GROUP TO MONITOR ACFI CHANGES – why do you need another group? The modelling was done, it showed the massive cut to funding and those involved were not listened to. Why would you and DoHA listen this time?

    Mr Butler, please stick to the facts and stop misleading the Australian people. Feel free to sit down with me and my organisation and we will show you just how real people will get real funding cuts through your actions.

  8. Mark Butler makes some telling points in his response to Ray Glickman’s piece The key ones for me are
    1. Aged care reform is not just about more money for nursing homes
    2. Providers need to engage in a professional manner in this debate
    , that is what their associations including their Directors are supposed to be for .
    3. Governments have been reluctant to move out from behind their ‘purchaser/provider’ shields on aged care since 1997

    There is no way forward if these ( and maybe other points) are not addressed)

  9. Come on Minister…do you really beleive that anybody in Aged Care beleives you anymore? We eat,sleep and breathe this life not for any other reason than we beleive our elderly generation deserve the best! That is why we get angry, emotive and down right disgusted when Governments such as yours do what you are doing. 12.4% cut to our ACFI is not funny and we are one of the innocent providers. Read your own timetable please because I cannot see where our facility will benefit until the following financial year. We will hang on tight this year but I bet we have more evidence to prove our point this time next year…do you care? No, probably not as you won’t be there to see your own plan to fruition. Stop treating us as fools and get realabout the problems we face. Better still come and do a few shifts then tell us we are ok!

  10. I am pleased to see that Minister Butler is taking time to respond to the plight of people who live in residential facilities, this is not about providers but the people who live in Nursing Homes and the reduction in funding to ensure appropriate care

  11. Very laissez-faire response from Minister Butler.

    Minister, you seem to be deflecting responsibility for this situation by equating your “job description” as the reason to “cop the flack”

    You misunderstand is that it is not “the system” but your actions which shape the future of Aged care, which along with support from the Gillard Government YOU have created that are being criticised.

    “Aged care funding has grown substantially in recent years” – in fact the requirement for aged care due to the baby boomers and aging population is grown at a rate that has not been reflected by funding. Applying a broad brush rule of ‘inflation’ does not apply in this industry and you of all people should know this.

    My 91 year old grandmother, her carers and in the coming years my baby boomer parents need more from you than words. We need Government funding!

  12. Minister Butler, thank you for your response, nonetheless I do not believe that you fully understand the levels of anger and outrage you together with your ill-informed advisors have caused to aged care providers across Australia.
    The announcement that the Dept of Health & Ageing was not going to pay the COPO indexation which had been estimated to be 1.58% didn’t come to our notice until mid June. When WA CPI has increased 4.8% to our costs, we are still obligated to pay wage increases through EBAs of between 3 – 3.75%, plus the prospect of further cost escalations resulting from the Carbon Tax, so let’s say our costs are rising by 6%, yet there is no indexation allowed. At the same time, from DH&A communications we learn of the $500 M clawback through modifying the ACFI scoring in ADLs and CHI because it was alleged there had been some providers who had been claiming rather aggressively, so we all had to wear the pain in order to bring the budget back into line. So what that means is a real funding cut of another 2 – 2.5%. Minister, these are real funding cuts, cuts that the smoke and mirrors magic won’t cover up. These funding cuts will result in staffing reductions because wage costs make up some 72% of our total income Any additional funds being allocated to aged care is to assist providers in meeting the increasing demands coming from an ageing population with many more requiring care at their life’s end when the care and medications etc is much more expensive whichever way you want to look at it.
    The LLLB reform package remains to be a bit of a joke with the laugh coming from the Gillard Govt. There’s supposedly funding worth $3.7 B allocated over 5 years of which only $577 M is indeed new money and little is available until 2014, then subject to conditions. By 2014, some ACF’s may well have closed down due to depleted reserves. By 2014 WA is likely to be 4000 beds short of where we need to be for our ageing population. That of course means our public hospitals will be full of the frail aged who should be in nursing homes. Given that it has taken the Rudd & Gillard gov’ts 6 years to develop a satisfactory aged care reform package, to have to wait for another 2 years is insulting. If this govt really cared for older Australians, they wouldn’t treat them like this, they would take their responsibility seriously, ensuring that there are adequate funds available to provide quality aged care to all those who need it. Minister, you need to find some new advisors

  13. This morning it was 1 deg. But our facility was warm because we are required to provide a “comfortable homelike environment” – Synergy is happy because they passed on the carbon tax flow-on in full to consumers (us). All the residents had hot showers “part of quality care and accreditation” – the gas man is happy – oops extra carbon tax there as well. Wages are up by 2.9% as of the 1st, nothing to scream about but every little bit helps when your have to pay the morgage. Rates and taxes in general go up each year and its usually 5-7% if your lucky. Food, well it depends if your in Carnarvon, Kununnara, Derby, Narrogin, Albany or Perth I suppose. Nothing new there. Staff are hard to find because lets face it who wants to work in the bush. No movie theatres out here. In 2010 CPI was 3.1 but ACFI was given 1.7 (oww), in 2011 CPI was 3.6 ACFI was given 1.8(double oww), in 2012 CPI was 1.6 ACFI was given 0. I am just a simple farm girl trying to look after the most vulnerable members of my community. I get kicked, bitten, trampled on, ignored. You change tactics, be visionary, lead with creativity all in a feble effort to make ends meet. There are no new facilities out here – because we cannot afford it. So we baby, and hug our buildings until they are like the people we care for, getting older, frailer and costing more money.
    When will the childish behaviour of the goverment stop. We are all tired, tired and fed up with year after year of kicks and beatings. Sound a bit upset don’t I. Guess what, I am and I’m not the only one Mr Butler. Look out your window because the crowd is growing and we are not silent and quiet anymore we ADVOCATE – and we ADVOCATE for SUSTAINABLE AGED CARE.

  14. Funding targeted for clients should not be redistributed to poorer performing parts of the organisation or by creative accounting to fund other programs. Executive within organisations have been justifying their roles and salaries whilst asking those providing the work to do more with less, my experience of this ensured I left the industry. Let consumers decide which providers can focus their efforts on actual care from the top down, if the organisation cannot provide requisite care and blame workers costs, look to the number of executive and their salaries. This is surely about trying to keep the lucrative ( for some) aged care industry honest.

  15. I thank the Minister for responding to the outrage being expressed by the sector. He needed to, as the groundswell of anger at the dismissive attitude of the Government towards the residents, families, staff and providers is continuting to grow; and the ongoing ill-informed assumptions about how our services are provided, how our businesses are run, and the lack of understanding about our motivations are misguided and unhelpful.

    The demand for aged services is increasing exponentially; calls from distressed families seeking urgent, immediate high care that is of consistent high quality, in appropriate surroundings and which offers dignity and understanding, is on the increase. There are insufficient beds to offer families and the demand for well trained and competent staff is going through the roof both in residential and community aged care.

    As a provider that pitches its wages to be in the top five providers it means that we seek to be competitive in our remuneration, training, career development and opportunities for professional growth.

    There is not general recognition of what high care means and it is not something that is discussed publicly. For us, it means working with very frail, vulnerable people who have multiple, complex, illnesses, challenging health conditions including dementia, mental health illnesses, struggling with incontinence, immobilitiy and with a total dependence on care staff in many cases, and demonstrating major impacts on the functionality of individuals, whose lives are frequently in the end stages; who, nonetheless with their families expect to be cared for as they would in a hospital and a hotel and their own home, all at the same time. We work closely with hospitals who frequently send residents back with increased needs and we are expected to be able to manage their escalating care needs on their return at a fraction of the hospital costs.

    Costs of training on an ongoing basis, for the multi-disciplinary teams that we employ, from highly skilled RNs, ENs, carers, allied health professionals, chaplains, pastoral carers, consumer advocates, managers, catering and hotel services staff, laundry and cleaning, maintenance and the list continues – means a complex programme of continuous ecudation, professional development with both mandatory and ongoing education for all staff whether front-line or support staff and this is essential whether or not we receive training funding.

    As a provider committed to high quality care, this sits alongside all the other essentials that must be included in our budgets to do with buildings, maintenance, utilities management, equipment and changes in care solutions.

    The Minister refers to the increases in service funding that his government has provided. He forgets to add that these increases have been provided against a backdrop of long term, consistent underfunding to the sector which has long had a downward trend, and this is matched by consistent, long term increasing demand for residential aged care by increasing numbers of frail elderly with increasingly complex care needs; all of which has not allowed providers to get ahead. Instead they constantly stretch to keep up, juggling priorities alongside the increasing care demands. The gap in any funding adjustments between 2012 and 2014 merely reinforces the level of disrespect which sits within government for the not-for-profit providers; used as we are to making do and providing care under increasingly challenging conditions. More with less.

    I would also add, that ‘modest changes’ is not a description I would apply to the significant policy setting adjustments the Minister is making, with money coming out of direct care services and quality care systems and being redirected to wages with the hiatus in the funding for the year. The implementation of the adjustments are controlling and invasively directive, far beyond what would normally happen in any other sector. The Minister’s comparison of 70 % provider revenue being matched to 70% costs of wages is naive and simplistic and does not reflect the complexity of business planning, day-to-day service delivery, and care provided 24 hours a day, 7 days a week, 52 weeks of the year. The direct appeal to change the funding from direct care to paying increased wages for staff is unhelpful as many providers are already paying above award wages simply to remain competitive; and are already dealing with inflated wages in the West, and the inflated cost of living.

    And this also needs to acknowledge that wages overall, have continued to fall behind across the sector as a whole, and this is solely to do with the traditional view of care workers and is a systemic gender issue that has not been addressed until very recently and even now, the solution offered will be stretched out over years for those workers, while still leaving those in Aged Care behind others services in the community sector. However, providers are now being drawn into a debate about quality of care or increased wages. It cannot be an ‘either-or’ debate, but an ‘and-and’ and the options presented by the Government and the Minister do not provide for this outcome.

    The need to look at the Living Longer Living Better Package as a whole is what has driven the level of outrage being expresed by providers, staff and residents and their families. ACFI is the funnel through which this Government has driven its change process. It was the Government’s choice to start at this point, with the money, using that as its lever to drive change. The fact that we want to talk as well about quality of care and workforce highlights our commitment to a much wider issue of the future viability of aged care in Australia, rather than simply buying into the Government’s commitment to rationalising care.

    This is a quality of life and care debate for frail, elderly Australians into the future. This debate is not only about ACFI but is also raising the implications concerning the future capacity to provide high quality services that are being driven and controlled more and more by the Department with little room left for innovation, ongoing improvements to quality, and the total commitment to person-centred care from the not-for-profit perspective.

    And finally, we haven’t yet talked about the issues of providers struggling in rural and regional Australia; the issues of workforce affected by the FIFO and the so called boom that is seriously compromising care; and the impact on communities and families for aged care; the lack of investment and non access to capital because of its high costs, the changes to accommodation bonds and charges, and the insurance proposed for bonds; the high cost of living with increases in utilities, and impact of the carbon tax; together make a mountain that providers across both residential and community aged care must now climb.

    In this debate, I dont’ know where to start, apart from saying, please listen and reverse your decisions!

    As a CEO of a multi-service organisation, I also provide a range of other community services and for organisations like mine which serve the marginalised and people in rural and regional WA, the changes the Minister is making have implications far beyond that to which he is currently laying claim.

    It seems the Minister is out of touch with the reality of aged care. We’re tired of picking up the Government’s random pieces of jigsaw and having to make sense of it for our residents, clients, families and staff; and the funding cuts are real. Having spent the last five months doing our budget for 2012-2013 I’m very clear on what is being taken out of the budget in the last few days of the financial year as I am now reforecasting and seeing what will be lost. Our losses at this stage will be over $1.5 m and is currently climbing. Minister, please reverse the funding cuts and listen to the providers and families.

  16. Minister, I reject totally your claims that the current debate is based on halftruths and downright mistruth. That really nhurts when we are trying so hard to provide maximum quality care with increasing costs, and real cuts in our facilities funding because of this decision. I am offended that you infer we are overclaiming. A very small minority may be, and they should bear the consequences of that, but to lump all providers together is offensive and hurtful. I don;t see you at the coalface helping the Australians who have built our country, but rather pontificating form your ivory tower. Get to where the tears, pain and smell is and then tell us if we are wrong to be outraged that you have left us to pick up the pieces. The consultation process was a facade and joke, you are out of touch with the reality of running an aged care facility in this time and era. I call on you to please reverse the decision to make cuts to the funding.

  17. Mr.Butler, you should meet with the aged care providers and let them explain to you the actual position. From your statement above its quite clear you are out of touch with reality. I take offence with your suggestion that providers are not passing on the subsidy increases to staff. WA has one of the highest wages in Australia. if we were not paying a competitive wage we would not have any staff providing care to the aged. It is quite clear that there is a funding cut of $500m, i am surprised that you do not understand the mechanics of the proposed cuts.

  18. My organisation having spent 4 months preparing the 2012/13 budget which was already very tough and tight and approved by the board then had to recast it after the NO COPO announcement given without notice. We cut $1.4million out of our budget. That is a REAL reduction in services.

  19. Thank you for your response Minister Butler. Whilst I know that there are two sides to every story, the extent of this chasm is becoming unbearable. When I read your response its impossible to reconcile this with the industry I have worked in for the last twenty years. It’s one thing for you as a member of the government to try and respond to our criticisms against a decision we in the industry know will impact on those most in need but another to dress this up in insults to that industry. At the end of all of this banter there are real people, people who may not be able to use their voice, so we will. You need to forgive that it gets emotional but as a voter (and I hope a aged person in the future) I am reassured that it is.

  20. Emotional over-reaction? I think not. Minister Butler, if you read only a selection of these, please make sure you read Dr Lucy Morris’s very clear, rational, non-emotional explanation of what you are setting up for the care of the aged in the future.

    Smoke and mirrors? Maybe not. Rather, robbing Peter to pay Paul.

  21. Dear Mark,
    The toughest thing about being in a leadership role is accepting that sometimes you get it wrong. The impact that I and others are identifying is real and will not go away by taking a defensive stance. There are also times that you have to acknowledge that your support team have got it wrong. That is of course if it is not in fact driven by yourself and it’s a screen being put up to protect yourself from criticism for a poorly thought out strategy to achieve a balanced budget .
    The role of a parliamentarian and minister is to ensure the most at risk in our society are supported and protected as they personally have little capacity to express their views on your policy decisions. Many of our residents would have supported the election of you prior to these same constituents becoming dependent us and others in their final stage of life. They would expect that that the trust given to you continues beyond their capacity clearly express their view or vote any further.
    We as leaders in this industry have to take up their voice for them and it is very clear that you have not heard their plea. The hope of many of us was that having a minister dedicated to aged care we would at last wouldn’t be given glib statements and our voice and those of your constituents wouldn’t be ignored. Sadly you have now breached the trust that you have worked so hard to build over the past years in your portfolio.
    Please stand up and be the leader you aspire to be. Acknowledge that all the voices out there advocating for these increasingly incapacitated elderly have a point to be made and reverse this madness of real cuts in funding for aged care. You are heading towards a cliff, you can either stop reassess your direction, or, continue and be a causality of not listening to all those who warn you of the danger in front of you. I know you have a capacity to be a great leader, but you have to stop listen and hear the warnings and then have the courage to reverse what is a destructive and beyond rational decision.

  22. The Ministers comment that the industry has not been accurate in the description of the impact on each organisation and facility is a discredit to the Minister. Aged care providers are highly professional in the conduct of their organisations because we have to be to survive in the highly regulated environment in which we operate.The lack of or inadequate increase in relation to increased costs in wages and other costs has been absorbed for many years. As a provider of Community Care this means fewer hours of support. The promise of a wider range of packages is welcome but it is still many years ahead and in the meantime the value of support per package continues to decrease. We continue to get more personalized in the support provided in the home but it does remain a reality that there are people for whom residential care is a necessity for short periods at the end of their life when their dependency and vulnerability is at its highest. This is why the cost of residential care is increasing and is reflected in the ACFI claims. Surely the Minister recognizes and understand this logic!

  23. The audacity of Minister Butler in claiming Aged Care has dealt with half truths,down right mistruth and other spurious comment just shows how ignorant he and his Cabinet Minsters are of Aged Care.
    We have never over clained in ACFI and at every opportunity have passed on gains to workers. This last budget does not allow this and may well result in staff reduction.
    The cool hard facts are Minister Butler and his team are well and truly out of their depth with very little understanding of Aged Care funding. We have had a real cut in funding and puts the viabilty of Small Providers Aged Care Facilities in real financial trouble. Minister on behalf of Aged Persons PLEASE rethink your miserly funding of 2012/2013 and give serious consideration to an additional increase for this financial year.

  24. I have calculated the rehash of ACFI funding and will lose $90,000 in 2012/13. The Nursing Home made $11,000 in excess funds this year. So the reality is it will lose money next year.
    The Minister has made some wrong assumptions on costs as private Allied Health service costs have increased in some areas by 50% over the last 2 years. I urge the Minister to restate the funding. Our elders are living stronger and requiring more care in both wages and services. BE FAIR.

  25. After a promising start it appears that Minister Butler has surrendered to, or actually believes, the spin from the Department about aged care funding. The sector has been telling governments of all persuasions about the need to plan for the rising aged population for decades.
    It should be no surprise that total spending on aged care has grown if there are more people in care and most of those people need more care than before.
    The Productivity Commission report provided some useful strategies to put aged care on a sustainable footing – but the Government has cherry picked the ideas that suit its political agenda.
    To use the increase in total aged care funding as an excuse to cut per capita care funding is a direct attack on vulnerable aged people in need of care.

  26. It was very disappointing to read Minister Butler’s response to Ray GLickman’s article as it clearly demonstrates that he doesn’t really understand the implications of the changes made to ACFI. Whichever way you look at it, the changes result in funding cuts to the delivery of CARE to our vulnerable elderly people. Its been acknowledged for years that residential aged care was ALREADY underfunded and this is only going to make it worse. I know from the detailed budgeting process that my organisation goes through, there is not a cent spent in residential care that isn’t ESSENTIAL and taking $1.5m out of our subsidies this year (and more in future years) can only result in a reduced standard of care and a great risk to the health and safety of our residents.

    I call on Minister Butler to spend time with aged care providers who can show him, based on EXISTING resident profiles, what the changes will mean. Keep an open mind Mr Butler and gather the facts. While you may say we are ’emotional’ over the issues, you need to understand that you are playing with the life and death of real people.

    I URGE you to gather the FACTS and reconsider before the consequences become even more evident.

  27. Mr Bulter to say I am disappointed in your recent decision to cut ACFI leading to reduced services for our frail eldery, would be an under statement. When you were first appointed Minister I heard you speak, I was so excited that finally Aged Care had a Minister who understood the Industry and you spoke so passionately about your desire to improve the services for both the residents and staff.
    You also talked about improving the relationship and communication between the DOH&A and the Industry. What happened Mr Bulter, is the world of politics so bad it has brain washed you into ignoring the reports and feedback from industry representatives or have you become complacent like all your predecessors? Please restore my faith in you and reverse your decision to cut the funding.

  28. Quoting the increase in the accommodation supplement (which is designed to cover capital spend) when everyone knows this is a cost of care debate smacks of desperation! Shame on you Mr Butler.

  29. Dear Minister Butler you are formally invited to share the experience of being a carer at our beautiful facility . I encourage you to take a hands on approach and see and experience for yourself what the real needs are .How can you talk the talk without walking the walk??. Please dont hesitate to call me to make arragements for you to participate in a shift .You of course will be paid the $17.82 per hour you will so deservingly earn.

  30. I Reject the Ministers comments that he feels we claim too high and don’t pass on the funds to our residents. We have just completed a major ACFI review of our residents and I am pleased to say that because we have increased our funding we have recruited nearly double our RN staffing numbers, increased our personal care hours by over 300 care hours per fortnight, and increased our activity/therapy hours to our residents by 90 hours per FN. Plus we are recruiting another 20 hours of Physio per week to provide extra pain management interventions to our residents. WHO SAID WE ARE NOT PASSING ON THE CARE TO OUR RESIDENTS? You need to come and sit in my seat for a few days and see the level of recruitment I am doing and look at the amazing reduction in our falls and skin tear clinical indicators. Wake up Minister.

  31. Dear Minister Butler. My organisation is going to be impacted by a 5.6% reduction in its REAL operating income as a result of this lack of thought and foresight by a Government that clearly does not want to listen, won’t listen, and clearly has little idea about the real fabric of Aged Care and how it operates. Your reform agenda lacks substance, is ill conceived and your continued promotion of this farce just goes to further highlight the overwhelming lack of credibility and understanding that you and this Government have.

  32. For a period after the PC report there was some hope we might see the back of our “Soviet style” aged care structure; this relic of inadequacy and contradiction. LLLB embraces and adorns it – a ‘horse with a hat’. LLLB is its forbear, with income/price controls issued from ‘on high’, concocted subsidies conjured from somewhere, but never from a cost of care study, and let’s not forget the ‘services directives’ from the latest DoHA residential care manual telling us we are now responsible to provide, but not to charge for this or that service. No price signals to reflect and meet costs, means no investment in new capacity, means more elderly in the queue for services. So what’s new?

  33. I think Minister Butler needs to ask himself what this actually means for the individual people who are living now or wishing to live in our Residential Facilities. Many small rural facilities already struggle and many rely on the good faith of their communities, even a small reduction is going to have an impact on our elders. What next?

  34. Minister Butler, the aged care industry has been patiently waiting for some significant reform for at least the last 10 years and all we have seen is review after review leading up to the most recent which was done by the Productivity Commission on as you know, “Caring for Older Australians”. Overall, all of these reviews essentially declared that a major change was required to achieve a sustainable industry through a period wherein the sector had to expand to meet the growing demands of an ageing population. Some excellent recommendations have been made in all the reviews. How disappointing it has been to see that the Gillard Govt has not embraced the recommendations made by the Productivity Commission. Instead, you and the Dept of Health & Ageing have presented a dressed up package labelled “Living Longer, Living Better” which offers very little relief and very few changes until 2014. What new money there was (not very much @ $550 Million) has been earmarked to be taken from the bucket in the proposed ACFI clawback and perhaps we might see some of this back in the Wages Compac. This is Indian Giving as someone has already mentioned.
    Minister Butler, is it not the Federal Government’s responsibility to provide quality aged care to those older Australians who need it? Let me tell you that if the funding levels continue to fall so that residential aged care facilities can no longer financially operate, you and the Dept may have to step out of the regulator – funder’s cozy position and actually start operating your own govt operated residential aged care facilities and find out how impossible it has become. We have squeezed the lemon dry, there is no more juice to be had. With no COPO, no indexation, reduced ACFI income, and all this announced late in June after budgets had been prepared, it is little wonder that there is the degree of anger and utter frustration aimed at you, your advisers and of course the faceless bureaucrats in the Dept.
    To suggest that providers are using arguments based on half truths and downright mistruth indicates just how far you are from reality. Yes we are very angry because you have abandoned older Australians, leaving us to pick up the pieces. Unless you change this foolish decision, these cuts will leave us no choice than to reduce staff and to consider whether we can continue to provide residential care. Some rationaisation of older, marginal facilities will be needed

  35. The Minister mentions in his response to Mr. Ray Glickman’s article that “the Accommodation Supplement is set for further growth in 2014”. That is in two years’ time. At this moment providers of residential care have to tighten the belt, so to speak, with no light on the horizon for another two years. I am sure many staff will start looking for another job, probably in retail, where they can work without the stress and emotions of working in an aged care facility. They get better wages on top of that.
    It does seem that Minister Butler is out of touch with reality of aged care delivery and what is happening in the ground for service providers. Dr. Lucy Morris’ explanation should provide the Minister with a clear insight what is really at stake in this situation.
    Like most of the people who have taken the time to get their opinion over, the staff and Board are very dedicated to providing quality aged care services, but we do fear for the future.

  36. Well said Minister… urging those concerned about aged care to take a considered view of the ACFI changes, focus on the facts and consider the reform as a whole. That’s exactly what providers are doing and why they are so outraged about what has been announced by the Government. It’s a pity that you are not following your own advice.
    Talk to some of the people in residential care and explain to them the real impact – then you might see emotions.
    Take another look at the numbers, the Productivity Commission recommendations and stand up for your portfolio as you were elected to do.

  37. I am pleased to see the Minister reassure the sector that residential care funding will not be reduced in net terms by the failure to index subsidies this year, and the changes to the ACFI tool. I am sure our residents and staff hope this is correct. Of course, more money in the Federal budget papers does not necessarily equate to more buying power for additional wages, higher utility bills and rising food and insurance costs. The reality is that providers will have less money for these things in the coming year. The only way providers will obtain more subsidy funding will be to submit increased ACFI claims. Perhaps this is, indeed, what DoHA assumes will happen! It is a pity the debate has headed in this direction, as there are positive elements in the LLLB reforms (particularly in community care). However, it would be remiss of providers, peak bodies and others in the sector not to point out the difficulties these funding cuts pose.

  38. As a manager of a small rural residential care facility I am stunned at the lack of insight the Minister, who is appointed to have such a powerful influence on the ability to care for our wonderful residents, has into the real dilemmas we as providers of care are facing. ACFI is our only source to fund the CARE of our residents- what may seem modest adjustments to the Minister means massive issues for us small stand alone rural providers with everything finanially stacked against us. We talk hundreds not millions !! YES it does matter. How can care funding be cut ?? Our residents are coming to us very high care from the community on admission, individually requiring all manner of needs that can not be provided elsewehere. THIS HAS CHANGED- I have been in residential care 17 years and we now have a great push for community care but this has meant HIGH NEEDS of residents and shorter lengths of residency in residential care. High level complex needs that change on a day to day basis. WE jump through hoop after hoop that we must,and reams of paper and time later submit an ACFI just to ensure these people are provided with what they each deserve. We receive no money for the hours of love, compassion, support, friendship staff provide OR for all the things that enrich their lives such as their therapeutic, social, spiritual, emotional needs and wellbeing !!! And why are we emotional- BECAUSE THE OLDER AUSTRALIANS, the people we are caring for deserve more NOT less. And it is really less. WE must still provide the same service to these people but now without the same funding for just their basic needs-we are talking showering/dressing/toiletting/dressing wounds/continence/pain management-This is only the beginning of what it means to provide CARE. We should be moving forward. AS for this accusation of overclaiming and not refleting in staffing for CARE it is ABSOLUTELY DISGRACEFUL. We have at our small community driven faility (the only in our town) managed to now provide a RN four times longer, an Occupational Therapist, Physiotherapist, night time stand up carer, more care hours in the day, therapy assistant hours just to name some things to ensure we provide the very best for our residents. Please listen and respect what these dedicated professionals within their field, at the forefront of this issue, is saying WE NEED MORE NOT LESS FUNDING FOR CARE !! PLEASE Relook at what you are doing to these exceptional people and our exceptional staff who I agree is the only thing that keeps the aged care industry together. IT is for the residents and staff who strive each day out of their own pure devotion to aged care that we ask you to reconsider !!

  39. Emotional eh!Mr Butler

    It is hard not be be emotional. Each year although funding has been provided it comes with so many hoops to jump through and at a huge cost (66%) in some cases to larger organisations like mine that it is too complex, timeconsuming to report back to and too expensive to even seek funding.

    These responses from the Minister do nothing to reasure me that the changes will mean that the opportunities I had expected to provide for comprehensive training and development experiences for staff in my organisation to build on what we have already achieved will happen. Rather concerned it will leave our training and development plans for the next few years in tatters.

  40. A grubby deal was done with the peak bodies, Associations, COTA, Australian Seniors etc….the deal was to let this reform through and not to complain in the short term….and look toward the long term future.
    Mark Butler must be a good salesman with a winning smile but now the sector has spoken and the Peak Bodies, Associations, COTA etc have to answer to their members

  41. Perfect demonstration by the Minister of just how ‘out of touch’ the Gillard government is with reality on so many fronts. Time to explore whether the Opposition funding package for Aged Care, including ACFI, is any better. Best get a specific, measurable and timely core promise from the Coalition in case the current Ministers offer is the best available.

  42. The real growth in subsidy income in recent years was enough to bring facilities back from the brink of collapse (when EBITDA fell to about $2,700 per bed (2008). It is no where near a sustainable footing. Grant Thornton’s recent Cost of Care report concluded that $25,000 – $32,000 EBITDA is required to justify investment in residential aged care. The Stewart Brown survey shows an NFP average of $8,500 per bed for the 9 months to March. LLLB is seeking to achieve a policy outcome of 90,000 new beds over 10 years to meet demand (or 2 new RACFs operationalised each week for the next 10 years). No chance. The cherry picking of the PC report to which the other bloggers to this article refer will not lead to a sustainable outcome. The independent pricing commission recommended by the PC and market based bonds coupled with fair disclosure of prices were key elements left out of LLLB. It will be the job of another government to fix aged care when there are inadequate numbers of beds and a scarcity of staff. I also share the blog view that Minister Butler is now a captive of the department line.

  43. This is a real story. Beryl is 95 and has osteoarthritis; chronic pain; short term memory loss. . Requires staff supervision with meals due to glucose intolerance. Needs supervision and physical prompts to ensure correct food choices are made and sufficient nutrition is maintained. Cannot cut up food due to arthritic hands. Able to ambulate but needs supervision from staff as she is a high falls risk-walks too fast with frame. Lacks insight due to short term memory loss. Can transfer herself when ambulating. Needs staff assistance with washing, dressing, grooming, oral hygiene. Staff assists with toileting-positioning and clothing adjustment. Staff assist with pad management for urinary incontinence-requires a scheduled toileting program to maintain continence Current ACFI MHL – $112/day – Proposed ACFI
    LHL – $75.62. The Minister is missing the real detail of people impact. Canberra is a long way away.

  44. Dear Mr Butler
    I work in Aged Care……In this sector, I don’t see any millionaires or multi billion dollar aged care businesses….I see none that are making any profits. What I do see and experience is aged australians (that gave this country the start we have) missing out on care and aged care facilities struggling to remain afloat. I see aged care workers being paid a pittence for their tremendous work. I see organisations that could not survive without the wonderful help of volunteers and I see management struggling to keep their workforce together so that they CAN provide a quality of care.
    I also see a government that continues to move the goal posts when it suits them, I see a government who really doesn’t listen and a government that just does NOT understand….come and work in an aged care facility not for 1 day…..try working on our wage under our conditions for 1 month…..it is only then that you could appreciate the truth.

  45. Mr Butler, I can’t add to the comments made above, except to express my outrage over how you and this government are treating some of the most vulnerable and deserving people in our community. I see the money the Government is pouring into other “priorities”, clearly to try and shore up up votes and/or appeal to popularist opinion and political agendas. I see how difficult it is for our organisation to balance its budget, stay viable, pay fair wages and provide quality services in the face of what are real and significant cuts. I also see that, whilst many have an interest in aged care, it’s not really a vote winner because the numbers directly affected are relatively low. You tell a polished and superficially convincing story Mr Butler. It is clear that you and your spin doctors subscribe that “If you tell a big enough lie and tell it frequently enough, it will be believed”.

  46. Minister Butler, is it not the responsibility to provide quality aged care to frail aged Australians who are in need of such services? When ACFs start closing down because they just can no longer continue to operate, are you,your advisers and the DOHA going to begin operating govt run aged care facilities? This would mean that the purchaser, funder, and regulator would have to become a provider. It would be interesting to see if you and your hapless people could actually operate a nursing home on the funds provided and how loud would you squeal if you then lost 5% of your govt funding?

  47. Minister, why have you rejected the Productivity Commission’s recommendation to undertake an independent cost of care study? If your assertions that your government’s funding is adequate and generous, why not obtain independent verification? We all know the answer to that question – your commitment to the funding for the care of older Australians would be exposed for what it is – grossly deficient and inadequate to meet the needs of our ageing population.

  48. Is Mr Butler REALLY so ignorant of the needs of the aged care sector or is he just another Gillard puppet? Either way, this is a shameful lack of respect for the mothers and fathers of this country, their children and families who are under huge stress currently – let alone in the future. Is this not the true measure of the man and woman steering this decision? Deplorable!

    Posted by Susan Hays.11/07/2012 04:29:31 PM

  49. Recent decisions around ACFI and COPO serve to remind boards and management teams that the aged care environment is becoming increasingly volatile and unpredictable. This forces providers to make decisions with less than perfect information and increases risk. For better or worse, the lid has been lifted on aged care and there is no putting the lid back on. The sector cannot go back; it can only adapt to the emerging environment. This is the challenge for boards and management. Two years ago a CEO of a mid-sized nonprofit informed me they had no need to engage in strategic planning as their funding and strategic direction was assured. That business no longer exists! By all means advocate. If the sector doesnt raise awareness with the Minister then its silence will be taken as approval of the Ministers decision. At the same time be prepared to invest a similar level of energy and time in planning for how to provide a service in an uncertain environment.

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