The Aged Care sector has been receiving a lot of attention lately. We know that while there are many aged carers that do fantastic jobs, the sector has been riddled by bad funding models, problems and blame-gaming between governments for a long time.

I asked the Department of Health, who takes care of this at a federal level, about fixing it at Senate Estimates.

Transcript

[Chair] Thank you. Senator Roberts.

[Malcolm Roberts] Thank you Chair, thank you for being here today. My questions are going to be fairly broad because I’m interested, it’s early days yet since the implementation, since the findings of the Royal Commission. I’m interested in principles that are guiding you and wherever you can, provide specifics, that’d be appreciated. I’m particularly interested in the impact on people in aged care facility who are receiving aged care and also on the budget. Our first question is what is being done to improve the Aged Care Funding Model and to close gaps so that our respected ageing Australians can live well and have certainty that they will not be disadvantaged?

So, Senator part of the, one of the recommendations from the Royal Commission and one that we’ve accepted and incorporated into the budget is the implementation of a new funding model for the Aged Care sector that’s called the AN-ACC System that will replace the current ACFI Funding System that is broadly regarded as no longer fit for purpose. And that new funding model will commence on the 1st of October next year.

[Malcolm Roberts] What is the basic principle behind the new funding model or driving it?

So, the basic principles of that is that it is a model that assesses need for the residents. Mrs. Strapp might be able to give you some more detail and specifics of that, but it was designed through the University of Wollongong through a contract that we put out there, and it is based on the assessed needs of residents. Mrs. Strapp might be able to give you some more specific details.

That’s right, and I’ll invite Mr. Murray to add anything that I’ve missed, but the AN-ACC was developed by the University of Wollongong over a number of years. And the government has put funding towards to it prior to this government to test the model and to develop the system around it, the infrastructure around it. And we’ve started, we’ve commenced shadow assessments. So, if the model replaces the current Aged Care Funding Instrument, that’s in place at the moment which is an instrument which aged care providers assess themselves against categories. Instead of that, we’re sending independent assessors out to look at what are the actual care costs associated with an individual. And the individual is assessed against a number of categories and the cost are then modelled by the University of Wollongong or they’ve tested what are the actual costs associated with care for someone in a residential aged care facility. And it’s supposed to, I guess, reflect what the actual costs are. I don’t know if Mr. Murray, if you want to add anything?

[Malcolm Roberts] So, then the Minister was accurate in saying that, and I wasn’t implying that he was being inaccurate, but implying that it’s based on needs of individual people receiving care rather than broad categories of aged care facilities?

Yeah, yes.

So, to a couple of changes. So, the current ACFI System is assessed by providers themselves so it’s a self assessment process. The new model will have independent assessors that conduct that work on behalf of the government of the residents in residential aged care against, I think it’s 13 categories, is that correct? That’s correct. And the costing of the delivery of those services will be assessed through a process that we’ve spoken to the Committee earlier in the day about. So, we will be establishing an independent hospitals and aged care pricing authority, so, we’re modifying the existing independent hospitals and pricing authority to include aged care skills and capacity to undertake an independent process of actually costing the delivery of service. And then those costs will be recommended back to government to be applied into the new funding model. So, it will be based on an assessment of cost of delivery of services with, of course, some indexes applied to those things to consider, for example, remoteness or special circumstances where we might be delivering services to the homeless, for example, who are recognised as having a higher cost of care or indigenous people in those remote indigenous communities. So, there’ll be a loading that’s applied to those base amounts in a very similar way that we do with the broader health system recommended by the new agency to apply to the AN-ACC funding system.

[Malcolm Roberts] So, that implies you’re seeking better care. Will that cost more? And I’m assuming it will, so if any additional costs, will that be met by efficiencies in this service, it will be better, or at higher costs? So, what’s the impact on the budgets?

So, the whole reform is designed about providing better care, respect, and dignity and high quality care is the whole purpose of the entire reform process that we’ve designed coming out of the Royal Commission. Another part of the AN-ACC model is a staffing matrix which applies staffing levels to the various forms of care within a facility, and we’re mandating as a part of the reform process a minimum number of care minutes per resident as a part of the overall reform process, again, on the recommendation of the Royal Commission. So, the whole system is designed to improve the delivery of care across the sector.

S[Malcolm Roberts] o, rather than standards imposed based on numbers of staff per facility or numbers of staff per resident it would be based on, standards will be based upon needs of residents.

So, one of the things about staffing is that every facility is different because it is made up of individuals with different needs and individual care requirements. And so, the staffing matrix contemplates that. It was also designed by the University of Wollongong. So, it fits within the system, designed by the same people. And so, it also contemplates that because that’s, rather than having a fixed ratio, so to speak, you have care that’s actually tailored based on the assessment of the person by the independent assessment process and then delivered to them in accordance with their care plan that’s developed as a part of their assessment process.

[Malcolm Roberts] So, looking at the NDIS, it’s highly complex, there’s limited accountability, highly variable service given to different people that doesn’t seem equitable at the moment. What’s being done to ensure that this aged care funding is not being wasted and that it’s being spent equitably and with accountability? We know the NDIS started off in a very vague, messy way. How will this start?

So, regular reporting of expenditure is also a feature of the new system, and expenditure against certain benchmarks. We’re also developing a star rating system that will assess against new quality standards which will also be reviewed and developed. So, your issue around quality standards is a part of what we’re working on as well. So, all of these elements including reporting of expenditure, which we’ve already said is a part of even the additional funding that we’re putting into the sector from the 1st of July, though the providers will be required to report against their expenditure of those funds to ensure that they’re going to the areas that we’ve indicated that they should. And that will be reported alongside the star rating system which will incorporate those spending measures as a part of the design of the new star rating system. So, quality standards, quality indicators, also. So, at this point in time we have three quality indicators that are publicly reported that will extend to five as of the 1st of July, and a part of the design of the new system will be determining how many additional quality indicators that are publicly reported and what they will be.

[Malcolm Roberts] What’s being done to ensure that aged care services are delivered to where they’re needed?

Well, at this moment, at this point in time, Senator, we allocate services based on an assessment of the particular areas, particular needs of an area. So, we continue to monitor an assessment of process. One of the things that we have said that we’ll do is that we won’t be allocating aged care beds specifically to providers post 2004. We’ll be changing that system. And we are also looking to see additional or further innovation in the way that services are delivered. The Commission report, for example, contemplates models of smaller scale providers being able to provide more bespoke type care to residents. And we see that there’s a genuine opportunity with the redesign of the system for that innovation to be particularly useful in regional Australia where there may not be the scale capacity or scale needs for residential aged care in the way that we currently know it. It may be, for example, and I canvased this previously with the [indecipherble], might be that a group of people may want to get together in a regional community, a small regional community and pool their capacity in the context of home care packages so that they can live in a small community, remain in their community, living in a service that provides quite bespoke care for their particular needs, but being maintained at a high quality. So, there will be the capacity for providers to become a registered provider under the new reforms and establish aged care capacity in some areas where it might not be existing now or increase capacity where there’s additional demand for it. And of course, all of the visibility elements that we’re building into the system will give consumers and the public more generally much better information on the quality of care that’s being delivered because that information will be demonstrated through the star rating system and the quality indicators.

[Malcolm Roberts] So, what powers do you see the government needing to ensure our ageing Australians get quality care and that issues are identified and addressed promptly? How do you ensure accountability?

Well, so there’s additional resources that will be made available to the Aged Care Quality and Safety Commission and new powers, based on the recommendations of the Royal Commission under a new Aged Care Act. And I’ve already indicated to you that we’ll be reviewing the aged care quality standards to incorporate into those things, recommendations that have come out of the Royal Commission report. So, we’re talking about a completely new Aged Care Act to support the sector, a review and reform of the aged care quality standards, and also additional powers for the Aged Care Quality and Safety Commission and some additional oversights. So, a Council of Elders, which will provide support and advice to the government and the Aged Care Quality and Safety Commission, a new Aged Care Quality Advisory Council, that will take place of some of the existing forums that exist, and a commissioner that will provide oversight as well for the aged care sector.

[Malcolm Roberts] Okay, how do you, how will you ensure that we don’t end up with the complex mess that is delivering very variable services in the NDIS at the moment? I know the NDIS basically started as a way to grab a headline for an election, but this, hopefully, will have a better foundation. How do you make sure that we don’t end up with another NDIS, which is variable care and lack of accountability and huge costs?

Well, Senator, making sure that the regulatory burden is not too high is an important fundamental, but it needs to be at an appropriate level to ensure the quality that you’ve talked about. So, the quality systems that apply to the sector are going to be extremely important in that sense as well. So, we’re having some discussions with the sector about the quality systems that apply

[Malcolm Roberts] So, you’ve involved the providers?

We will be talking to the providers. We will be talking to consumers of aged care, their representative organisations and other parties who have an interest in this. This is a very significant redesign job. We would like to have available for senior Australians, a continuum of aged care from the very simplest of services right to the highest levels of clinical need within residential aged care in a system that is as simple for people to navigate as possible. That’s not necessarily an easy thing to design because there are some things that are currently baked into the way that the system operates that are going to be a challenge to change. But as they’re the tasks that we’ve set ourselves as part of the reform process.

[Malcolm Roberts] Has the government done an analysis or review of the NDIS to understand what’s gone wrong there?

I would say that has being somewhat separate to this process, but we have, of course, just undergone a two-year Royal Commission which has had a pretty forensic look at the aged care sector. They provided us with 148 recommendations. And of course, we’ve responded to those formally, but also with the package that we’ve released in the budget.

[Malcolm Roberts] Now, I understand, I haven’t gone into this, but I understand that you’re deregulating bed licences.

That’s correct. So, that was the process whereby we wouldn’t be any further, post 2004.

[Lady] 2024.

Oh, sorry, 2024. 2024, allocating bed licences. So, it will be a matter for an approved provider to establish services as an approved provider. So, that will be a different process.

[Malcolm Roberts] How is more control and choice created by deregulating bed licences?

Well, we think the opportunity for providers to create aged care in different forms will do that. We see that this creates an opportunity for quite a deal of innovation in the way that services are delivered. We still will have in place the quality standards, the quality indicators, the oversight regulatory bodies, and of course the Act to govern that, but as the sector has clearly changed over the last 30 years we see it changing considerably into the future and giving it the flexibility and the opportunity to do that without some of the restrictions that apply at the moment we think are a good thing. So, there’s an ACAR around that’s currently being considered by the department at the moment for the allocation of 2000 beds along with about $150 million in capital support. The likelihood is that that will be the last ACAR round before the system changes in 2024, noting that the occupancy rate at the sector is somewhere about 90% at the moment. So, there is capacity in the system for growth. And one of the things in our broader package as a part of the budget announcement is $400 million to assist with capital development of new facilities particularly in regional areas where they might not be viable in a sense that you would see in that facility in metropolitan areas.

[Malcolm Roberts] Same that apply to low socioeconomic areas?

Yup.

[Malcolm Roberts] Okay. What are the risks of handing location and development of aged care facilities to developers? That’s what you’re doing essentially, isn’t it?

Not necessarily, Senator. To provide services they will still have to be an approved provider.

[Malcolm Roberts] Okay.

I mean, there is, there is already in the market I think, an element of property development. My view is that the issues that relate to the quality of care go back to the quality indicators, the quality standards, the star rating system, and the financial reporting, all of which provide visibility into the sector, the money, the funds that have been put in, how they’re spent, ensuring that they’re appropriately spent. And those are the elements that I think go towards, and of course, the role of the Quality and Safety Commission, I think they are the things that provide the tools to ensure that people receive high quality care.

[Malcolm Roberts] You mentioned regional centres will get attention, or not be left out. Having been up in North Queensland recently, Richmond and Julia Creek, the Richmond Mayor, John Wharton, has got a wonderful scheme for developing the area agriculturally. Irrigation, he is not getting support from the state government and in terms of allocating their water licences that they need to do that, making their water allocations, but he can see that Richmond could go from being 1,000 people right now to 8,000 people if the scheme is replicated. And it looks very very positive. Julia Creek just down the road has got, just basically had a new hospital built and it’s all but shut down because they can’t get the staff and the funding for the staff. So, that means their aged care facility is also shut down. People moving to other towns for doing that. And after being in Julia Creek all their lives. So, really what I’m saying is that the regions have been neglected and we need to make sure that the regions are given everything they can to continue development. Because we’ve got people in the regions who want to develop, when they have that development, be it agriculture, farming, industry, then they can have more services come there. They have more teachers, they have more doctors, they have more nurses, they have a dentist. So, instead of seeing a collapse of the regions we can see revitalization of the region, but they need that support from federal and state governments and other policies outside aged care because the regions have been neglected.

Senator, as someone who lives in regional Australia I’m very alert to those issues. And some communities have seen a decline and the loss of service because of the requirement for scale. I think the opportunity to generate some innovation in the way the system operates does provide a pathway for some of those small communities particularly. But you’re right in the context of workforce. And one of the things that we’ve looked at in our reform process is how we work with states and territories in relation to provision of services on a shared basis. We have a lot of multi-purpose services around the country at the moment, whether or not there’s the capacity for us to generate more of those in communities where a work force would be better utilised, doing more than just trying to provide a small base hospital and a few aged care beds, if you bring those two things together you create some critical mass. A reason for people to stay in some of those critical workforces. So, we are very open to those conversations as well, so that those services that are required, will be required, can then be established or even built in some of those communities as they may develop such as Julia Creek that you’ve mentioned.

[Malcolm Roberts] Last question, Chair, what I’m getting at, Minister, is that we’ve seen Australia go from being the lowest cost electricity supplier to the highest cost, one of the highest costs. We’ve seen a reluctance of state and federal governments to provide water infrastructure. And we’ve seen state and federal governments colluding to steal farmer’s property rights. These are hindering our country and they’re hindering the regions. When the state and federal governments finally work out that we just need secure property rights, cheap electricity, instead of artificial inflation of the prices due to regulation not needed and also water infrastructure, then we’ll see booms in agriculture and manufacturing at the end.

Senator, I’m not sure that’s necessarily a question, but so much a statement, but–

[Malcolm Roberts] When is your government going to do something about them?

But, well can I say in the context of energy prices, I think that’s something that this government is quite focused on because we do recognise that it’s an important cost, an input cost to business, and it’s a–

[Malcolm Roberts] Minister Taylor has already expressed fears recently about the future, even higher electricity prices, future unreliability and future instability of electricity supply. These are the things that are affecting regional growth.

Look, I understand Senator Taylor expressing those fears and I think he’s quite focused on those in the context of water. I’m a great supporter of water development and my home state of Tasmania has seen about 15 irrigation schemes developed over time. And it has a real opportunity for the development of communities. But I think as Senator Watt quite correctly says it’s a bit off topic.

[Chair] Yeah, that’s right.

[Malcolm Roberts] Thank you.