Aged care crisis to deepen in next 12 months

I support the amendments moved by the shadow minister, because we know that under this government the aged-care system in Australia is rapidly approaching crisis point, particularly if you live in an electorate like mine, which is a rural and regional one, or one of those that involve smaller providers.

Prime examples are in Western Australia, where last year the federal government allocated 1,564 additional residential aged-care places to our state. However, only 314 of these beds were actually taken up—it is a great indication.

In the preceding year, of the 1,208 beds on offer only 507, or 42 per cent, were taken up in WA.

What is worse, over the last three years 786 bed licences, the licence that provides the funding for aged-care beds were handed back to the government—283 of those were from Western Australia.

Now in WA we are some 2,400 beds short of our aged-care requirements. That is a lot of people in my state and in my part of the south-west.

The government has chosen not to fund aged care in the way it needs to. Instead, it has wasted billions of dollars on unrealistic dreams and schemes that often have turned out to be nothing less than a nightmare.

This is a at time when the group referred to as the baby boomers, those born between 1946 and 1964, start to enter retirement—that section of our community who are now between 46 and 65 years old and are looking at their retirement and aged-care solutions.

It also looks as though we will have to defend their superannuation savings from being grabbed by what is just an incredibly wasteful Labor government.

Around nine per cent of our population is aged 70 years or older. That is expected to rise to 13 per cent by 2021 and 20 per cent, around 5.7 million people, in 2051—and this government has sat on its hands.

By 2050 over 3.5 million Australians are expected to use aged care each year. As we are ageing we are acquiring more complex healthcare conditions and changing disease patterns, resulting in increasing and changing aged-care needs. The challenges include a larger, increasingly culturally diverse, ageing population.

I see that in my electorate.

The dependency ratio in 2007 was six people of working age for every person aged 67. By 2047 this will be almost halved, to 3.2 people of working age for every person aged over 67.

So with fewer people generating taxation revenue, care options of concessional and assisted aged-care residents, those with the least resources, will be jeopardised.

And at this crucial time, under a dysfunctional Labor government, the agenda in Australia has been to remove support for residential-aged-care provision and waste taxpayers funds hand over fist in so many ways.

The fact that we are debating this bill prior to an election shows that this government has not prioritised aged care at all. It is no wonder that residential aged-care providers are not taking up those bed licences.

Despite promises of reform, five years on under this government there is very little actual change in the communities—my communities and your communities—where it is so desperately needed. We have seen the government undertake a litany of reports and reviews, including 20 reviews and three Productivity Commission reports. They were continually ignored.

They were put off until now when here we are, just prior to election, discussing aged care. They were continually ignored or responded to with more inquiries without a decision being made or anything being done to secure aged care into the future. However, the bills only cherry-pick a few recommendations of the Productivity Commission report Caring for older Australians, which brings us to the focus of the bill before the House today.

The government’s changes to aged-care funding which came into effect on 1 July last year under the Living Longer Living Better program represent, in effect, a knife to the heart of small regional aged-care service providers.

I know that because they have told me. When the Labor Party and the Labor government spruiked their plan as the panacea for our aged-care system, they deliberately failed to tell the Australian people that this program in fact claws back $750 million from the aged-care sector over the next 2½ years.

The actual practical result, as opposed to the misrepresentations of the government, is that residential aged-care providers will receive less funding for new patients than they got for patients last year.

That is what my aged-care providers are telling me. The 2012-13 budget alone will see $500 million of ACFI funding ripped out of a sector that is already under pressure.

Grant Thornton reported, in the Living Longer, Living Better reform report #2, of June 2012:

In the last two months since the Government’s reform announcements, over $3.5 billion in planned aged care development projects have been shelved.

That is the actual result. A very frail elderly Australian entering aged care in the current year brings with them federal funding of around $56 to $63 a day less than a resident admitted in the last financial year.

Given the average turnover rate in aged-care facilities of around 50 per cent per annum, by the end of the current financial year half of the residents will be supported at this new lower rate.

One can only imagine what it is doing in the smaller facilities. I know you can well imagine it, Mr Deputy Speaker Scott. At the end of the next financial year, nearly all of the residents will be on the lower rate of funding.

For a 40-bed unit, this would represent a loss of funding of close to half a million dollars by 2014-15. With only 40 per cent of residential aged-care providers operating in the black, I just wonder whether this government has been asleep in developing this policy and presenting it at this late date, so close to the election.

In its media release of 10 August 2012 entitled ‘Aged care providers facing a $750 million revenue shortfall’, Leading Age Services Australia asserts:

Aged care providers face a revenue black hole of more than $750 million over the next two-and-a-half years …

It also outlines research findings as follows:

… 89 per cent of aged care facilities will face “unrecoverable” losses of revenue under the revised funding model, which came into effect on 1 July, 2012.

“This ultimately means an average reduction of between $20,000 and $23,000 in care funding for each affected resident every year” …

… … …

“The average loss per aged care facility is more than $125,000 each year, with some facing revenue shortfalls of up to $560,000. Smaller and rural facilities are potentially the most affected.

I know that also for the reason that these are the providers that come and speak to me directly.

Many aged-care providers in regional Australia are already losing money. The government members need to come out into the regional areas and see exactly what this is doing.

Funding for residential aged care is managed under ACFI, the Aged Care Funding Instrument, in which levels of acuity—nil, low, medium and high—are assessed over a range of biological and behavioural factors determining the funding received. The factors are categorised as activities of daily living, behaviour and complex health care, and there are 12 in total.

The levels are frequently reviewed in individual patients. In one case recently, from my electorate, the patient’s level of acuity rose from low to medium in the behavioural section, due to deteriorating behaviour; however, the payments actually dropped by $18 a day. Astoundingly, as the need increased, the funding reduced.

Given the impending increase in aged-care needs bearing down on Australia in the form of our ageing population, this assault on the viability of residential aged-care providers is not acceptable or sustainable. A $56-a-day loss equates to $392 a week, or $20,440 a year, per patient.

The onset of this issue will be insidious; it will be gradual, as more and more residents are turned over and lower payments become far more common.

Crunch time will probably be at the end of the current financial year, when the new budgets for these providers are prepared. And if, as I heard, we are to be judged on how we treat our most vulnerable, the Labor government’s new funding model is definitely a fail.

This is why aged-care providers cannot afford the additional beds: they are already losing on each and every bed, so extra beds means greater losses. And that is why, of the 5,278 new residential aged-care places allocated to Western Australia since 2007, only 910, or 36 per cent, have been taken up, simply because they do not attract sufficient funding.

Well, now they are going to attract even less. This government is making it even harder for our elderly by cutting support to the most needy and the most frail.

The other issue to be addressed in the government’s changes is Labor’s new agenda of interfering in management through the workplace supplement. In aged care the Labor government, as it has in childcare, has sought to enhance union control and government interference. It offers more money for wages, but receiving it can cost providers more than they actually receive.

Aged and Community Services WA estimates that an aged-care provider who operates a small 31-bed regional facility would be eligible to receive $17,000 under the workforce supplement principles but in order to receive this would have to commit to an additional $30,000 in wages.

That is a false economy—and a devious manipulation from a government becoming famous for such actions.

At the last federal election the coalition outlined our plan for the first-ever four-year agreement, and we set out some areas that we believe ought to be included in any agreement.

We are committed to the delivery of a high-quality, affordable and accessible aged-care scheme that meets the needs and the preferences of older Australians.

Our goal has always been to provide the very best care, whether in the community or in residential care, and particularly for people in rural and regional areas like my own electorate.

The fundamental work on the first-ever aged-care provider agreement is certainly going to be retained. I certainly support the amendments moved by the member for Dickson.

And I would say to those members opposite who have not spent time discussing how Labor’s policies are actually impacting smaller rural and regional providers that I strongly encourage you (1) not to have aged care as a last resort of this government just prior to an election and (2) to actually get out there and talk to them on the ground; go and talk to the people in my electorate this is affecting so badly—perhaps the people at Tuia Lodge in Donnybrook.

I had a whole raft of different providers, not just from my electorate but from other electorates, come to visit me just to say how badly this is affecting them. They are concerned about their ongoing viability.

They are desperate to be able to provide the supports and services the people in their care need, and they so desperately want to provide these supports and services. But the government is putting all of that at risk.

I know in talking not only to the providers but to the staff as well that they are very passionate about what they do; they are passionate about the people in their care.

And I know that the people who live in those communities desperately want to be able to spend their last years in small facilities in their own communities, and that is the type of facility that is on offer out in our electorates.

We need to work hard to make sure these providers are in a position to offer opportunities for people in those smaller communities to actually receive the aged care they need in their local community. So, on that basis, I support the amendments moved by the member for Dickson.