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Gillard Announces $3.7 Billion Aged Care Policy

The Gillard Labor government today announced a suite of aged-care policies worth $3.7 billion over five years.

The package aims to facilitate more support and care at home for older Australians, better access to residential care, recognition for carers and more support for those with dementia.

The policy was announced by the Prime Minister and the Minister for Ageing, Mark Butler.

  • Listen to Gillard and Butler announce the package (39m – transcript below)
  • Listen to Aged-Care spokespeople comment on the package (17m)
  • Watch SBS report (3m)

Text of media release from Prime Minister Julia Gillard.

More choice, easier access and better care for older Australians

Under landmark changes to the aged care system, more people will get to keep their home, and more people will get to stay in their home as they receive aged care.

Prime Minister Julia Gillard and the Minister for Ageing, Mark Butler, today announced a 10 year plan to reshape aged care, beginning 1 July 2012.

The Gillard Labor Government will deliver the $3.7 billion Living Longer Living Better plan to deliver more choice, easier access and better care for older Australians and their families.

To make it easier for older Australians to stay in their home while they receive care, we will:

  • Increase the number of Home Care Packages- from 59,876 to almost 100,000 (99,669).
  • Provide tailored care packages to people receiving home care, and new funding for dementia care.
  • Cap costs, so that full pensioners pay no more than the basic fee.

To make sure more people get to keep their family home, and to prevent anyone being forced to sell their home in an emergency fire sale, we will:

  • Provide more choice about how to pay for care. Instead of a bond which can cost up to $2.6 million and bears no resemblance to the actual cost of accommodation, you will be able to pay through a lump sum or a periodic payment, or a combination of both.
  • Give families time to make a decision about how to pay, by introducing a cooling-off period.
  • Cap care costs, with nobody paying more than $25,000 a year and no more than $60,000 over a lifetime.

For the first time, we will also introduce fairness into the payment system. Right now, pensioners often pay more than people with hundreds of thousands of dollars in assets and a private income. As a result, pensioners are subsidising the accommodation and care costs of millionaires.

From now on the system will be fairer, based on capacity to pay. The amount you pay for aged care services will be capped and underpinned by tightened means testing, meaning older Australians will not be forced into a fire sale of the family home in order to get access to aged care.

This will not affect the million people already in the system, who will not pay a cent more than they would have under the current arrangements.

To ensure there are immediate improvements as well, the government will also:

  • Increase residential aged care places from 191,522 to 221,103.
  • Fund $1.2 billion to improve the aged care workforce through a Workforce Compact.
  • Provide more funding for dementia care in aged care, and more support for services.
  • Establish a single gateway to all aged care services, to make them easier to access and navigate.
  • Set stricter standards, with greater oversight of aged care.

This package reflects in large part what older Australians, their families and carers, and aged care providers have told us is wrong with the system, along with the valuable input of the Productivity Commission report, Caring for Older Australians.

These reforms will enable older Australians to get the help they both need and deserve so they can remain living in their own homes for as long as possible. Labor’s plan will help older Australians keep their own home for as long as they want.

They replace an aged care system designed a quarter of a century ago and which is now ill-equipped to meet the needs of retiring baby boomers and their parents who are living longer and healthier lives.

Implementation of the reforms will be overseen by a new Aged Care Reform Implementation Council. The new reform package will be implemented in stages to enable providers and consumers to gain early benefits of key changes and have time to adapt and plan for further reform over the 10 years.

Under Living Longer Living Better the Gillard Government will invest:

  • $1.9 billion to deliver better access to aged care services;
  • $1.2 billion over five years to tackle critical shortages in the aged care workforce;
  • $80.2 million to improve aged care linkages with the health system;
  • $54.8 million to support carers;
  • $268.4 million to tackle the nation’s dementia epidemic;
  • $192 million to support the diverse care of Australia’s ageing population.

Home care
Older Australians want to receive care in their own home. Over the next five years, the number of operational Home Care packages will increase from 59,876 to 99,669. This will mean less waiting time for people who need care.

Under new means-testing arrangements for Home Care packages, which will start from 1 July 2014, a consistent income test will be introduced. This will ensure that people of similar means pay similar fees – regardless of where they live – with safeguards for those who can least afford to pay.

The means test will not include the family home, which remains exempt.

People currently receiving a Home Care package will not be subject to the new arrangements while their current care continues.

In addition, to protect care recipients with higher than average care needs, an indexed annual cap of $5,000 for single people on income less than $43,000, and on a sliding scale of up to $10,000 for self funded retirees, will apply to care fees. A lifetime care fee cap of $60,000 will be introduced.

Residential care
From 1 July 2014, the maximum accommodation supplement that the Government pays to aged care providers when people are unable to meet the cost of their accommodation will be increased from $32.58 to around $52.84 per day. This will help more aged care homes to be built or refurbished.

As a result, we expect aged care places to increase from 191,522 to 221,103.

At the same time, we will give older Australians more choice about how to pay for their care, ensuring no-one is forced into an emergency fire sale.

Residents can pay for their accommodation in a lump sum, periodically, or a combination of both. A new cooling off period will mean that residents will not need to decide how they are going to pay until they have actually entered care.

From 1 July 2014, residential care means testing will be strengthened and improved. The current income and assets tests will be combined. This will address the unfair situation that results in asset-rich, income-poor residents paying for all of their accommodation and nothing for care, and income-rich, asset-poor residents who pay for their care but not for accommodation.

As with Home Care, the treatment of the family home will not change from current arrangements.

An annual cap of $25,000 and a lifetime cap of $60,000 will apply to care fees.

Support will continue to be provided to ensure homes in regional, rural and remote Australia are viable, and that people with greatest need, such as Indigenous Australians and homeless people, are looked after.

Building the workforce
The Government is tackling critical shortages in the aged care workforce by allocating $1.2 billion over five years to attract, retain and train aged care workers – and to ensure that they receive competitive wages through a Workforce Compact between government, unions and aged care providers.

Building a gateway to aged care services
A new My Aged Care website and national call centre will be established from 2013 – the first step in building the Aged Care Gateway, an online integrated information and assessment entry point. The website will include an innovative ratings system of aged care homes.

Tackling dementia
Nearly a million Australians are estimated to have dementia by 2050.

The Government is making significant investments to better support people, families and carers living with dementia. A new Dementia Supplement will provide financial assistance of $164.3 million to people receiving Home Care packages and in residential care.

There will be increased support for primary health care providers to undertake more timely dementia diagnosis, and a stronger focus on people with younger onset dementia.

Transcript of media release from Minister for Ageing, Mark Butler.

A better and fairer aged care system under Labor

Before entering Parliament, I spent a lot of time in aged care facilities talking with aged care staff and working closely with providers and consumer representatives on aged care policy and programs.

For 15 years I worked for the LHMU – affectionately known as ‘the Missos’ – who are the largest aged care union in South Australia. So I understand the challenges faced by those considering entering the aged care system and their families.

That was the 1980s and the aged care system that exists today is a product of those years. It is under significant pressure and it will simply not be able to provide the care and support that Australians need and service into the future.

Today, too few people are able to access care and support in their own home where they want it, not enough nursing homes are being built, employers are having trouble recruiting and keeping aged care workers and many older Australians have to conduct a fire-sale of their home to pay large bonds to get into residential care. The aged care system is no longer meeting our needs.

The reforms that the Prime Minister and I announced today will usher in a 21st century aged care system built around people staying in their own homes and one that better meets the needs and preferences of a larger, more active community of older Australians.

We have committed $3.7 billion over five years to deliver for older Australians, their carers and families.

The package will mean:

  • More support and care at home;
  • Better access to residential care;
  • Greater choice over the services received in your home;
  • Increased recognition of carers and those from culturally diverse backgrounds, and;
  • More support for those with dementia and better access to information.

Importantly, more people will get to keep their family home and no-one will be forced into an emergency fire-sale of the home.

The ageing of Australia’s population is a profound social shift which requires an equally profound shift in society’s mind set about ageing. Our challenge is to make sure that as we live longer, we continue to lead happy, healthy, productive and connected lives.

Labor has the leadership and vision that is needed to deliver the kind of system Australians will be proud of today and in the future.

You can read more about our package at or contact the Aged Care Information Line on 1800 900 554.

Transcript of joint press conference with Julia Gillard and Mark Butler.

  • Listen to Gillard and Butler (39m)

GILLARD: I’m here today with Minister Butler to announce the Government’s new policy on the future of aged care. We need a new aged care system for four reasons.

First, Australians are living longer, compared with the days when the old age pension first started, Australians live 25 years longer. Now that’s a great thing, it’s a fantastic thing, it means Australians get the opportunity to enjoy longer lives, something that should always be viewed as an asset for our nation, but it does have implications for how we run aged care.

Second, we know the proportion of Australians who will be older, is changing too, we are an ageing society, so our aged care system has to recognise that.

Third, we now have a new generation moving into retirement, the baby boomers, who will clearly want more options and choices than older Australians have sought in the past. The baby boomers changed what it meant to be a teenager, they’ve shaped our life, changed what it’s meant to be an adult Australian, and they will change our conception of ageing as well.

And fourth, the current system has problems that need to be addressed. Now some people talk about a crisis in aged care. There are great people working in aged care, but there are huge problems too, and those problems include that there are not enough funded care packages for those who want to live independently in their own home. To give you just one statistic on that, last year, 24,000 applications were received for community care packages, less than 2000 were provided.

Second, the system currently of payments is unfair. Average pensioners are subsidising the accommodation and care costs of people earning many times what they do.

Third, families can’t get the information they need to make difficult choices.

And fourth, and perhaps most disturbingly of all, 40 per cent of older Australians, are forced into emergency fire sales of their homes, in order to raise the money to pay for care, with bonds that can cost as much as $2.5 million, and bear no resemblance to the cost of accommodation.

So we need to change the system. And the policy that I am announcing with Minister Butler today, is one that honours the rights and dignities of older Australians, it is built on the work of the Productivity Commission that we requested, and of course it’s informed by the conversations Minister Butler has had intensively with stakeholders and with 4000 Australians around the country, older Australians and their loved ones.

The system that we announce today is fairer and simpler. It will give older Australians and their families greater choice and greater control than they’ve had in the past. It will mean that if you want a nursing home place, we will make it easier for you to get one. If you want care in the home, we will make it easier for you to get that care.

More people will get to keep their home, and more people will get to stay in their home. And it will put our aged care system on a sustainable footing so that it can provide the kind of care that Australians expect and deserve, as our population changes.

So what’s at the centre of this package? Well, two things. Making sure older Australians can stay longer in the home, like so many of them want to, and second, making sure older Australians and their families, aren’t forced into emergency fire sales of their family home, at a time of life that’s already difficult, and that can be made heartbreaking if you need to face an emergency fire sale of your home.

So the measures we are announcing today are as follows. To make it easier for older Australians to stay in their home and receive the care they need, we will double home care packages from $59,876 to almost $100,000.

We will provide new tailored care packages to people receiving home care, and new funding for dementia care. And we will cap costs, so that full pensioners pay no more than a basic fee, and others have caps as well, depending on their ability to pay.

We will also make sure that more people get to keep their family home, and prevent the fire sales that I’ve referred to. We’ll do that by providing more choice about how to pay for care, instead of a bond up to $2.6 million, and bearing no resemblance to the actual cost of accommodation, you will be able to pay through a lump sum or a periodic payment, or a combination of both, whatever you choose.

People will also have longer to make that choice, with a cooling off period introduced, so that they can take up their aged care place, and then think about the best way to pay. And you’ll have longer to pay if you need it, and longer to think about how to do it. There will also be a cap on care costs, with no-one paying more than $25,000 a year, and no-one paying more than $60,000 over a lifetime.

And because these changes will increase the number of places, people won’t be forced to make sudden decisions under pressure because they’re scared they’ll lose the only place on offer. This means that people won’t be forced into those emergency fire sales.

For the first time in aged care, fairness will also get a look in. For too long, pensioners have had to subsidise those who are much better off than themselves. Under these changes, which I emphasise will only apply to new people entering care from 1 July, 2014, ability to pay will be taken into account.

Now this recognises a simple reality that those who can support themselves, and contribute a bit more should, and that we must look after the needs of those who can’t.

We’re making these changes now so that we can start improving the system from 2012, but it’s important that those older Australians who are receiving care in the community now, or who are in a nursing home, understand that these changes do not apply to them, those in care will be grandfathered, they will not pay more.

Now these are all big changes, and there’s a lot of detail to be absorbed, and that’s one reason too why we’ve got the start date of 1 July, 2014.

Now I do want to say a word about funding. We are deliberately taking the opportunity today to make this announcement well in advance of the Federal Budget, because whilst this policy has some fiscal impacts, it’s not a budget measure per se, there’s some new funding here, but for the most part, the funding for the package comes from a combination of redirected funding and means testing.

There are two reasons for that, aged care funding must be sustainable into the future and it must give providers an incentive to build places. We’ve got to have it viable, and we’ve got to have it sustainable for the long term.

In conclusion, can I say that when we’ve had policy debates about ageing in the past, losing the family home was the great fear of older Australians when those policy debates were had.

Now, with this policy, the family home will be at the centre of how we will deliver aged care in the 21st century.

I’ll turn to Minister Butler for comments, and then we’ll take questions.

BUTLER: Thank you, Prime Minister.

Today we announce the most sweeping reforms to our aged care system in almost 30 years, transforming a system that was built in the 1980’s around nursing homes, to one whose primary objective is to support older Australians staying in their own home for as long as possible, and if at all possible, for the whole of their lives.

In designing these reforms, as the Prime Minister indicated, we’ve listened very closely to the Productivity Commission, and to stakeholders in the sector, who have worked with us very closely in going over those recommendations one by one.

But most importantly we’ve listened intently to the views of older Australians themselves, views that have been put very forthrightly and very frankly, in the conversations I’ve had with them over recent months, that the Prime Minister referred to.

Living Longer, Living Better is a package of major reform, and $3.7 billion in new initiatives. We will create a new home support program that will consolidate the existing home and community care program, the respite program, and a number of others, and give it six per cent real growth in funding every year.

We will create two new types of homecare packages, and add, as the Prime Minister said, 40,000 new places over the coming five years, taking the expansion of homecare packages under this Government to 110 per cent.

All new homecare packages, and eventually all existing packages, must be consumer-directed, that is, built around the needs of the individual themselves, rather than around the convenience of the provider. And we’re committed to providing more support to carers, those family members who care for their loved ones in their own home, day in and day out.

In addition to a very significant expansion of respite entitlements to those carers, we’re increasing funding to Carer’s Australia for counselling services by 50 per cent over the coming five years. In spite of those reforms though, designed to allow people to stay in their own home, many will still have to enter residential care for some period of their life.

This package builds a fairer and a better residential care system. We will increase the benchmark accommodation charge to $52.80 per day from July 2014 for facilities that are built or significantly refurbished after today’s date, clearing the bottleneck that exists on building new facilities in a number of states around the country, and also taking the increase in that charge to 130 per cent under this Government.

We will also finally introduce a single system of accommodation charging reflecting the principle of ageing in place, which for some years now has meant that older Australians no longer have to move between a hostel system on the one hand and a nursing home system as they become more frail.

In doing this, we will deal with two significant causes of distress for many families in the current system.

Firstly, the Prime Minister and I have spoken before about the excessive bonds being charged in parts of the sector, up to $2.6 million as the Prime Minister said; amounts that bare no relationship to the cost of the accommodation being provided.

The Government is establishing an Aged Care Financing Authority modelled on the Pharmaceutical Benefits Pricing Authority, which among other things will approve accommodation charges and ensure that they reflect the value of the product being offered.

Secondly, the Prime Minister and I have spoken about the fire sale of the family home, faced by so many families who are expected to pay these bonds at a time of significant family crisis. The Government will entrench real choice, so that the consumer decides whether it suits them to pay their accommodation charge in lump sum or on a rental style, periodic basis.

This will be done through a statutory cooling off period that allows the consumer and the family to make that decision after they have gained security of tenure over their place under the Aged Care Act.

As a Labor Government, it goes without saying that we will maintain a robust safety net so that places are available in all regions for older Australians without income or assets sufficient to pay for their own accommodation or their own care.

At least a couple of times in the forums I held late last year, I had people come up to me and say something along the lines that – one lady said: I worked in aged care for 20 years, and I thought I knew it back to front until I had to find a place for my mum. And for the life of me, I couldn’t find the information that we needed as a family to make the best possible choice.

The Government will introduce a single gateway into the system in line with recommendations of the Productivity Commission and the National Aged Care Alliance. At its heart will be a new My Aged Care website which will include information on aged care providers in your community, their services, their amenities, their staffing levels, their fees and charges, their history of complaints – if they have any, and for the first time, a rating system.

To better support older Australians in a system with much more choice, we’re significantly expanding the National Aged Care Advocacy Program by 20 per cent. We’re extending quality accreditation from residential care into home care as well, and giving greater powers over complaints to the independent Aged Care Commissioner so that older Australians and their families can have the greatest possible confidence that they’re receiving good quality care.

The most important factor in the quality of care, however, is the number and the quality of staff; and this is undoubtedly the largest supply bottleneck in the system as well.

Aged care workers are notoriously underpaid. A few weeks ago, both Gary Gray and I met with a number of union delegates in a facility in Western Australia. One woman there had worked at the facility for 19 years. She’d got her Certificate III, then she’d got her Certificate IV. She’d done her first aid training, and she was required to do continuing professional development, but she was still earning well shy of $20 an hour.

To start the process of getting fair and competitive wages into this system, we’ve adopted the model that was proposed by the National Aged Care Alliance. The Government will contribute $1.2 billion to the implementation of a workforce compact to be agreed between providers, unions and consumer groups, and facilitated by an eminent person to be the subject of consultation between Minister Shorten and the president of Fair Work Australia.

As described by NACA -the National Aged Care Alliance – this is a bridging arrangement to longer-term work that must be done on a wages structure that will allow a quality workforce to grow from 300,000 today, to almost one million aged care workers in coming decades.

Dementia is the largest cause of disability among older Australians by a long way, but it will become the largest cause of disability across Australia generally in the next few years. For that reason, Minister Plibersek and I will take a recommendation to the next meeting of state and territory health ministers, that dementia be added to the list of six national health priorities, including at the moment diseases such as cancer, cardiovascular disease, and diabetes.

As has already been reported I think in the media, our package includes a substantial investment of around $270 million in dementia investments to fight dementia in areas like extra care resources for people with dementia receiving aged care; better hospital systems, quicker diagnosis by GPs; better support for the 15,000 younger Australians under 65 who live with dementia; and expanded support services for particular groups like people with dementia from a culturally and linguistically diverse background.

The package also delivers better support to other groups with diverse needs, and responds to a loud and clear message that I receive from older Australians, that they want better guarantees around their control over the circumstances of their death.

This package makes funding arrangements much fairer, but they also make them more sustainable in the face of soaring demand now and into the future.

Feedback from older Australians through the Productivity Commission inquiry and my forums told us that they recognise the need to contribute to the cost of the care, provided they have the financial capacity to do so, and provided that they’re guaranteed that we’re building a better system.

The Government has decided not to alter the treatment of the family home. We will however, introduce more sustainable income testing arrangements, and in residential care, means testing of non-housing assets for people who enter care after 1 July 2014.

Income testing will only apply to income above the maximum pension limit which is currently around $23,500 for a single person. And as the Prime Minister said, we will put in place annual, and for the first time, lifetime caps that limit any person’s contribution to a reasonable amount over one year or their lifetime.

I’m happy to take any questions or throw to the Prime Minister first.

GILLARD: Okay, Phil.

JOURNALIST: Just – Minister Butler said that this is the biggest reform since 30 years. I know it may be a little premature, but how long can we envisage these changes keeping industry sustainable before we, you know, maybe have to go through an exercise like this again?

GILLARD: Well we are envisaging this as the long-term system for the future. We’ve designed it understanding that we’re going to see increased demand as our society ages. And we are viewing this as being implemented over a 10 year period. I’ll go to Minister Butler for some more details.

BUTLER: There will be a substantial review written into the Aged Care Act of progress halfway through that 10 year period. And I imagine, and I know the sector imagines, that we will then want to have a look at things like the degree to which we’ve increased workforce supply, whether there is the capacity to accelerate an expansion of homecare packages at that time, or even introduce the entitlement idea that the Productivity Commission talked about.

I think people in the sector generally agree that we’re going to have to take this slowly; there are supply constraints, particularly around workforce that limit the speed with which we can expand things like home care. But in five years time, having freed-up the bottleneck on construction, having got better workforce arrangements and better maturity in the sector around how you deliver truly consumer-centred care in the home, we may hopefully be in a position in five years to accelerate this.

GILLARD: Yes David.

JOURNALIST: Prime Minister, with the caps that you’re introducing, you’ve referred a few times to the bond at the moment which (inaudible) $2.6 million. But with these caps, can you give any sort of assurance this won’t see any providers capped close their doors?

GILLARD: This is about better viability for providers so that they know what the system is going to be and how they can work within that system, including to see an expansion of the number of places.

So from the point of view of providers, one of the big motivators of a need for change is the system was not going to be viable. I mean, it’s got viability problems now – so creaking now, and that going to get worse in the future. I’ll get Minister Butler to comment on that too.

BUTLER: Let’s be clear, some providers have been earning bonds that give them way over the odds compared against the cost of the accommodation they’re providing.

What we are establishing is a system that will ensure that what they charge reflects the cost of the accommodation they’re providing. They will be able to provide evidence to the financing authority that says it costs us to provide this particular accommodation a certain amount on a lump sum basis or a periodic basis.

We’re moving, I guess, the benchmark rate to $52.80 from July 2014, that would give a return on investment of about 10 percent to the median cost of construction around the country. We think a 10 percent return on investment in this sector, which is a low-risk sector – aged care is not going anywhere fast, it’s going to be with us and continue to grow.

It’s very dependent on Commonwealth funding – so it’s a low risk sector, a 10 percent ROI is very reasonable, and there’s going to be a system where if it costs more they’re going to be able to show that to financing authorities.

JOURNALIST: You talk about supply constraints from the workforce. What are the first workforce issues to be addressed and why wasn’t that a real focus of this announcement today given that it is possibly the key constraint?

GILLARD: Well I think it’s a huge focus of the announcement today with the compact process that Minister Butler’s outlined, and that’s because the workforce strains in terms of getting people into the workforce, retaining them in the workforce are really showing all around the nation, but particularly showing in those parts of the nation where there is a draw into other industries and other sectors. For example Western Australia is seeing huge turnovers of staff and real difficulties in getting staff into the aged care sector.

Minister Butler will go to the details of the workforce components here.

BUTLER: Thank you, Prime Minister.

The single largest element in dollar terms of this package is the workforce element; $1.2 billion out of the $3.7 billion. In addition to that we are providing – there are more than $400 million in the forward estimates already for training in the aged care sector. We are giving that money to the compact parties to give us some advice about whether some of that should be re-prioritised into areas of particular needs.

So in dollar terms this is a very substantial investment by the Government, and in structural terms we have adopted entirely the recommendation from the National Aged Care Alliance comprising providers, unions and consumer groups.

JOURNALIST: (Inaudible) about the fees getting as high as $2.5 million. I understand the average is around $200,000 in accommodation.

BUTLER: Two hundred and sixty-four thousand.

JOURNALIST: So how much of this or is this really giving the most help to people who are already the best – the most well heeled, the best off? People who are best off, are they getting the most help from your changes because they’re paying higher fees now?

BUTLER: Well, if I can have a go at that. Look what we’re finding, certainly not many Australians have $2.6 million lying around once they’re into their 80s, which is the average age of entry into residential care, but we are not finding that large bonds in the hundreds of thousands are just being paid by people of relatively high asset and income.

We are finding people who might be on the pension but have a substantial asset, that they are being asked by the provider to liquidate that asset and to pay the money over to the provider. This is the sort of conversation we see in aged care facilities now.

So this is something that applies across the board whether you are a pensioner with a substantial asset now because you bought into the housing market in a capital city some decades ago, or whether you are a self-funded retiree with reasonably high levels of asset and income, either way it is not a fair system and it’s a system we’re going to deal with.

JOURNALIST: Just on means testing. You say that from 2014 some people, some pensioners and non-pensioners might pay more. Do you have any numbers on how many people might pay more? And are the changes to the bond arrangements designed to offset those costs in a sense?

BUTLER: The major changes are in home care, and currently people who earn above pension income can be asked to pay 50 percent of that above pension income, but it’s not a mandatory arrangement.

From 1 July 2014 for people entering care after that date we will make that 50 percent income contribution mandatory for people who earn above pension income. So pensioners will not pay any more in home care, part pensioners will pay 50 percent of their income above $23,500 for a single person up to a cap of $5,000. Now a home care package might cost as much as $50,000 to the Commonwealth, so that is up to a cap of 10 percent of the home care package they might be on.

Self-funded retirees on incomes of more than $43,000 per year for a single will pay again 50 percent of above pension income but up to a cap of $10,000, which might be as high as 20 percent of the cost, with the Commonwealth Government meeting the other 80 percent.

JOURNALIST: (Inaudible)

GILLARD: I’ll go to that in a second, but can I just say in relation to Mark’s last answer, if you look at the system overall that we are laying out today we’ve got to ensure it’s viable, we’ve got to ensure it’s sustainable, we’ve got to ensure it’s fair. And a big thing in the fairness that I would direct your attention to is the lifetime cap. So people can go through the process of requiring care at home, then go into residential aged care at the appropriate point and understand, you know, the maximum amount over their lifetime that they might be required to contribute.

BUTLER: So to take an example, someone under the current system might spend a year in home care and then two years in residential care. Under the current system a self-funded retiree can pay up to $24,000 towards the cost of their care costs. Now if they happen to be in residential care for three, four or five years, which happens regularly, they might end up paying more than $100,000 to their care costs. Under our new system with a lifetime cap of $60,000 they will be capped at that rate.

So a self-funded retiree on high income might pay one year of home care at $10,000 and then two years, which is an average stay in residential care, at $25,000 a year and reach the lifetime cap. Anyone who stays longer would be protected, and the Commonwealth would pay the whole of the care costs.

If I can just finish – I think Karen asked the follow up. The proportion of the older population between those three categories is around 51 percent are full pensioners, around 37 percent of the population are part pensioners, covered by the $5,000 cap, and around 12 or 13 percent – is that up to 100? – 12 or 13 percent are self-funded retirees.

JOURNALIST: Tony Abbott says this morning that you’re announcing big – paying these big additional charges, making everyone using the aged care pay more. You’re saying he’s wrong.

GILLARD: Well on the extravagant claims I would expect that Tony Abbott’s got things wrong. But can I say this about the attitude of the Opposition; first I would expect Tony Abbott to be negative today, I mean what else would one expect except Tony Abbott to be negative? It’s as certain as the coming up.

But when this comes to the Parliament Mr Abbott has met with stakeholders and has said to them – and this has been publicly reported – that if the Government’s package drew on and built on what the Productivity Commission recommended then he would be prepared to offer bipartisan support.

So let’s expect all of the shrill negativity today, because Mr Abbott’s got no other speed when he’s in front of the media, but when it’s in the Parliament we would expect Mr Abbott to honour his words to the key stakeholder groups he’s spoken to.

JOURNALIST: How does this package affect the families of young people who currently use nursing home care because they’ve become injured or they’ve become ill and acquired a disability and there’s no other care for them? Are they caught up in this?

BUTLER: There is a process being led by Minister Macklin, particularly with the State and Territory Governments to move younger people from having to avail themselves of residential aged care, largely because there aren’t alternative disability-specific facilities available to them.

What we’ve seen through that process is a substantial reduction in the number of new entrants to residential aged care who are younger people with a disability. And this is obviously at the heart of the ambitions that this Government has for a National Disability Insurance Scheme so that there are disability-specific supports for people, so that younger people with a disability, to the extent that they require residential care, are being accommodated with people of their own age.

JOURNALIST: Mr Butler can you outline for us the $1.6 billion claw back you’re going to make to help pay for this? And would you describe what some of the homes have been doing with rorting the system?

BUTLER: Well this has been a period of unusual claiming, if I can put it that way, under the new aged care financing and funding instrument that we introduced in 2008. This is an instrument that much better reflects the different levels of frailty that residents in residential care have. But what we found last year is that the growth of claiming among some providers was deeply unusual.

Having audited a number of these and set up a monitoring group that includes providers and consumers and clinicians, doctors to provide us with clinical evidence, we found that there are certain questions in the assessment process that have shown dramatic increases in movements between low needs to medium needs to high needs.

So taking an example is how long it takes residents to chew their tablets. This is a question in the ACFI assessment process that doesn’t require any evidence. And it has seen amongst some providers a huge shift to high needs with a resulting lift in the income they receive from the Commonwealth Government.

Those questions that require clinical evidence haven’t shifted, they haven’t shifted, and the extra income we know is not going into additional care staff.

So we’re very confident after the work we’ve done with the monitoring group that this is inappropriate claiming, and we’re able to take steps to bolster the evidence requirements among those questions, and also bolster some audit processes to pull back half of that upward revision, so $1.6 billion out of the $3.2 billion over five years, and direct it into new areas of need.

GILLARD: We’ll go to Phil and then come back to Karen. Phil.

JOURNALIST: More broadly, this policy is part of a trend of reforms by your Government to keep public spending sustainable as the population ages. In that context, would increasing the tax on superannuation contributions go against that trend?

GILLARD: Nice try and no doubt drawn off the pages of today’s newspapers and in the category of Budget speculation – and you’ll just have to wait to Budget night. I know it’s frustrating, but you’ll live.


BUTLER: A waste of a question.

JOURNALIST: I know. Given the crackdown on what you’re effectively saying is rorting in some corners, and increased regulation on fees, how much blow back are you expecting from providers for the, what you’ve just announced today?

BUTLER: Look, there are some providers who have been unusually claiming levels of money that we don’t think they’re entitled to. And they may be unhappy that the jig is up – we also know that there are consultants that are being used widely in states like South Australia and Queensland, one of whom had a cartoon on their website with a nurse holding a Parliament House shaped money box and shaking it vigorously until money came out.

So look this is a process that needs to stop. It was an unfortunate phase by some providers. We intend, in a measured way, to start to claw back that money and redirect it into areas of need, and if some providers don’t like that I think bad luck.

JOURNALIST: Nursing proprietors – nursing home proprietors might say though that looked at the other way, that cartoon could have shown how hard it has been to get money out of the Government for much-needed improvements in services here.

GILLARD: Well Mark I’ll go to the other Mark, but a man of your expertise in this area would of course recognise the substantial increases in investment, in aged-care that this Government’s already made.

What we are announcing today of course goes to the long-term structures of the system – and it’s long-term viability, sustainability, and fairness, and puts, you know, the family home at the centre of how care’s going to be delivered.

But you’d have all those figures in your mind about our in… additional investments, I’m very confident.

BUTLER: And in case you don’t, Mark, I’m happy to remind you of them: aged care funding under this government this year is more than two thirds higher than it was five years ago. And one of the substantial sources of extra funding for providers is the new funding instrument we’ve put in place so that per resident funding to providers has grown by more than four per cent per year.

So there are certainly providers doing better than others. But the providers I’ve talked about – that we’ve been able to look at that have been claiming in unusual ways extra funding, we know that the extra funding is moving into earnings rather than outgoings in extra staff, which is what you would expect if their frailty levels were increased.

JOURNALIST: They haven’t been penalised or prosecuted over these claims though have they?

BUTLER: No, no, we’re making reassessments and we’ll look at the way in which the assessment process and compliance mechanisms work in the future. Our priority at the moment though is to redirect the money into important new initiatives – and we’re doing that.

JOURNALIST: As far as the workforce compact goes, will the Health Services Union be involved in that?

BUTLER: Well look, that is a matter for the National Aged Care Alliance, and at the moment the Health Services Union, United Voice, and the Australian Nursing Federation who represent nurses in the area are the three unions represented in the alliance.

That is a matter for the industrial parties to work through, as overseen by the person as I said that Minister Shorten, Fair Work Australia will nominate to chair that process.

JOURNALIST: And are you happy with their representation of aged care workers in recent years?

BUTLER: Well our priority is to make sure that aged care workers, no matter what their industrial representation, are given more support by this Government, and have the incredibly important work that they perform day in and day out, recognised and reflected in wages and other conditions of employment.

So that is our focus. And our focus isn’t on the particular industrial representation from state to state.

JOURNALIST: On the rorting that’s been going on, have officials been warning these nursing homes? Has there been action to try and crack down before this crack down?

BUTLER: Well as part of the process that I talked about, Michelle, with a monitoring group of providers and consumers and clinicians, we’ve also been undertaking reassessments, which we’re able to do under the Aged Care Act. And a number of those providers have seen their assessments reduced very significantly – and in significant numbers.

So there have been some robust and frank discussions, it’s fair to say, between the Department and those providers.

JOURNALIST: But there’s not been an opportunity to get back money that’s already been misappropriated as it were?

BUTLER: No. And you know, we need to recognise that that money is attached to an assessment of a particular resident in aged care. And we’re not intending to have the assessment of individuals downgraded.

So this is something that will apply to new assessments. We don’t want to see in any way individual residents of aged care facilities can end up worse off. We’re going to do this as I said in a measured way with new assessments.

GILLARD: Michelle, to put it at its most simple, you would expect us to be very forensic about the evidence, and you would expect us to make the best decisions in this package for the future about the use of Government dollars, and we have.

JOURNALIST: (Inaudible) access to GPs and specialists. How will the reform package improve that? That’s a problem currently.

BUTLER: Absolutely. Well there is around $60 million in the package where we’ll be asking the health sector and the aged care sector to devise innovative ways in which we can get better health linkages. What we know is that around 30,000 people every year are admitted from a residential care facility to hospital when they could have been quite adequately treated at the aged care facility if a GP were available – or some other health professional.

They’re just not available in those cases. So we need to find innovative ways of being able to connect GPs that will be open in ’12, ’13. We want to-

JOURNALIST: Is that open for discussion and debate?

BUTLER: Yeah, so we want to talk with the sector, and obviously the AMA and other representatives of the health sector about the best way to target that money. And we also want to look at ways in which we can leverage off technical innovations like telehealth and such like.

GILLARD: And we should of course say just for completeness, that is also being worked from the other end if you like with the kind of, the health reforms and the work that we’re asking Medicare locals to do for example, to you know map patterns of need and primary care responses.

JOURNALIST: Prime Minister, just on another issue, the Opposition Leader’s given a speech this morning in which he’s described himself as a conservative, and a conservationist, and he says that those two things come from the same route; and to be one you are the other. Can you give us a response to that?

GILLARD: Look, I won’t lose too much time worrying about the alliteration in Mr Abbott’s speeches. But as I understand it what Mr Abbott’s out and about today is something that the Government dealt with last Friday at the Council of Australian Governments. I think we’re just seeing an unseemly bit of catch up because Mr Abbott likes to pretend occasionally he’s got something positive to say.

Thanks very much.

JOURNALIST: Prime Minister, just quickly, your trip to Singapore, what do you hope to achieve?

GILLARD: I’ll be leaving on Sunday. Singapore’s a good partner, a good friend, we have extensive links across all of the way in which government works with other nations – extensive links, economically extensive ties in defence, we work together in multilateral forums in the region and beyond. For example, Singapore has been invited on a number of occasions to attend the G20.

So I’m looking forward to having the opportunity for full discussions whilst I’m there.

The Government of Singapore and its officials rightly watch people come and go and fly through Singapore on their way to other places, and certainly like it if we can take the time and opportunity, periodically, to directly engage with the Government of Singapore. And that’s what I’ll be doing.

Thanks very much.

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Malcolm Farnsworth
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