Mr TURNBULL (Wentworth) (16:56): There are few more pressing issues that face Australia today than that of aged care. Our population is getting older: today at least one out of every seven Australians is aged over 65, and that number is predicted to double in coming decades. By 2050 over 3½ million Australians are expected to use aged-care services at some point each year. This issue of aged care is of great significance to my electorate of Wentworth, where there are more than 40 aged-care facilities and 11,000 residents over the age of 75.
I have visited many of the very fine aged-care facilities in Wentworth. Only last week I was at the Montefiore Home in Randwick being given lessons in making challah by the residents. There, as I have been at the other aged-care facilities I visited in my electorate, I was impressed by the commitment of the staff, the range of activities and strong relationships that have been developed and, of course, the use of the very best technologies and medical science to maximise the experience of the residents and their quality of life.
However, achieving high standards in aged care is never easy, and it is becoming increasingly difficult. There is growing and alarming evidence that the aged-care sector cannot provide the care that Australians expect. Despite an increase in demand, only around 40 per cent of residential aged-care facilities are operating at a profit. At a time when there is increasing demand for services, providers are walking away from the sector due to the lack of viability in providing high-care beds and the increasing compliance demands of government. Providers are handing back licences, and senior Australians are having to wait longer and travel further to find a bed, thereby placing higher pressure on the public hospital system and on families. This is in stark contrast to the situation under the coalition government, when aged-care places were highly sought after.
The Productivity Commission reported on this matter in 2011, and the slowness of the government in responding to it, of course, is a remarkable feature of this debate. It took the minister over 250 days to respond to the Productivity Commission report. But, in any event, the report, Caring for older Australians, set out the key difficulties confronting the aged-care system. It is difficult to navigate. Its services are limited, as is consumer choice. Quality is variable. Coverage of needs, pricing, subsidies and user co-contributions are inconsistent or inequitable. Workforce shortages are exacerbated by low wages, and some workers have insufficient skills. What was called for was real leadership and real change. Instead, there was, as I said, over 250 days of nothing happening before the minister finally responded to it. The report from the commission recommended a reduction in regulation over price and supply in aged care, recognising that overregulation in the industry was a major impediment to investment. However, this package of bills intends, contrary to the recommendations of the Productivity Commission, to introduce additional regulations to pricing. Labor, regrettably, has ignored the bulk of the report’s recommendations and merely cherry-picked those that suit its agenda.
Let me turn to how this disappointing package directly impacts my own electorate of Wentworth. I recently visited the Advantaged Care aged-care complex in Bondi and met with the managing director, Mr Michael Kresner, to discuss the current policy environment for aged-care service providers. Mr Kresner made a submission to the Senate inquiry on these bills. This is the inquiry which should be allowed to complete its report before the debate on these bills is concluded in this House; the government is not prepared to do that.
In any event, Mr Kresner expressed very real concern about the package. He noted that the Productivity Commission’s report into aged care recommended a reduction in the regulation of pricing in aged care to encourage an innovative, sustainable and strong future aged-care industry which would have the flexibility to deal with our ageing population’s expectations. This is a quote from his submission:
“Due to the relatively high proportion of wage costs to overall return, providers are using too many high level resources to meet regulatory compliance and do not have the … head space or flexibility to think out of the box to deliver on the flexible care models the public is calling for.”
“Market driven accommodation bonds, has given investors the confidence to invest, know they will be able to pay back debt to acceptable levels and achieve returns that justify investment over the long term … oversupply has often led to providers cutting their bonds to achieve occupancy in the short term.”
His submission says that, in the eastern suburbs of Sydney and the south Gold Coast, there has been an:
“over supply in recent years where providers have had to be intensely competitive.”
The government’s proposed package of bills adds yet more red tape to an already over-regulated industry. The coalition, on the other hand, has committed to cutting a billion dollars of red tape and regulation costs on business each year. We will make sure that we maintain a high standard of care and safety but will create in this industry a regulatory environment that allows aged-care providers to do what they do best—looking after senior Australians. Labor’s proposed package is seeking to further regulate pricing in aged care, and that will have the effect of restricting innovation and threatening the viability of our industry in a period where investment desperately needs to be encouraged. In every industry, putting a cap on the price will drive capital away. Mr Kresner is one of the few people who are investing in aged-care facilities today and he has built four new aged-care facilities in the last decade, investing close to $70 million in the process.
Speaking with aged-care providers in my electorate, such as Mr Kresner and Howard Smith from Greengate, two major, detailed issues with the bills have emerged as common problems for providers: the regulation of accommodation bonds, on which I have just touched, and the Aged Care Workforce Supplement. Accommodation bonds are an important part of the funding model for aged-care providers, being refundable deposits that residents pay for living in an aged-care facility. They allow operators to repay debt for constructing new facilities. Accommodation bond pricing is currently market based. The new legislation proposes regulating accommodation bonds, including introducing a new bureaucrat, the pricing commissioner, to determine bond pricing. For bonds over $400,000, which is the majority of the bonds in Wentworth, there are no defined approval criteria. It is unclear how the pricing commissioner will determine the price for these bonds or whether the decision will be discretionary. Accommodation bond pricing approval will not be determined for another year, apparently, which will lead to further uncertainty for the industry, and there is unlikely to be any appeal rights if applications fail or pricing is reduced.
The proposed regulation of accommodation bonds is highly troubling for operators and has created significant uncertainty. Indeed, investment in the sector has been significantly reduced because of this uncertainty and, for many operators, has ceased since 2010 when the Productivity Commission commenced its report. This uncertainty is set to continue until at least the middle of next year when the pricing commissioner commences issuing its pricing approvals.
All of this is a terrible outcome for the aged-care industry, given that the sector already suffers significant underinvestment, especially relative to the forecast demand. We have to ask: why is this government seeking to limit private investment in aged care when the baby boomers are starting to consider where they will live when they become old and infirm?
Those operators who are already in the process of constructing new premises have based their investment decisions on accommodation bond pricing in the current market. If the pricing commissioner does not approve their proposed pricing, and with no appeal rights, what will this mean? Will they be immediately in default of valuation and debt-funding covenants? What motivation is there to provide choice for aged-care residents when the government determines pricing, not the market? The coalition believes that the quality and choice of accommodation for residents will be reduced—and that, of course, has been the tenor of the submissions made to the Senate inquiry.
I now turn to the matter of the Aged Care Workforce Supplement—this union recruitment scheme using public money to build up the ranks of the United Voice union. The $1.2 billion workplace supplement, which will supplement the wages of some in the industry, is an issue of particular concern to the coalition and has been consistently raised as a major concern by aged-care providers in the community. Under the proposed workforce supplement, providers with more than 50 beds will have to enter into an enterprise bargaining agreement and meet certain workforce obligations to access funding under the supplement.
The draft guidelines require aged-care operators to enter into union-endorsed enterprise-bargaining agreements to access additional funding, to then pass on to staff through higher wages. This mirrors a very similar pattern of behaviour that we saw in the early childcare sector, with many childcare providers being strongarmed into entering into enterprise-bargaining agreements after the government introduced the Early Years Quality Fund. The government is encouraging the United Voice union to approach workplaces to sign up staff, with the promise of extra government money if they do so.
This promised supplement comes right on the heels of cuts to the Aged Care Funding Instrument. The speed at which this was followed by the introduction of this access measure clearly indicates that the government seeks to reward only those providers who have workers with union membership.
This is a significant change to the industrial relations environment where aged-care providers are not required to enter into an enterprise-bargaining agreement above and beyond the current regulatory environment of compliance with modern awards and National Employment Standards. The supplement is better described as a government-funded, taxpayer-funded, union-driven membership drive, dressed up as a funding reform.
The Presbyterian Aged Care Network, whose affiliate Presbyterian Aged Care NSW runs services in Paddington in my electorate, noted in their submission to the Senate Community Affairs Legislation Committee on this legislation that they are concerned that there are fundamental flaws in the proposed mechanisms for the supplement. They believe that the supplement will not achieve its goal of improving aged-care wages, especially for those people on award rates whose employers may not be able to afford the percentage margin above the awards required to be eligible for the supplement.
The government’s aged-care package, which the House is debating today, has been beset by delay and just seems to add unnecessary red tape to what is an already highly regulated area. Having established the Productivity Commission inquiry, the government took the best part of a year—over 250 days—to respond to the recommendations and then largely ignored the recommendations of the Productivity Commission, cherry-picking a number of those recommendations. Not all of the measures in this legislation are misconceived; there are some worthwhile elements among it.
What the legislation does not do is provide the impetus or the incentive for the improvement of aged-care services in Australia. In an industry that has been crying out for liberation from the excessive regulation, red tape and heavy costs which, as Mr Kresner describes, are associated with that, the government is now imposing further costs.
The coalition supports high standards and efficient regulation to provide high-quality care and service to the increasing number of older Australians in aged care. But nothing, except perhaps more recruits to the trade union, is gained by adding unnecessary and ill-thought-out red-tape measures to an industry which is in desperate need of more innovation and more creativity. That can only come from an industry which is accorded greater economic freedom. The government is seeking to deny that. It is a classic example of one of the failures of this Labor government. At the end of the day, this government does not believe, as our side of politics knows, that the role of government is to enable Australians to do their best; it profoundly believes and is quite convinced here in this sector, as in every other sector of our economy, that the government’s role is to tell Australians what is best and, in so doing, it fails to respect the innovation, the intellect, the energy and the enterprise of Australians and the innovation that will flow from it.