EXPLANATORY STATEMENT
AGED CARE ACT 1997
SECTION 44-16
DETERMINATION OF RATES OF FINANCIAL ASSISTANCE
(ACA Ch. 3 No. 12/2007)
TRANSITIONAL SUPPLEMENT
Subsection 44-16(3) of the Aged Care Act 1997 provides that the Minister may determine in writing the amount of additional primary supplements or the way in which the amount of the supplement is to be worked out. Subsection 44-16(1) of the Act provides that the Residential Care Subsidy Principles 1997 may provide for additional primary supplements. Section 21.26 of the Residential Care Subsidy Principles 1997 provides for the eligibility for payment of the transitional supplement.
An aged care service is eligible for the payment of transitional supplement when residential care other than respite care is provided to:
- A care recipient who, after 30 September 1997, entered a residential care service that was not certified on the day the care recipient entered the service; or
- A person who:
- on 30 September 1997 occupied a hostel place as defined under the Aged or Disabled Persons Care Act 1954; and
- on 30 September 1997 was a financially disadvantaged person for General Conditions formulated under section 10F of that Act; and
- after 30 September 1997 continued to receive residential care from the service; and
- has been classified under Part 2.4 of the Act
- on 30 September 1997 occupied a nursing home bed in a nursing home approved under section 40AA of the National Health Act 1953; and
- after 30 September 1997 continued to receive residential care from the service; and
- has been classified under Part 2.4 of the Act.
This determination sets the transitional supplement rates with effect from 1 July 2007. This amount is equivalent to the concessional resident supplement for services where more than 40% of the residents are concessional or assisted residents.
All residential care subsidy rates are indexed on 1 July each year. The index incorporates movements in wage costs and non-wage costs. The wage costs component is calculated using the annualised dollar figure of the October 2006 Federal Minimum Wage decision of the Australian Fair Pay Commission expressed as a proportion of the (latest available) Average Weekly Ordinary Time Earnings at the time of the AFPC decision. The non-wage costs index is based on the Consumer Price Index exclusive of the impact of A New Tax System consistent with a whole of government decision.
Consultation
As the indexation of this supplement uses a well established formula for indexation, no specific consultation with industry was undertaken with respect to this instrument.
Overview
The Aged Care Act 1997, enacted by the Parliament of Australia, was introduced to address the need for a structured approach to providing financial assistance for aged care services. It establishes the framework for subsidies and supplements to ensure that residential aged care services are accessible and affordable for those in need. The Act was designed to fill the gap in ensuring adequate support for elderly individuals requiring residential care, particularly those who may be financially disadvantaged. The 2007 legislative instrument, concerning the determination of rates of financial assistance, specifically addresses transitional supplements for residential care services. This instrument aims to maintain and adjust the supplement rates in line with economic indicators, ensuring the financial assistance provided is commensurate with the costs of providing care. The policy objective is to ensure that the rates are regularly updated to reflect changes in the economic environment, particularly wage and non-wage costs, thereby maintaining the viability and sustainability of residential aged care services.
Scope and Application
The Aged Care Act 1997 applies to entities providing residential care services, particularly those who offer residential care other than respite care to specific categories of care recipients. The Act targets care recipients who entered a residential care service after 30 September 1997 that was not certified on the day of entry, as well as those who occupied a hostel place or nursing home bed on 30 September 1997 and were financially disadvantaged, continuing to receive residential care after this date. The legislation also pertains to the classification of these individuals under Part 2.4 of the Act. The transitional supplement rates set forth in this Act are effective from 1 July 2007, aligning with the concessional resident supplement for services where more than 40% of the residents are concessional or assisted residents. These rates are indexed annually on 1 July, incorporating changes in wage costs and non-wage costs as determined by the Australian Fair Pay Commission and the Consumer Price Index. This legislative framework applies nationally across Australia and is subject to the provisions of the Residential Care Subsidy Principles 1997.
Key Provisions
The primary sections of the Aged Care Act 1997 (ACA) under consideration here are Section 44-16(3) and Section 44-16(1), which allow the Minister to determine the amount of additional primary supplements, and the Residential Care Subsidy Principles 1997, which provide for the eligibility of certain payments. Specifically, the transitional supplement is outlined in Section 21.26 of the Residential Care Subsidy Principles 1997. This supplement is applicable to aged care services that provide residential care other than respite care under certain conditions. Eligibility for this supplement is limited to care recipients who entered a residential care service after 30 September 1997 and were not certified on the day of entry, or to those who were financially disadvantaged on 30 September 1997 and continued to receive residential care thereafter. These provisions are intended to provide financial assistance to those who meet specific criteria.
The Aged Care Act 1997 imposes several obligations on the parties involved. The Minister, under Section 44-16(3), has the authority to determine the amount of additional primary supplements and how these amounts are calculated. This is subject to the conditions outlined in the Residential Care Subsidy Principles 1997, particularly Section 21.26, which specifies the eligibility for the transitional supplement. Service providers must ensure that the care recipients meet the eligibility criteria to qualify for these supplements. Additionally, the Act mandates that all residential care subsidy rates are indexed annually on 1 July, incorporating movements in wage costs and non-wage costs.
There are no specific offences, penalties, or consequences outlined in the Act for failure to comply with the transitional supplement provisions. However, non-compliance with the terms of the subsidy payments could potentially lead to legal scrutiny or financial audits by relevant authorities. The Act ensures that the supplement rates are indexed using a formula that includes the annualised dollar figure of the October 2006 Federal Minimum Wage decision of the Australian Fair Pay Commission and the Consumer Price Index exclusive of the impact of A New Tax System. The use of established indexation formulas ensures consistency and fairness in the calculation of these supplements.