EXPLANATORY STATEMENT
AGED CARE ACT 1997 SECTION 44-19
DETERMINATION UNDER SECTION 44-19
(ACA Ch. 3 No. 16/2008)
ADJUSTED SUBSIDY REDUCTION
Subsection 44-19(2) of the Aged Care Act 1997 (the Act) provides that the Minister may determine in writing the amount of the adjusted subsidy reduction.
Under the National Health Act 1953, nursing homes that had transferred from State Government funding to Commonwealth nursing home funding were known as “adjusted fee government nursing homes”. They were paid a discounted rate of standard infrastructure funding.
The discounted subsidy translated into the Act as the adjusted subsidy reduction. This is a reduction to the daily subsidy per resident equivalent to the discount that applied before 1 October 1997. It only applies to services that were approved as “adjusted fee government nursing homes” under the previous arrangements.
This determination sets the adjusted subsidy reduction amount as $10.96 with effect from 1 July 2008, and revokes the previous determination under 44-19 (ACA Ch. 3 No. 13/2007).
Paragraph 44-19 (1)(b) of the Act provides for the Minister to determine in writing that a residential care service, or part of a residential care service through which the care is provided, is an adjusted subsidy residential care service. The Minister’s determination under this section of the Act (ACA Ch 3. No. 5/2007) was updated on 13 June 2007 to remove those adjusted subsidy places that are now owned by the non-government sector.
Consultation
Many aged 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.
As the indexation of this subsidy uses a well-established formula for indexation, no specific consultation with industry was undertaken with respect to this instrument.