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.
Overview
The Aged Care Act 1997, enacted by the Australian Parliament, addresses various issues related to the provision of aged care services in Australia. One aspect of the Act is the adjusted subsidy reduction, which pertains to the historical discount applied to the standard infrastructure funding of nursing homes that transitioned from State Government to Commonwealth funding. This Act aims to ensure a consistent and fair subsidy structure for these services. The explanatory statement regarding Section 44-19 of the Act indicates that the Minister has the authority to determine the amount of the adjusted subsidy reduction in writing. Effective from 1 July 2008, the adjusted subsidy reduction amount was set at $10.96, superseding the previous determination made under 44-19 (ACA Ch. 3 No. 13/2007). The policy objective behind this determination is to maintain a transparent and systematic approach to the indexation of aged care subsidy rates, which incorporates movements in wage and non-wage costs.
Scope and Application
The Aged Care Act 1997 applies to the adjusted subsidy reduction for nursing homes that had transitioned from State Government funding to Commonwealth nursing home funding. Specifically, this applies to services that were previously approved as "adjusted fee government nursing homes." The Act provides the Minister with the authority to determine the amount of the adjusted subsidy reduction, which is a reduction to the daily subsidy per resident equivalent to the discount that applied before 1 October 1997. The current determination sets this amount at $10.96, effective from 1 July 2008, and supersedes the previous determination made under 44-19 (ACA Ch. 3 No. 13/2007). Furthermore, the Act allows for the identification of residential care services, or parts thereof, that qualify as adjusted subsidy residential care services, with the Minister’s determination updated as of 13 June 2007 to exclude those adjusted subsidy places now owned by the non-government sector. This determination is part of the broader framework of the Act that ensures consistent application and indexation of aged care subsidies.
Key Provisions
The key provisions of the Aged Care Act 1997, as amended by the Determination under Section 44-19, involve the establishment of an adjusted subsidy reduction for certain residential care services. Under Section 44-19(2), the Minister is authorised to determine the amount of the adjusted subsidy reduction in writing, setting it at $10.96 effective from 1 July 2008, and revoking the previous determination (ACA Ch. 3 No. 13/2007). Additionally, Section 44-19(1)(b) allows the Minister to designate a residential care service or part of it as an adjusted subsidy residential care service in writing, with a recent update removing those places now owned by the non-government sector.
The Act imposes specific obligations on parties involved in aged care services. The Minister must ensure that the adjusted subsidy reduction is accurately calculated and applied to eligible services, which in this case are those previously known as "adjusted fee government nursing homes". This requires the Minister to review and update the subsidy rates in accordance with established indexation formulas. Furthermore, the Act necessitates that residential care services comply with the Minister’s determination regarding their eligibility for the adjusted subsidy, ensuring that they meet the criteria specified in Section 44-19(1)(b).
Failure to comply with the provisions of the Aged Care Act 1997 can result in legal consequences. While the Act does not explicitly state specific offences, breaches of the Minister’s determination could lead to disputes over subsidy amounts, potentially resulting in legal action. Additionally, the Act's requirement for accurate and timely indexation means that any failure to adhere to the established formulas could be subject to review and correction, impacting the financial arrangements between the service providers and the Commonwealth. The penalties for non-compliance are not explicitly stated in the Act, but they could involve financial penalties or corrective actions to ensure adherence to the stipulated rates and obligations.