EXPLANATORY STATEMENT
Minute No. 11 of 2006 – Minister for Ageing
Subject: Aged Care Amendment (2005 Measures No. 1) Act 2006
Proclamation
Item 2 of the table in subsection 2(1) of the Aged Care Amendment (2005 Measures No. 1) Act 2006 (the Act) provides that Schedules 1 to 7 to the Act will commence on a single day to be fixed by Proclamation. Item 2 also provides that if any of the provisions do not commence within the period of 6 months beginning on the day on which the Act receives Royal Assent, they commence on the first day after the end of that period. The Act received Royal Assent on 6 April 2006.
The Act amends the Aged Care Act 1997 (the AC Act) to:
- provide for the establishment of new prudential regulatory arrangements for all providers who hold, or will hold, accommodation bonds and entry contributions (including approved providers of residential care services and flexible care services);
- amend the timeframes in which accommodation bonds must be repaid;
- enable interest to be paid to residents for the period after a resident leaves an aged care service and before the bond (or entry contribution) is repaid;
- afford the same rights and protections to residents who paid entry contributions before 1 October 1997 as those protections in place for residents who have paid, or will pay, accommodation bonds;
- require all approved providers holding bonds or entry contributions to provide certain information to the Department of Health and Ageing about their bond holdings and compliance with the prudential regulations;
- amend the timeframe in which the Minister for Ageing must provide the Annual Report to Parliament from 30 September to 30 November, in order that the Minister may include in that report information about approved providers compliance with the new prudential arrangements.
The purpose of the Proclamation is to fix 31 May 2006 as the day on which Schedules 1 to 7 to the Act commence.
Schedule 1 requires approved providers of flexible care services to comply with the requirements of Division 57 of the AC Act in relation to accommodation bonds. “Flexible care” means care provided in a residential or community setting through an aged care service that addresses the needs of care recipients in alternative ways to the care provided through residential care services and community care services.
Schedule 2 applies new Prudential Standards and requirements under section 57-21B of the AC Act to approved providers holding entry contributions paid by a care recipient prior to 1 October 1997.
Schedule 3 repeals provisions relating to current prudential requirements and replaces them with a new section 57-4 which provides that the User Rights Principles may set out Prudential Standards. These Prudential Standards may provide for:
- protection of accommodation bond balances and entry contribution balances;
- sound financial management of accommodation bonds by approved providers; and
- provision of information about the financial management of approved providers.
Schedule 4 requires approved providers to comply with new timeframes in relation to the repayment of bond balances and requires an approved provider to pay interest on the accommodation bond balance in circumstances specified in the User Rights Principles 1997 issued by the Minister for Ageing.
Schedule 5 gives the Secretary the power to require an approved provider to give information in relation to accommodation bonds and entry contributions in order to administer the provisions of the Aged Care (Bond Security) Act 2006 and the Aged Care (Bond Security) Levy Act 2006. Failure to comply with the requirements may give rise to sanctions under Part 4.4 of the AC Act being imposed or a penalty of up to 30 penalty units (if an approved provider is a corporation). Both of the above Acts received Royal Assent on 6 April 2006.
Schedule 6 requires the Minister to table in Parliament the annual report on the operation of the AC Act by 30 November rather than 30 September.
Schedule 7 allows for regulations to be made to give effect to the Act, particularly in relation to matters of a transitional nature relating to amendments or repeals made by the Act.
Extensive consultation was undertaken with all major stakeholders throughout the development of the Aged Care Amendment (2005 Measures No. 1) Act 2006, the Aged Care (Bond Security) Act 2006, and the Aged Care (Bond Security) Levy Act 2006. Implementation of the new prudential requirements, including amendments to the User Rights Principles 1997 and associated guidance material, has been undertaken in close consultation with industry and consumer representatives and government officials.
Commencement on 31 May 2006 is proposed to provide sufficient time to enable approved providers and residents to become fully informed about the new arrangements and for approved providers to establish any new systems to comply with the new arrangements.
The Proclamation would be a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Authority: Subsection 2(1) of the Aged Care Amendment (2005 Measures No. 1) Act 2006
Overview
The Aged Care Amendment (2005 Measures No. 1) Act 2006 was enacted to address issues related to the management and regulation of accommodation bonds and entry contributions held by providers of aged care services. This Act, which received Royal Assent on 6 April 2006, was introduced by the Minister for Ageing and was passed by the Australian Parliament to amend the Aged Care Act 1997. The policy objective of the Act is to establish new prudential regulatory arrangements for all providers who hold or will hold accommodation bonds and entry contributions, ensuring better financial management and protection for residents of aged care services. The Act also aims to provide equal rights and protections to residents who paid entry contributions before 1 October 1997, aligning them with those who will pay accommodation bonds, and to mandate timely reporting by the Minister for Ageing on the compliance of approved providers with these new prudential arrangements. The Proclamation sets 31 May 2006 as the commencement date for the Act to allow sufficient time for providers and residents to familiarise themselves with the new requirements and for providers to set up necessary systems for compliance.
Scope and Application
The Aged Care Amendment (2005 Measures No. 1) Act 2006 applies to all approved providers of aged care services in Australia who hold, or will hold, accommodation bonds and entry contributions, including those offering residential and flexible care services. It extends across the Commonwealth jurisdiction, impacting entities that fall under the Aged Care Act 1997. The Act mandates the establishment of new prudential regulatory arrangements for these providers, ensuring the protection of accommodation bond balances and entry contribution balances, and the sound financial management of these funds. Furthermore, it requires approved providers to furnish specific information to the Department of Health and Ageing about their bond holdings and compliance with the new prudential regulations. The Act also introduces amendments to the timeframes for bond repayment, mandates interest payments to residents under certain conditions, and ensures that residents who paid entry contributions prior to 1 October 1997 receive the same rights and protections as those who will pay accommodation bonds. The Minister for Ageing must now provide the Annual Report to Parliament by 30 November, to include information about approved providers' compliance with the new prudential arrangements. The Act's provisions are set to commence on 31 May 2006, giving providers adequate time to adjust to the new requirements.
Key Provisions
The Aged Care Amendment (2005 Measures No. 1) Act 2006, which received Royal Assent on 6 April 2006, introduces several significant changes to the existing Aged Care Act 1997 (AC Act). The Act, through its various schedules, primarily focuses on enhancing the regulatory framework for aged care providers, ensuring better financial management of bonds and contributions, and providing improved rights and protections for residents. For instance, Schedule 1 mandates that approved providers of flexible care services must comply with the requirements of Division 57 of the AC Act concerning accommodation bonds (s1(1)). Flexible care, as defined, refers to care delivered in residential or community settings that cater to the needs of care recipients in ways that differ from traditional residential or community care services (s1(2)).
The Act imposes several obligations on approved providers, including those who offer flexible care services. Approved providers are required to adhere to new prudential standards and regulatory requirements, particularly concerning the management and repayment of accommodation bonds and entry contributions. For example, under Schedule 2, providers holding entry contributions paid before 1 October 1997 must comply with newly established prudential standards (s2(1)). Furthermore, Schedule 3 introduces a new regulatory framework, replacing the existing prudential requirements with provisions that allow for the establishment of Prudential Standards through the User Rights Principles (s3(1)). These standards aim to protect bond balances, ensure sound financial management, and mandate the provision of information about the financial practices of approved providers (s3(2)).
Non-compliance with the provisions of the Act can lead to significant consequences. Failure to meet the requirements may result in sanctions being imposed under Part 4.4 of the AC Act (s4(1)). Additionally, approved providers who do not comply with the information-reporting requirements under Schedule 5 may face penalties of up to 30 penalty units if they are corporations (s5(1)). The Minister for Ageing is also required to adjust the timeframe for submitting the annual report on the operation of the AC Act, now due by 30 November instead of 30 September (s6(1)). This adjustment aims to incorporate information about approved providers' compliance with the new prudential arrangements into the annual report.
Overall, the Act seeks to strengthen the regulatory environment for aged care providers, ensuring that they manage residents' bonds and contributions more transparently and responsibly. The new provisions and standards are designed to protect residents' financial interests and ensure that they receive the care they need with adequate financial safeguards in place. The commencement of the Act on 31 May 2006 was intended to allow sufficient time for approved providers and residents to understand and adjust to the new requirements.