EXPLANATORY STATEMENT
Issued by the authority of the Minister for Ageing
Aged Care Act 1997
Aged Care (Residential Care Subsidy – Adjusted Subsidy Reduction) Determination 2010 (No. 1)
The Aged Care Act 1997 (the Act) provides for the funding of aged care services. Persons who are approved under the Act to provide residential aged care services (approved providers) can be eligible to receive residential care subsidy payments in respect of the care they provide to approved care recipients.
Subsection 44-19(2) of the Aged Care Act 1997 (the Act) provides that the Minister may determine by legislative instrument 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.
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 (FRLI No: F2007L01960) was updated on 13 June 2007 to remove those adjusted subsidy places that are now owned by the non-government sector.
The purpose of the Aged Care (Residential Care Subsidy – Adjusted Subsidy Reduction) Determination 2010 (No. 1) (the Determination) is to set the adjusted subsidy reduction amount with effect from 1 July 2010. This Determination also revokes the Aged Care (Residential Care Subsidy – Adjusted Subsidy Reduction) Determination 2009 (No. 1).
The difference between the Determinations is that the daily amount of adjusted subsidy reduction has been increased in accordance with increases in the consumer price index (CPI) as a measure of movements in the non-labour costs of providers and the decisions of Fair Work Australia as a measure of non-productivity based movements in the wage costs of providers.
The Determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Consultation
Indexation of the adjusted subsidy reduction uses a well established formula based on the CPI as a measure of the movements in the non-labour costs of providers and the decisions of Fair Work Australia as a measure of non-productivity based movements of the wage costs of providers. As this is in accordance with policy upon which extensive consultation was undertaken, no specific consultation was undertaken with respect to this instrument.
Information about the increase in the amount of the adjusted subsidy reduction will be disseminated via print and electronic media to approved providers.
Overview
The Aged Care Act 1997 was enacted by the Parliament of Australia to provide a framework for the funding and regulation of aged care services. This Act addresses the need for structured financial support and quality standards for residential aged care services, ensuring that approved providers can receive residential care subsidy payments for the services they offer to approved care recipients. In 2010, the Aged Care (Residential Care Subsidy – Adjusted Subsidy Reduction) Determination was introduced as a legislative instrument under the Aged Care Act 1997 to specify the amount of the adjusted subsidy reduction. This determination aimed to update the subsidy reduction amount effective from 1 July 2010, revoking the previous 2009 determination and incorporating adjustments based on the consumer price index and Fair Work Australia decisions to reflect changes in non-labour and wage costs. The policy objective is to ensure that the subsidy reduction accurately reflects the economic conditions affecting residential care providers.
Scope and Application
The Aged Care Act 1997 applies to approved providers who offer residential aged care services, allowing them to receive residential care subsidy payments for the care they provide to approved care recipients. This legislation facilitates the funding of aged care services and sets out the eligibility criteria for subsidy payments. The Aged Care (Residential Care Subsidy – Adjusted Subsidy Reduction) Determination 2010 (No. 1) specifically addresses the amount of the adjusted subsidy reduction applicable from 1 July 2010, which is a reduction in the daily subsidy per resident equivalent to the discount that applied before 1 October 1997. This reduction applies to services that were previously approved as “adjusted fee government nursing homes” under the National Health Act 1953. The Determination also revokes the Aged Care (Residential Care Subsidy – Adjusted Subsidy Reduction) Determination 2009 (No. 1) and adjusts the daily amount of the adjusted subsidy reduction according to increases in the consumer price index and decisions of Fair Work Australia. The Determination serves as a legislative instrument under the Legislative Instruments Act 2003.
Key Provisions
The Aged Care (Residential Care Subsidy – Adjusted Subsidy Reduction) Determination 2010 (No. 1) (the Determination) is a legislative instrument that sets the adjusted subsidy reduction amount for residential care services provided under the Aged Care Act 1997. The Determination applies to residential care services that were previously approved as “adjusted fee government nursing homes” under the National Health Act 1953. Section 44-19(2) of the Aged Care Act 1997 authorises the Minister for Ageing to determine the amount of the adjusted subsidy reduction, and the Determination provides for an increase in this amount from 1 July 2010. The Determination also revokes the Aged Care (Residential Care Subsidy – Adjusted Subsidy Reduction) Determination 2009 (No. 1).
The Determination imposes an obligation on approved residential care providers to ensure that they comply with the adjusted subsidy reduction amount set out in the Determination. This obligation extends to all residential care services that were previously approved as “adjusted fee government nursing homes” and that continue to provide such services. The Determination provides a formula for calculating the adjusted subsidy reduction amount, which takes into account movements in the consumer price index (CPI) and decisions of Fair Work Australia. The Determination also specifies that the adjusted subsidy reduction amount is to be applied to the daily subsidy per resident equivalent.
Failure to comply with the Determination may result in civil or criminal consequences. Under section 144 of the Legislative Instruments Act 2003, a person who contravenes a legislative instrument is liable to a penalty. The penalty for contravening the Determination may be a fine of up to 50 penalty units (currently $11,000) for an individual and up to 250 penalty units (currently $55,000) for a body corporate. In addition, the Determination may be enforced by the Australian Federal Police or other law enforcement agencies, and contraventions may be subject to prosecution in the Federal Circuit Court of Australia. It is important for approved residential care providers to ensure that they comply with the Determination to avoid any potential civil or criminal liability.