EXPLANATORY STATEMENT
Issued by the authority of the Minister for Ageing
AGED CARE ACT 1997
Subsection 44-29(8)
Aged Care (Residential Care Subsidy – Amount of Viability Supplement)
Determination 2005 (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 can be eligible to receive residential care subsidy payments in respect of the care they provide to approved care recipients.
The residential care subsidy which is payable in a particular case includes a basic amount and can also include various supplements, which are intended to deal with particular circumstances. One such supplement is the viability supplement, which is available to eligible rural and remote providers of aged care services in recognition of the cost pressures due to isolation and small size. The viability supplement primarily benefits small services operating in rural, remote and isolated areas.
The approach in the Act is that the Secretary may, in accordance with the Residential Care Subsidy Principles 1997 (“the Subsidy Principles”), make a determination in respect of a residential care service (the Act, section 44-29(2)). The making of such a determination is a pre-condition for the payment of viability supplement (the Act, section 44-29(1)). Subsection 44-29(8) of the Act provides that the viability supplement for a particular day is the amount determined by the Minister in writing or worked out in accordance with a method determined by the Minister in writing. Subsection 44-29(9) of the Act provides that the Minister may determine different amounts based upon certain matters, including the number of places in services, the degree of isolation of the services and any other matters determined by the Minister in writing.
Following amendments to the Subsidy Principles which have effect from 1 January 2005 (see the Residential Care Subsidy (Amendment) Principles 2005 (No. 4) “the Amending Principles”), the Secretary may make determinations in respect of services covered under each of three schemes which have governed the viability supplement:
- The scheme which was initially put in place when the Act commenced operation in 1997;
- A modified scheme which was put in place in 2001; and
- A new scheme which commenced operation on 1 January 2005.
This Ministerial Determination sets out, pursuant to section 44-29(8) of the Act, the amount of the viability supplement which is payable to services determined by the Secretary to be eligible under each of these three schemes.
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 index is based on the Safety Net Adjustment determined by the Australian Industrial Relations Commission as a proportion of Average Weekly Ordinary Time Earnings. 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 rate of supplement uses a well-established formula for indexation, no specific consultation with industry was undertaken with respect to this Determination.
This Determination gives effect to changes to the viability supplement which were introduced by the Amending Principles. The Office of Regulation Review has advised that no Regulation Impact Statement is required for the Amending Principles.
This Determination is a “legislative instrument” for the purposes of the Legislative Instruments Act 2003.
Details of this Ministerial Determination are set out in the Attachment.
ATTACHMENT
NOTES ON CLAUSES
Clauses 1 and 2 set out the title of the Determination and its commencement date (1 January 2005).
Clause 3 revokes a previous Ministerial Determination which set amounts under
section 44-29(8).
Clause 4 defines the concepts of “1997 scheme service”, “2001 scheme service” and “2005 scheme service” by reference to a new section 21.34 in the Residential Care Subsidy Principles 1997. Essentially, each concept refers to services which are subsidized in accordance with the terms of the points test set out in the relevant scheme. See the commentary to section 21.34 in the Explanatory Statement to the Amending Principles for an explanation of which scheme applies to a service which is eligible under more than one of the points tests.
Clause 4 also defines “Principles” as the Residential Care Subsidy Principles 1997.
Clause 5 sets out the viability supplement which is available under the 1997 scheme.
Clause 6 sets out the amount of viability supplement which is available under the 2001 scheme.
Clause 7 sets out the amount of viability supplement payable under the 2005 scheme. In its 2004-05 Budget, the Australian Government provided an extra $14.5 million over 4 years to increase the viability supplement, with effect from 1 January 2005. The rates in clause 7 reflect this increase in funding.
The details of the 2005 scheme are set out in the Amending Principles. A maximum of 100 points is available under the scheme and a service must score at least 50 points in order for the Secretary to be empowered to make a determination in relation to it. There are three components to the test:
- Up to 65 points are available in respect of location, with very remote locations attracting the highest number of points – this reflects the special viability challenge faced by remote services;
- Up to 30 points are available in respect of the number of places in the service, with services with fewer than 20 places attracting the highest number of points – this reflects the special viability challenge faced by small services; and
- 5 points are available if more than 50% of care recipients are people with special needs (other than people who are people with special needs only because they live in rural or remote areas or they are financially or socially disadvantaged).
Clause 7 sets out the amount of supplement available for various point scores under the 2005 scheme points test, between the minimum eligibility score of 50 points and the maximum possible score of 100 points (which would be applicable to a small service in a very remote location, having more than 50% of its residents with special needs).