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 2007
ACA Ch. 3 No 15/2007
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 particular difficulties faced by such services as a result of their isolation, small size, characteristics of the majority of their residents, and consequentially higher cost structures. The viability supplement primarily benefits small services operating in rural, remote and isolated areas.
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.
In essence, there are three viability supplement schemes (the 1997 scheme (which was put in place when the Act commenced operation), a modified scheme which was put in place in 2001 and a new scheme which commenced operation on 1 January 2005), which run in parallel. Each scheme has its own criteria for payment and each pays different amounts of viability supplement, depending on the circumstances of the residential care service. For example, the 2005 scheme provides increased assistance to the more rural and remote residential care services.
This Ministerial Determination is made pursuant to section 44-29(8) of the Act, which sets 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 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.
Details of this Ministerial Determination are set out in the Attachment.
Consultation
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.
ATTACHMENT
NOTES ON CLAUSES
Clauses 1 and 2 set out the title of the Determination and its commencement date (1 July 2006).
Clause 3 revokes previous Determinations which set amounts under
section 44-29(8) of the Act.
Clause 4 defines the concepts of “1997 scheme service”, “2001 scheme service” and “2005 scheme service” by reference to 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.
Clause 4 also defines “Principles” as the Residential Care Subsidy Principles 1997.
Clause 5 sets out the amount of viability supplement payable under the 1997 scheme.
Clause 6 sets out the amount of viability supplement payable under the 2001 scheme.
Clause 7 sets out the amount of viability supplement payable under the 2005 scheme.
Clause 8 sets out the amount of supplement payable to former 1997 or 2001 scheme services where the score attained by the services on the day under the scoring system set out in the table in subsection 21.35C (1) of the Principles is 40 or 45.
Overview
The Aged Care Act 1997 was enacted to provide for the funding of aged care services, including residential care subsidies for approved care providers. This legislation addresses the gap in funding and support for residential aged care services, particularly those in rural and remote areas, which face unique challenges due to isolation and higher operational costs. The Act enables the provision of various supplements, such as the viability supplement, to assist these services. The Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2007, made under the authority of the Minister for Ageing, sets the amount of the viability supplement payable to eligible services. The policy objective is to ensure that rural and remote residential care services receive adequate funding to maintain their viability and continue to provide necessary care to their residents. The determination indexes subsidy rates annually to account for changes in wage and non-wage costs, ensuring the sustainability of the supplement. This determination follows the established indexation formula without requiring specific industry consultation.
Scope and Application
The Aged Care Act 1997 establishes the framework for the funding of aged care services in Australia, and under this legislation, residential aged care providers can receive residential care subsidy payments for the care they provide to approved recipients. Specifically, the Act allows for a viability supplement to be paid to eligible rural and remote providers of aged care services to recognise the particular difficulties faced by such services, including isolation, small size, and higher cost structures. This supplement primarily benefits small services operating in rural, remote, and isolated areas. The Act applies to the Commonwealth and includes provisions that can be extended or restricted through subordinate instruments. The viability supplement is determined by the Minister and varies based on the number of places in the services, the degree of isolation of the services, and other matters as determined by the Minister. The Aged Care (Residential Care Subsidy – Amount of Viability Supplement) Determination 2007 specifies the amounts of the viability supplement for services under three distinct schemes, each with its own criteria and payment amounts.
Key Provisions
The Aged Care Act 1997 (the Act) sets the framework for funding aged care services, with Section 44-29(8) providing for the viability supplement, a subsidy aimed at assisting eligible rural and remote providers. This supplement acknowledges the unique challenges faced by such providers due to isolation, small size, and higher operational costs. The amount of the viability supplement is determined by the Minister, either directly or via a specified method, and can vary based on factors like the number of care places, degree of isolation, and other criteria outlined by the Minister (Section 44-29(9)). The legislation distinguishes between three distinct viability supplement schemes: the 1997 scheme, the modified 2001 scheme, and the 2005 scheme, each with its own eligibility criteria and payment rates. The 2005 scheme, for instance, provides enhanced support to more rural and remote services.
The Act imposes specific obligations on entities seeking to benefit from the viability supplement. To be eligible, an entity must first be approved under the Act to provide residential aged care services. Additionally, the entity must meet the criteria for one of the three viability supplement schemes, as outlined in the Residential Care Subsidy Principles 1997. These criteria include the points test relevant to the particular scheme and any additional conditions set by the Minister. Moreover, entities must ensure they comply with the indexation provisions, which adjust the subsidy rates annually based on wage and non-wage cost movements.
Failure to comply with the provisions of the Aged Care Act 1997 and the associated Ministerial Determinations can lead to various consequences. The Act does not explicitly detail penalties for non-compliance with the viability supplement provisions. However, general provisions in the Act may apply, including potential fines or other sanctions for breaches of administrative requirements. Additionally, entities may face civil or criminal actions if their non-compliance results in financial loss to the Commonwealth or affects the quality of care provided to residents. The specific penalties would depend on the nature and severity of the breach, as well as any relevant state or federal laws.