EXPLANATORY STATEMENT
Issued by the authority of the Secretary of the Department of Social Services
Aged Care Act 1997
Annual Prudential Compliance Statement Determination 2014
The Aged Care Act 1997 (the Act) provides for the regulation and funding of aged care services. Persons who are approved under the Act to provide aged care services (approved providers) can be eligible to receive subsidy payments in respect of the care they provide to approved care recipients.
Section 96-1 of the Act allows the Minister to make Principles providing for various matters required or permitted by a Part or section of the Act. Among the Principles made under section 96-1 is the Fees and Payments Principles 2014 (No. 2) (the Fees Principles). Previous principles made include the User Rights Principles 1997 (the User Rights Principles).
Until the commencement of the Aged Care reforms on 1 July 2014 the requirements for the annual prudential compliance statement were set out in the User Rights Principles. From 1 July 2014 the Fees Principles set out the requirements for the annual prudential compliance statement. However, the Fees Principles only set out the requirements for the annual prudential compliance statement for financial years commencing on 1 July 2014.
The requirements for annual prudential compliance statements in the Fees Principles include matters that only apply from 1 July 2014. That is, as a result of the Aged Care reforms, the way in which individuals contribute towards their aged care costs has changed. Accordingly, the matters approved providers are required to report on have changed.
However, approved providers are asked to provide an annual prudential compliance statement after the end of each financial year, looking back at the matters they were required to report on for the past year. As the Disclosure Standard was revoked from the User Rights Principles effective on 1 July 2014, which included the matters required to be reported on for the 2013-14 financial year, this determination will ensure that approved providers are asked to report on matters as they existed last year, and not on matters that had not existed in law during the 2013-14 financial year.
This determination was created by drawing on information from the User Rights Principles 1997 and the Fees and Payments Principles 2014 (No 2).
The determination is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Consultation
No consultation was undertaken in relation to this determination as a result of the extensive consultation that had been undertaken in preparing the Fees and Payments Principles 2014 (No 2).
This intent was communicated in November 2012, with the public release of a paper providing an overview of the proposed legislative changes. A video presentation detailing the proposed reforms was also made available online to assist members of the public to understand these changes.
Regulation Impact Statement
The Office of Best Practice Regulation has advised that no Regulatory Impact Statement is required for this determination (OBPR ID 17066).
Commencement
The determination commences on registration.
Cessation
The determination ceases on 1 July 2015.
Details of the Annual Prudential Compliance Statement Determination 2014
Part 1 - Preliminary
Section 1 – Name of determination
This section states that the name of the determination is the Annual Prudential Compliance Statement Determination 2014 (the determination).
Section 2 – Commencement
This section provides that the determination commences on registration.
Section 3 – Cessation
This section provides that determination ceases on 1 July 2015. This determination is intended to cover the requirements for approved providers to provide an annual prudential compliance statement for the 2013-14 financial year or 2014 calendar year only. For following financial years the requirements for annual prudential compliance statements set out in the determination will cease at the commencement of this day because it is intended the requirements for annual prudential compliance statements for the financial year 2013-14 and beyond will be wholly those in the Fees and Payments Principles 2014 (No 2) (the Fees Principles).
Section 4 - Authority
This section confirms that the authority for making this determination is found in paragraph 51(1)(e) of the of the Fees Principles.
Section 5 - Definitions
This section defines certain terms used in the determination.
Act means the Aged Care Act 1997.
annual prudential compliance statement for an approved provider, means the statement that is given to the Secretary within 4 months of the end of the relevant financial year as required by section 51 of the Fees Principles.
approved provider has the same meaning as the Act.
different financial year means the financial year approved in accordance with section 59 of the Fees Principles, or section 32 of the Accountability Principles 2014
Fees Principles means the Fees and Payments Principles 2014 (No 2).
post 1 July requirements means the matters to be included in annual prudential compliance statements as set out in the Fees Principles.
pre 1 July requirements means the matters to be included in annual prudential compliance statements as set out in the User Rights Principles.
relevant financial year means the 2013-14 financial year or if approved in accordance with section 59 of the Fees Principles, or section 32 of the Accountability Principles 2014, that different year.
User Rights Principles means the User Rights Principles 1997 as in force on 30 June 2014.
Part 2 – Matters to be included in Annual Prudential Compliance Statement
Section 6 – Purpose of this Part
This Part of the determination sets out what approved providers are required to include in the annual prudential compliance statement for the relevant financial year.
This determination is only to apply to annual prudential compliance statements for the 2013-14 financial year or, where a provider has been approved a different financial year in accordance with section 59 of the Fees Principles, or section 32 of the Accountability Principles 2014, the relevant financial year of the approved provider.
For the 2014-15 financial year onwards the requirements in the Fees Principles will apply to annual prudential compliance statements.
Section 7 – Information to be included in annual prudential compliance statement for 2013-14 financial year
This section sets out the matters that must be included in the annual prudential compliance statement for approved providers that have a reporting year that aligns with the financial year.
This section sets out the relevant provisions of the User Rights Principles that are to apply to annual prudential compliance statements for the 2013-14 financial year.
Section 7 of the determination stipulates, by way of a comparative table, that annual prudential compliance statements prepared by approved providers for the 2013-14 financial year must include the matters previously set out in the User Rights Principles rather than the Fees Principles.
The annual prudential compliance statement for the 2013-14 financial year must also include a statement that the approved provider has complied with:
(a) paragraph 57-2(1)(e) of the Act as in force on 30 June 2014; and
(b) subsection 23.28(3), and Divisions 2 and 5 of Part 4, of the User Rights Principles.
Section 8 – Information to be included in annual prudential compliance statement for different financial year.
This section sets out the matters that must be included in the annual prudential compliance statement for approved providers that have a reporting year that is different to the financial year. In these circumstances the approved providers will have a reporting year that covers a period before and after the changes that occurred on 1 July 2014.
This section provides that the annual prudential compliance statement must cover matters before 1 July 2014 by reference to the User Rights Principles. For matters arising after 1 July 2014 the approved provider must report in accordance with the requirements set out in the Fees Principles.
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Annual Prudential Compliance Statement Determination 2014
The Annual Prudential Compliance Statement Determination 2014 (the determination) is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the legislative instrument
Care recipients contribute to the cost of their accommodation provided with their care by paying an accommodation payment. The Aged Care Act 1997 (the Act) and various Principles made under the Act set out the basis on which care recipients can be asked to contribute to the cost of their accommodation and stipulate approved providers responsibilities for charging, using, managing and refunding accommodation payments.
The Disclosure Standard, under the Fees and Payments Principles 2014 (No 2) (the Fees Principles) requires providers to disclose to the Department of Social Services (the Department), within four months of the end of their financial year, their accommodation payment liabilities and whether or not they have complied with the requirements for accommodation payments. This must be in a form approved by the Secretary of the Department and is known as the ‘annual prudential compliance statement’.
This determination sets out the matters that approved providers are to report in the annual prudential compliance statement for the 2013-14 financial year or, where a provider has been approved a different financial year in accordance with section 59 of the Fees Principles, or section 32 of the Accountability Principles 2014, the relevant financial year of the approved provider.
The matters set out in this determination are not new and merely reflect the matters that were previously required by the Disclosure Standard under the User Rights Principles 1997 until they became part of the Fees Principles. Unfortunately, the Fees Principles do not address the matters that approved providers are required to disclose to the Department about for the 2013-14 financial year.
This determination ensures the approved providers report on matters that were relevant and required for the 2013-14 financial year.
Human Rights Implications
The Principles are compatible with the right to an adequate standard of living and the right to the enjoyment of the highest attainable standard of physical and mental health as contained in article 11(1) and article 12(1) of the International Covenant on Economic, Social and Cultural Rights, and article 25 and article 28 of the Convention on the Rights of Persons with Disabilities.
The determination promotes these rights by ensuring approved providers are managing the funds provided to them by care recipients in accordance with the prudential standards set in the Act and the Principles. The determination provides consumers with increased confidence in the bonds system by ensuring approved providers are prudent and accountable in their handling of care recipients’ accommodation bonds. It also ensures that consumers, who are able to request particular information form aged care providers, are provided with information that is relevant to the providers’ compliance with its responsibilities.
Conclusion
The determination is compatible with human rights as they promote the human right to an adequate standard of living and the highest attainable standard of physical and mental health.
Finn Pratt
Secretary of the Department for Social Services