EXPLANATORY STATEMENT

Issued by the Authority of the Minister for Ageing

Aged Care Act 1997

Residential Care Subsidy Amendment Principles 2006 (No. 1)

The Aged Care Act 1997 (‘the Act’) regulates the Australian Government’s role in supporting quality aged care in Australia.  One function of the Act is to determine the rules under which parties that provide aged care (‘approved providers’)  may operate.  There are also rules that set out how approved providers must deal with persons receiving residential care (‘care recipients’), or approved to receive residential care (‘prospective care recipients’).  One of the areas covered by the Act relates to the payment of residential care subsidies to approved providers in respect of the care they supply to care recipients. 

The Residential Care Subsidy Principles 1997 (‘the Principles’) deals with eligibility for the Residential Care Subsidy (a payment by the Australian Government to approved providers for providing residential care to care recipients).  The Principles detail the eligibility requirements for the subsidy including how it is paid and what amount is paid.

The Conditional Adjustment Payment (CAP) is a component of the Residential Care Subsidy.  The eligibility requirements that approved providers must satisfy for CAP are detailed under Part 10, Division 4 of the Principles.  CAP is payable to an approved provider as a percentage (3.5% for the 2005-06 financial year) of the Base Subsidy received by an approved provider.

In summary, the Principles require approved providers to:

(a)   encourage staff training and provide a notice each year to the Department of Health and Ageing (the Department) confirming they have encouraged staff training at their residential care services;

(b)   prepare a financial report that complies with the requirements set out in the Principles and have that report audited each year.  In general, if requested, an approved provider must provide a copy of its most recent audited financial report to a:

• recipient of its service (or their representative);
• person approved as a recipient of residential care (or their representative) who is considering receiving care through its service; and/or
• person or agency authorised by the Secretary of the Department. 

Approved providers must also provide a written notice each year to the Department confirming that they met the reporting requirements for the previous financial year; and

(c)   participate in any aged care workforce census conducted by or on behalf of the Department.

The Residential Care Subsidy Amendment Principles 2006 (No. 1) makes a number of technical amendments to the Principles to ensure the efficient operation of CAP. 

Authority to make Principles

Subsection 96-1(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.

Consultation

The Department consulted with approved providers and industry peak bodies in relation to these amendments. 

Legislative Instrument

The Residential Care Subsidy Amendment Principles 2006 (No. 1) is a legislative instrument for the purposes of the Legislative Instruments Act 2003.  Schedule 1 of the Residential Care Subsidy Amendment Principles 2006 (No. 1) is taken to commence on 19 February 2005. 

Subsection 12(2) of the Legislative Instruments Act 2003 provides that if a legislative instrument is expressed to take effect from a time before it is registered, but the instrument would adversely affect the rights of, or impose liabilities on, a person at a time before the instrument is registered, the instrument has no such effect in relation to the period before the instrument is registered.  The retrospective commencement of Schedule 1 of the Residential Care Subsidy Amendment Principles 2006 (No.1) does not contravene Subsection 12(2) of the Legislative Instruments Act 2003, because it beneficially reduces the reporting burden on approved providers of residential aged care.  The amendments contained in Schedule 1 clarify that approved providers need only lodge one annual notice per year to confirm their compliance with CAP staff training requirements and one annual notice per year to confirm their compliance with CAP financial reporting requirements.  Prior to these amendments being made, approved providers could be required to lodge such notices for each payment period (ie monthly).  No approved provider has been required to lodge these notices monthly as it has always been the intention that such notices should be lodged annually. 

The Office of Legislative Drafting and Publishing has also advised that, with respect to these technical amendments, there is no contravention of Subsection 12(2) of the Legislative Instruments Act 2003.

The Office of Regulation and Review has advised that a Regulation Impact Statement is not required for the Residential Care Subsidy Amendment Principles 2006 (No. 1) (ORR ID Number 8227).

Details of the amendments to the Principles are listed at Attachment A.

ATTACHMENT A

NOTES ON CLAUSES

Section 1 states that the name of the amendments to the Principles is the Residential Care Subsidy Amendment Principles 2006 (No. 1).

Section 2 states that:

• Sections 1 to 3 and Schedule 1 commence on 19 February 2005; and
• Schedule 2 commences on the day after the amendments to the Principles are registered.

Section 3 states that Schedules 1 and 2 amend the Principles.

Schedule 1

Amendments taken to have commenced on 19 February 2005

Item 1

This item inserts a new subsection 21.26E(2A) to clarify  that an approved provider only needs to lodge one notice (known as the ‘Staff Training Statement’) per year with the Department to confirm its compliance with the CAP staff training requirements.

Item 2

This item inserts a new subsection 21.26F(2A) to clarify  that an approved provider only needs to lodge one notice (known as the ‘Annual Notice’) per year with the Department to confirm  its compliance with the CAP audited financial reporting requirements.

Schedule 2

Amendments commencing on the day after the Amendments are registered

Item 1

This item inserts a new paragraph (a) in the definition of financial period in subsection 21.26B(1).  The amendment to the definition extends the due date for a provider to notify the Department of its compliance with the CAP audited financial reporting requirements by one month for 2006 (unless the Secretary determines an alternative financial period for the provider under subsection 21.26B(2)). 

This amendment extends the 2006 financial reporting date for CAP by one month.  The extra reporting time is provided in recognition of the need for providers to adopt the Australian Equivalents to International Financial Reporting Standards in their 2005-06 General Purpose Financial Reports.  The extension is consistent with the Australian Securities and Investment Commission’s extended reporting date for 2006.

Item 2

This item amends paragraph (b) in the definition of financial period in subsection 21.26B(1) to omit the words “of 12 months”.  This amendment allows a provider to have a non-standard financial period of more than or less than 12 months, which may be necessary to enable the provider to remain eligible for CAP while it moves to a standard 12 month financial period for future years.

Item 3

This item substitutes a new definition of previous financial year in subsection 21.26B(1).  The purpose of this amendment is to ensure the term ‘previous financial year’ can include an earlier financial year which has been determined by the Secretary to be a period of less than 12 months and/or a period that commenced on a date other than 1 July.   As such, the new definition reflects the power of the Secretary of the Department to determine non-standard financial years under subsection 21.26B(2).

Item 4

This item amends paragraph (b) of the definition of relevant financial year in subsection 21.26B(1) by replacing the words “period of 12 months” with the words “period of not more than 12 months”.  

This amendment allows the Secretary of the Department to approve a non-standard financial year of 12 months or less (which may or may not commence on 1 July).  The purpose of this amendment is to allow an approved provider that have previously used a non-standard CAP financial year to remain eligible to receive CAP while it moves to a standard CAP financial year  

For example, if an approved provider’s financial year ended on 30 November 2005 and the approved provider wanted to move to the standard financial year from 1 July 2006 onwards, then this approved provider would be able to apply for a CAP financial year that commences on 1 December 2005 and ends on 30 June 2006 – that is, a seven month financial year. 

Item 5

This item amends paragraph (b) of the definition of training period in subsection 21.26B(1)  to omit the words “of 12 months”.  This amendment allows a provider to have a non-standard training period of more than or less than 12 months, which may be necessary to enable the provider to move to a standard 12 month training period in future years.

Item 6

This item substitutes a new subsection 21.26B(2) and removes the note to that subsection.  The purpose of this amendment is to allow approved providers to continue to seek the Secretary’s approval to non-standard financial periods, training periods and relevant financial years.  An approved provider will still need to satisfy the Secretary of the Department that, on reasonable grounds, it would be impracticable for the approved provider to use the standard financial period, training period or relevant financial year.

This item reflects the changes made in this Schedule to the definitions in subsection 21.26B(1).  New paragraph 21.26B(2)(a) reflects the amendment made by item 2 of this Schedule to the definition of “financial period”.  New paragraph 21.26B(2)(c) reflects the amendment made by item 4 of this Schedule to the definition of “relevant financial year”. New paragraph 21.26B(2)(d) reflects the amendment made by item 5 of this Schedule to the definition of “training period”.

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