13 December 2005
Melbourne, 13 December 2005: Proposed changes to the regulatory regime governing Australia's aged care sector are to be welcomed as laying the foundations for greater investor confidence and higher standards of governance among aged care providers, according to a corporate lawyer at one of Australia's leading firms.
Ms Robyn Baker, a partner in the Melbourne office of Clayton Utz and a former adviser to government in the area of health, said the Federal Government's new three-pronged legislative approach would not only strengthen the prudential regime under which aged care providers operated but would also give greater certainty to aged care residents as well as investors in the sector.
The Government introduced three pieces of legislation - the Aged Care Amendment (2005 Measures No. 1) Bill 2005 (which amends the Aged Care Act 1997), the Aged Care (Bond Security) Bill 2005 and the Aged Care (Bond Security) Levy Bill 2005 - into the House last Thursday. Together they provide the framework for a new prudential regulatory regime aimed at improving the management and security of residents' accommodation bonds and entry contributions.
An accommodation bond is a sum of money paid to an approved provider for entry to a low level residential aged care facility or high level "extra service" facility. Under the proposals, the Federal Government will guarantee the repayment of bond balances to residents in the event an approved provider becomes insolvent and is unable to repay the bonds. The Government will seek to recover the amount of the bond (and associated administrative costs) from the provider in the first instance, or failing that, via a levy imposed on other approved providers. The aged care sector holds around $3.7 billion in accommodation bonds.
The new regime also requires approved providers to comply with new prudential standards dealing initially with liquidity, record keeping and disclosure.
"The proposals are to be welcomed as improving the regulatory environment in a sector that will be increasingly critical to Australia's economic and social wellbeing," Ms Baker said.
Ms Baker said although the levy proposal may concern some providers, a more robust regulatory regime would not only contribute to improved standards across the board but also encourage greater investment in aged care.
"The sector is really coming of age. However to encourage ongoing investment, prudential reform as the Government has proposed is drastically needed."
Ms Baker said the changes were the latest step in the ongoing transformation of aged care from a cottage industry to an increasingly sophisticated sector.
Australia's aged-care sector has undergone rapid consolidation over the past year, with major players such as DCA Group and Macquarie Bank all involved in multi-million dollar acquisitions. More recently, Ramsay Health Care announced plans to sell its portfolio of aged care facilities, valued at around $80 million.
There are more than 2,900 accredited aged care services in Australia.
