30 May 2006
Melbourne, 30 May 2006: 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, says the Federal Government's new three-pronged legislative approach will not only strengthen the prudential regime under which aged care providers operate but also give greater certainty to aged care residents as well as investors in the sector.
Three key pieces of legislation - the Aged Care Amendment (2005 Measures No. 1) Act 2006 (which amends the Aged Care Act 1997), the Aged Care (Bond Security) Act 2006 and the Aged Care (Bond Security) Levy Act 2006 - come into effect this week, having been introduced into Federal Parliament late last year. 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 new laws, the Federal Government will guarantee the repayment of bond balances to residents should an approved provider become insolvent and therefore 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. As at December last year, the aged care sector held an estimated $3.7 billion in accommodation bonds.
Ms Baker says although the introduction of a levy may concern some providers, a more robust regulatory regime should not only contribute to improved standards across the board but also encourage greater investment in aged care.
"The aged care sector is really coming of age. However to encourage ongoing investment, prudential reform as the Government has introduced is drastically needed," says Ms Baker.
"The new laws are to be welcomed as improving the regulatory environment in a sector that will be increasingly critical to Australia's economic and social wellbeing."
The new regime also requires approved providers to comply with a set of new prudential standards imposing obligations in relation to matters such as record keeping, liquidity and disclosure. These obligations include maintaining a bond register; implementing, maintaining and complying with a liquidity management strategy, and; making certain disclosures to current and prospective residents of aged care facilities.
Ms Baker says the new laws are 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 last 18 months, with major players such as DCA Group, Macquarie Bank and Ramsay Healthcare all involved in multi-million dollar acquisitions or sales of aged care assets.
There are more than 2,900 accredited aged care services in Australia.
