3AW Radio Drive with Dr Sally Cockburn
E & OE
COCKBURN:
Today, July 1. Some new changes kicked in, in the way that the Federal Government is funding aged care. There is some confusion, I’m hoping we can settle it, because obviously aged care is an area that we don’t want confusion. We want people to understand it. On the line is Senator the Honourable Mitch Fifield who is the Assistant Minister for Social Services. Minister thank you for taking the time to speak to us.
FIFIELD:
Good to be with you Sally.
COCKBURN:
Now, look there is a lot of confusion, people are frightened, can you nutshell it for us?
FIFIELD:
Sure Sally. The first point is that arrangements for peoples’ aged care and what they have to pay, for those who are in aged care before the 1st of July, don’t change. So what comes in today, only affects people who are coming into aged care from today. That’s the first thing. Essentially there’ll be a new means test arrangement for people in aged care. In the past, if you were looking at aged care accommodation, only your assets were taken into account. If you were looking at care, only your income was taken into account. So, previously you had the situation where people who had high assets, might not have paid much for their care. And people who had high income, might not have paid much for their accommodation. So there will now be for residential care a combined assets and income test in a new means test. I’ll just quickly go through what that means in practice. In residential care, everyone will pay a basic daily fee, which is set at 85% of the pension. And for those people who can afford to do so, they may be asked to pay a further means tested care fee. On the accommodation side of things people will have the choice as to whether they pay a lump sum, a daily payment, or a combination of the two. And if people want to get a good handle on what they’ll be liable to pay, they should visit the My Aged Care website www.myagedcare.gov.au where they can put in their assets, they can put in their income and that will tell them what they’re likely to pay for their care and also on the accommodation side of things.
COCKBURN:
Now, can I just ask you a question about that, the myagedcare.gov.au but before I get to that. Firstly, these changes belong to the previous government don’t they? I can remember I was actually at the meeting where they were launched by the then Minister Mark Butler. Is there anything new in this that’s been added?
FIFIELD:
Look, it’s essentially what the previous government legislated in the middle of last year. We supported, in the broad, what they were doing, because it’s important that people who have the capacity to make a contribution to their care and accommodation do so. But it’s also important that there be a safety net so that people who have low means, can still get the care, and still get the accommodation that they need. Now, because this is a new way of doing things, and because I wasn’t the minister who designed and legislated this, I’m going to be watching very carefully what the real life effects of the new aged care arrangements are, for providers and for consumers.
COCKBURN:
From the providers perspective though, one of the things that I’ve heard is that there has been a change to the tax, some of the taxation arrangements for their payroll tax. And I believe that wasn’t in this original legislation that it’s been added. So they may have budgeted in their business budget for a particular amount they are going to be paying in payroll tax, but that’s been changed now, is that clear?
FIFIELD:
In the budget we announced that we were ending something called the payroll tax supplement. As you know, payroll tax is a state tax and there had been an arrangement for a number of years where the Federal Government reimbursed aged care providers, mainly for-profit providers, for their state payroll tax liability. Now we had two issues. One was the budget situation that we inherited meant that we were no longer in a position to make that contribution to providers. There was also an issue of principle. And that is, the states should be responsible for levying a state tax base. They should be responsible for determining who it applies to. But they should also be responsible for determining the exemptions. The decision that we took represents around $700 million over the next four years. So it’s a significant amount of money, but we weren’t in a position to continue paying that.
COCKBURN:
But Senator what I’ve heard though is that some of these for-profit organisations as you say have budgeted for this payroll supplement and therefore some of their building opportunities may not go ahead which means we won’t get, let’s say 100 bed facility in a place, and let’s face it jobs as well. And this sort of, was sprung on them.
FIFIELD:
Well, it was part of the budget. But we also announced in the budget that we were repurposing $1.5 billion which the previous government had taken from aged care providers. They kept it in the fund and they were only going to give it to aged care providers if they entered a union enterprise agreement. Which we didn’t think was fair. So we said we were going to give that money back to aged care providers. Which we did in the budget. And so aged care providers will get a 2.4 per cent increase from the 1st of July into their base funding. So providers need to net out that particular increase with the reduction that they have from the cessation of the payroll tax supplement. We also have just announced a new aged care funding approval round for additional places. And we also are continuing with something called the significant refurbishment supplement which is extra money for aged care providers who significantly refurbish their facilities.
COCKBURN:
Senator, the other thing though I heard about the myagedcare.gov.au was that when you go in and try and work out – and it’s a bit complex unless you have some help to do this, working out how much I’m liable to pay, because as you said I’ve got to work out where I’m means tested and all that sort of stuff – Is that they get an estimate and it’s not actually an exact amount. One of the concerns that I understand is that, especially with elderly people and especially in community settings, they’re a little bit sceptical about giving an estimate and then signing a contract with an aged care facility if it’s only an estimate. Is there any way of suring that up for people?
FIFIELD:
Well, the aged care fee estimator on the website is a guide. It shouldn’t be taken as the final word. I think it’s really important for families and individuals to start talking about aged care before they get to that critical point where it becomes urgent. Also, I think it’s important to take independent financial advice. One of the significant changes is that the distinction between high care and low care is being removed. Previously you could only pay a lump sum for low care accommodation. Now you will be able to pay either a lump sum, a daily fee or a combination of the two for your accommodation. And so it’s important, in what is a very significant financial decision, that people get independent advice. The website is there to be a guide, it’s a guide very much for whether someone will have to pay an additional means tested care fee. And on the accommodation side, of course, if someone is in the higher means situation then there will be a negotiation between them and the aged care provider as to what they pay for their accommodation.
COCKBURN:
So who works out the exact amount that you’re going to be up for if you sign a contact?
FIFIELD:
Well it depends if you’re someone who is of low means or…
COCKBURN:
Let’s say I fall into a category where I have to pay. I’m just concerned about, how do you sign a contract when you’ve only got an estimate of the cost?
FIFIELD:
It’s important to briefly go through the categories because if you’re someone of low means the government will cover your accommodation cost and you don’t have to pay the additional means tested care fee. You just have to pay the basic care fee. If you’re someone of moderate means, again like everyone else, you pay the basic care fee…
COCKBURN:
But that’s not the question. It’s if I fall into the means where I need to know what I’m paying and I can only get an estimate from the government site, how do I know, when I sign on the dotted line at the aged care place, whose going to tell me what the actual amount is going to have to be?
FIFIELD:
Let’s take someone who has higher means. For someone in that situation, they have to pay their full accommodation costs. For someone in that circumstance, they negotiate with the aged care provider and the aged care provider will have a particular offering at a particular price. And then that individual will have 28 days in which to decide whether they want to pay the lump sum, or a daily fee, or a combination of the two.
COCKBURN:
And I think the most important thing is that there is the site they can go to for advice, but they need to get independent financial advice and have someone that can work through this. The fundamental thing is it’s not more expensive, there’s more room in there to help people on low incomes and it’s just a little bit more complex for people on higher incomes. Bu they can get financial help, that’s that in a nutshell.
FIFIELD:
That’s right, there is the safety net there that continues both for accommodation costs and for care costs. Because it’s important to see that there are two sides to the equation for aged care. There is what you pay for your care and what you pay for your accommodation.
COCKBURN:
It just is confusing for people, but the most important message – and thank you very much for your time Senator – it isn’t affecting anyone who’s currently in accommodation, this is for people going in there. Senator Mitch Fifield thank you very much for your time, we do appreciate it, you are the Assistant Minister for Social Services and thank you for clarifying that.
FIFIELD:
Thanks Sally.