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2010 - 2011 - 2012 - 2013
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES/SENATE
AGED CARE (BOND SECURITY) LEVY AMENDMENT BILL 2013
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Mental Health and Ageing,
the Hon Mark Butler MP)
AGED CARE (BOND SECURITY) LEVY AMENDMENT BILL 2013
OUTLINE
Currently under the Aged Care Act 1997 certain residential aged care services and
certain flexible aged care services may charge certain care recipients accommodation
bonds for entry into residential aged care services or certain flexible aged care
services. These accommodation bonds (less any allowable deductions made by the
approved provider) are required to be refunded to care recipients when they leave the
aged care service.
If an approved provider becomes insolvent and is unable to refund the
accommodation bond balances that are owing to the care recipients, the Aged Care
(Bond Security) Act 2006 provides a mechanism by which the Commonwealth may
repay the outstanding bond balances to the care recipients. This scheme is known as
the Accommodation Bond Guarantee Scheme (Guarantee Scheme).
The Aged Care (Bond Security) Levy Act 2006 enables the Commonwealth to recover
the costs of refunding these bond balances (along with administrative costs) from
approved providers via a levy.
This Bill amends the Aged Care (Bond Security) Levy Act 2006 as part of a suite of
Bills giving effect to the Living Longer Living Better aged care reform package.
Amongst other things, the Aged Care (Living Longer Living Better) Bill 2013
describes new ways for care recipients who enter residential care or certain flexible
care, on or after, 1 July 2014 to contribute to the cost of their accommodation. The
Bill enables care recipients to elect to pay for their accommodation by periodic
payment, lump sum or by a combination of both.
If a care recipient elects to pay by lump sum, this lump sum will be required to be
refunded to care recipients (less any allowable deductions) when the care recipient
leaves the residential aged care service or certain flexible aged care services.
In order to ensure that the same protections exist for care recipients who pay these
new lump sums and those that paid accommodation bonds under the existing
arrangements, amendments are required to both the Aged Care (Bond Security)
Act 2006 and the Aged Care (Bond Security) Levy Act 2006 to extend the operation of
the Guarantee Scheme to care recipients who enter care on or after 1 July 2014 and
pay lump sums (known as refundable accommodation deposits or refundable
accommodation contributions).
This Bill amends the Aged Care (Bond Security) Levy Act 2006 to:
change the name of the Act to the Aged Care (Accommodation Payment Security)
Levy Act 2006; and
ensure that if the Guarantee Scheme is triggered and the Commonwealth repays
accommodation bonds or the new types of payments (collectively known as
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accommodation payment balances), the Commonwealth is able to recover its
costs, via a levy, from approved providers.
Financial Impact Statement
There will be no cost to approved providers of residential aged care unless:
a provider becomes bankrupt or insolvent;
the Commonwealth has to pay outstanding accommodation payment balances
(which, as defined through these amendments, will also include bond balances)
owed to care recipients; and
the Commonwealth decides to recover the costs of refunding these balances from
all approved providers via a levy.
In this situation, the magnitude of costs that flow to approved providers of residential
aged care would be determined by the monetary value of the outstanding
accommodation payment balances (including interest) repaid by the Commonwealth
on behalf of the defaulting approved provider, whether any part of this cost could be
recovered from the defaulting approved provider and the costs incurred by the
Commonwealth in administering the default event (including the repayment of the
accommodation payment balances).
In the event that an approved provider becomes bankrupt or insolvent and defaults on
their obligation to repay care recipients' accommodation payment balances, the
Commonwealth would assess the impact of recovering costs from all approved
providers that held such lump sum amounts ten days before the default event
declaration was made. The Commonwealth has the legislative capacity to recover
costs from approved providers in instalments over a number of years. This will
minimise the potential impact on approved providers.
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Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny)
Act 2011
Aged Care (Bond Security) Levy Amendment Bill 2013
This Bill 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 Bill
The Aged Care (Bond Security) Levy Amendment Bill 2013 extends the existing levy
provisions under the bond security legislation to enable the levy to be imposed in
respect of the obligations of approved providers to refund two new types of
accommodation payments, refundable accommodation deposits and refundable
accommodation contributions. These new types of accommodation payments are
provided for in the Aged Care (Living Longer Living Better) Bill 2013.
Human Rights Implications
The proposed amendments do not limit any human rights, nor propose any offences or
penalties.
Conclusion
This Bill is therefore compatible with human rights because it does not engage any of
the applicable rights or freedoms.
The Hon Mark Butler MP, Minister for Mental Health and Ageing
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AGED CARE (BOND SECURITY) LEVY AMENDMENT BILL 2013
NOTES ON CLAUSES
Clause 1 - Short Title
This is a formal provision which provides that the Bill, once enacted, can be cited as
the Aged Care (Bond Security) Levy Amendment Act 2013.
Clause 2 - Commencement
This clause provides that the Act commences on 1 July 2014. This aligns with the
commencement of the changes to the Aged Care (Bond Security) Act 2006 and the
introduction of the new types of accommodation payments that are described in
amendments to the Aged Care Act 1997 which are reflected in the Aged Care (Living
Longer Living Better) Bill 2013.
Clause 3 - Schedule(s)
This clause provides that each Act that is specified in a Schedule to this Bill is
amended or repealed as set out in the applicable items in the Schedule concerned, and
any other item has effect according to its terms.
SCHEDULE 1 - AMENDMENTS
Item 1
This item amends the long title of the Aged Care (Bond Security) Levy Act 2006.
Currently, the long title describes the Act as `An Act relating to the imposition of
levies in respect of certain obligations to refund bond balances, and for related
purposes'. This item amends this long title to read: `An Act relating to the imposition
of levies in respect of certain obligations to refund accommodation payment balances,
and for related purposes'.
This reflects the new scope of the Act which enables a levy to be imposed on
approved providers for the costs incurred by the Commonwealth in refunding not just
bond balances (as defined by the Aged Care (Bond Security) Act 2006) but also
refundable accommodation deposit balances and refundable accommodation
contribution balances.
Item 2
This item amends the name of the Aged Care (Bond Security) Levy Act 2006 so that,
from 1 July 2014, it will be called the Aged Care (Accommodation Payment Security)
Levy Act 2006.
A note will be inserted under section 1 to remind the reader of the operation of section
10 of the Acts Interpretation Act 1901. The effect of this is that if another amendment
of the Act is described by reference to the Act's previous short title (that is, the Aged
Care (Bond Security) Levy Act 2006), that other amendment has effect, from
1 July 2014, as an amendment of the Act in accordance with its new short title (the
Aged Care (Accommodation Payment Security) Levy Act 2006).
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Items 3 and 7
These items insert in section 5 of the Act definitions for `accommodation payment
balance' (item 3) and `outstanding accommodation payment balance' (item 7).
`Accommodation payment balance' has the same meaning as that given by the Aged
Care (Accommodation Payment Security) Act 2006 (once enacted). That Act defines
`accommodation payment balance' to mean:
a refundable deposit balance;
an accommodation bond balance;
an entry contribution balance; and
an unregulated lump sum balance.
`Outstanding accommodation payment balance' also has the same meaning as in
section 6(2) of the Aged Care (Accommodation Payment Security) Act 2006 (once
enacted). That subsection defines outstanding accommodation payment balance to
mean, in summary, an accommodation payment balance that has not been refunded
when it was due to be refunded in accordance with the Aged Care Act 1997 or User
Rights Principles, or any applicable formal agreement.
Items 4 and 8
These items repeal, from section 5 of the Act, the definitions of `bond balance'
(item 4) and `outstanding bond balance' (item 8).
`Bond balance' is the collective term used in the Act prior to amendment to refer to
accommodation bond balances, entry contribution balances and unregulated lump sum
balances. Each of these concepts is now included in the definition of `accommodation
payment balance' (refer item 3). As such there is no longer a need to define `bond
balance'.
Similarly, `outstanding bond balance' refers to a bond balance that had not been
refunded by the approved provider. This term is being replaced by the term
`outstanding accommodation payment balance' (refer item 7).
Item 5
Currently under section 8 of the Act, the maximum amount of revenue to be raised by
any levy imposed on approved providers must not exceed the costs recoupment
amount specified in the costs recoupment determination, the making of which enables
the levy to be imposed.
Section 5 of the Act defines a cost recoupment determination to mean a refund costs
recoupment determination or an administrative costs recoupment determination within
the meaning of the Aged Care (Bond Security) Act 2006.
This item amends the definition of `costs recoupment determination' so that instead of
referencing the Aged Care (Bond Security) Act 2006, it will reference the Aged Care
(Accommodation Payment Security) Act 2006 which is the new name for that Act.
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These changes do not affect how the maximum rate of levy is calculated.
Item 6
Section 5 of the Act defines a `default event declaration' as having the same meaning
as in the Aged Care (Bond Security) Act 2006.
This item amends the definition of `default event declaration' so that instead of
referencing the Aged Care (Bond Security) Act 2006, it will reference the Aged Care
(Accommodation Payment Security) Act 2006 which is the new name for that Act.
Item 9
Subsection 6(2) of the Act describes the circumstances in which a levy may be
imposed. This amendment simply replaces all references within that section to `bond'
with references to `accommodation payment'. The effect of this is to ensure that the
levy arrangements apply not just in respect of bonds (which currently include entry
contributions and unregulated lump sums) but all lump sum accommodation payments
including refundable accommodation deposits, refundable accommodation
contribution balances, accommodation bonds, entry contributions and unregulated
lump sums.
Item 10
Item 10 is an application provision which provides that the amendments described in
this Bill apply in relation to a default event declaration specified in a costs
recoupment determination whether the default event declaration was made before, on
or after 1 July 2014.
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