Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2004-2005
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
HOUSE OF REPRESENTATIVES
AGED CARE (BOND SECURITY) LEVY BILL 2005
EXPLANATORY MEMORANDUM
(Circulated by authority of the Minister for Ageing, the Honourable Julie
Bishop MP)
AGED CARE (BOND SECURITY) LEVY BILL 2005
OUTLINE
This Bill operates in conjunction with the Aged Care (Bond Security) Bill
2005 and enables the imposition of levies on approved providers in order to
recover any costs incurred by the Australian Government as a result of
repaying accommodation bond balances to residents in the event that an
approved provider becomes insolvent (as provided for in the Aged Care (Bond
Security) Bill 2005).
This Bill forms part of a suite of Bills, including the Aged Care (Bond
Security) Bill 2005 and the Aged Care Amendment (2005 Measures No. 1) Bill
2005, which together strengthen protection of residents' accommodation
bonds, as announced by the Government in September 2005, by enhancing
prudential regulatory requirements and by guaranteeing the repayment of
bond balances to residents in the event that an approved provider becomes
insolvent and is unable to repay bonds.
FINANCIAL IMPACT
There will be no cost to industry unless a provider becomes insolvent and
the Australian Government has to pay outstanding bond balances to care
recipients. Costs will only be realised in the event of an approved
provider defaulting on their obligation to refund an outstanding bond
balance and the magnitude of costs that flow to industry will depend on the
number of bonds repaid by the Australian Government on behalf of the
defaulting provider, whether any money can be recovered from the defaulting
approved provider and the administrative costs of the Australian Government
associated with the repayment of bonds. In the event of a default, the
Australian Government will assess the impact of recovering costs from all
other approved providers and will have the legislative capacity to enable
costs to be repaid in a series of instalments over a number of years. This
will minimise the impact on approved providers.
REGULATORY IMPACT STATEMENT
This Bill forms part of a package of three Bills that creates new
prudential regulatory arrangements and a guarantee scheme for the repayment
of bonds to aged care recipients in the event that the approved provider of
the service becomes insolvent and has outstanding bond balances. The
Regulatory Impact Statement for the suite of Bills is included in the
Explanatory Memorandum for the Aged Care (Bond Security) Bill 2005.
AGED CARE (BOND SECURITY) LEVY BILL 2005
NOTES ON CLAUSES
Clause 1 - Short Title
This clause provides that the Bill may be cited as the Aged Care (Bond
Security) Levy Act 2005.
Clause 2 - Commencement
This clause provides that clauses 1 and 2 of the Bill will commence on the
day on which the Act receives Royal Assent and clauses 3 to 10 of the Bill
will commence at the same time as Schedule 5 to the Aged Care Amendment
(2005 Measures No. 1) Bill 2005 commences. Schedule 5 to the Aged Care
Amendment (2005 Measures No. 1) Bill 2005 will commence on a day to be
fixed by Proclamation or, at the latest, 6 months after Royal Assent.
Clause 3 - Application of This Act
This clause provides that the Bill applies in all States and Territories
but does not apply in any external Territory (for example, Norfolk Island,
the Australian Antarctic Territory, Heard Island, the McDonald Islands and
the Coral Sea Islands). This is consistent with the Aged Care Act 1997.
Clause 4 - Binding the Crown
This clause provides that the Bill binds the Crown in each of its
capacities and that the Bill does not make the Crown liable to be
prosecuted for an offence.
Clause 5 - Definitions
This clause defines the key terms used in the Aged Care (Bond Security)
Levy Bill 2005.
The key definitions included in this clause are:
"approved provider" - This term has the same meaning as the meaning in
schedule 1 of the Aged Care Act 1997. That is, an approved provider means
a person or body in respect of which an approval under Part 2.1 of the Aged
Care Act 1997 is in force, and, to the extent provided for in section 8-6,
includes any State or Territory, authority of a State or Territory or local
government authority.
"default event declaration" - this term is defined by reference to the Aged
Care (Bond Security) Bill 2005. Clause 10 of that Bill enables the
Secretary to make a default event declaration if the Secretary is satisfied
that an insolvency event has occurred in relation to an approved provider
and there is at least one outstanding bond balance of the approved
provider. In essence, a default event declaration "triggers" the guarantee
scheme for the repayment of bonds to residents.
"outstanding bond balance" - This term has the same meaning as in subclause
6(2) in the Aged Care (Bond Security) Bill 2005. A bond balance is an
outstanding bond balance of an approved provider at a particular time if:
a) at that time all, or part, of the bond balance has not been refunded;
and
b) that time is later than the time required for the bond balance to be
refunded by the approved provider under:
iii) Subdivision 57G of the Aged Care Act 1997; or
iv) the User Rights Principles; or
v) a formal agreement applying in respect of the bond balance.
Clause 6 - Regulations may impose levy
This clause enables the Commonwealth to impose a levy on approved providers
holding accommodation bonds and/or entry contributions. This allows the
Commonwealth to recover any costs associated with the repayment of bonds to
residents in the event that an approved provider becomes insolvent and has
at least one outstanding bond balance.
Sub-clause 6(1) provides that if a costs recoupment determination has been
made (under the Aged Care (Bond Security) Bill 2005), then the regulations
may impose a levy. The levy would be applied to all approved providers who
have refund obligations (that is, all approved providers holding bonds).
Sub-clause 6(2) defines the refund obligations of approved providers under
subclause 6(1).
In relation to clause 6, the Aged Care (Bond Security) Bill 2005 provides
that the regulations may prescribe matters that enable or facilitate the
collection of the levy imposed under this clause. For example, the
regulations may provide for the person or persons who are liable to pay the
levy, the time the levy is due to be paid, the methods by which the levy
may be collected (including through instalments) and the penalties (if any)
for offences against the regulations.
Clause 7 - Rate of levy
The clause provides that the regulations will determine the rate of levy.
This enables, for example, the regulations to impose the levy based on the
total bond holdings of each approved provider as a proportion to total
accommodation bond balances across the industry.
Clause 8 - Maximum rate of levy
This clause requires the rate of levy to be fixed so that the total amount
to be raised by the levy must not be any more than the amount set out in
the costs recoupment determination. That is, approved providers cannot be
levied for any more than has been paid by the Commonwealth in both refund
amounts and administrative costs. Aged Care (Bond Security) Bill 2005
provides for the making of costs recoupment determinations and the
information that must be contained in them.
Clause 9 - Levy may discriminate between classes of approved providers
This clause provides that the regulations may impose different rates of
levy for different classes of approved providers. This enables, for
example, the regulations to impose the levy based on the remoteness or
otherwise, of the location of services.
The clause provides that the regulations imposing the levy must not
otherwise discriminate between approved providers. For example, the
regulations cannot state that approved providers in New South Wales will be
required to pay a levy but approved providers in Queensland will not be
required to pay a levy.
Clause 10 - Regulations
This clause empowers the Governor-General to make regulations that
prescribe matters required or permitted by the Act to be prescribed or
necessary or convenient for carrying out or giving effect to the Act.