Transforming Aged Care: New Legislation Aims to Enhance Quality and Safety

Last month, the Federal Government unveiled its much-anticipated overhaul of the aged care system. If passed, the Aged Care Act could see providers fined more than $1.5 million for the most serious breaches of substandard quality of care.

This foundational, rights-based shift in obligations is a direct response to the Royal Commission into Aged Care Quality and Safety which called for significant reforms to ensure the safety and quality of care for elderly Australians.

The proposed legislation is currently being examined by a Senate committee, with some concerns from peak bodies and advocates who say more detail is needed about how the increased protections for elderly Australians will work. The coalition has backed the bill, but only after some significant changes were made.

Despite the bipartisan support, The Office of the Inspector-General of Aged Care has warned that Labor’s $5.6 billion package of reforms may fall short of the Royal Commission’s recommendations.

Some of the key proposals in relation to governance and regulation of the sector include a Statement of Rights for older Australians in aged care, with a duty for providers to uphold these rights.

The Act will also grant stronger regulatory powers to protect people from harm, including whistleblower protections and a regulator with enhanced investigative powers. An independent statutory Complaints Commissioner will be established within the Aged Care Quality and Safety Commission (ACQSC).

The ACQSC will be responsible for protecting and enhancing the safety and wellbeing of aged care recipients. Its role will be to engage with stakeholders to develop best-practice models, register providers, and monitor compliance with standards and codes of conduct. The ACQSC will also administer the Serious Incident Response Scheme, resolve complaints, report on complaints, and reduce restrictive practices.

The Department of Health and Aged Care will oversee the operations and integrity of the aged care system, with the Secretary acting as the aged care System Governor. Responsibilities will include facilitating equitable access, supporting service continuity, and encouraging workforce development.

Megan Motto, CEO of the Governance Institute of Australia, says there is a need for boards in the aged care sector to focus sharply on governance to prevent future missteps.

“It’s clear that the sector has been grappling with the legacy of the pandemic and the ongoing spotlight from the Royal Commission,” Ms Motto said.

“Providing further scrutiny through stronger governance, whistleblower protections and independent oversight will help boards and organisations manage the growing needs of an ageing population with the dignity and quality of care our elderly Australians deserve.”

The Federal Government’s reforms also include larger means-tested contributions from new entrants, meaning individuals will contribute more based on their financial capacity. Additionally, there will be a higher maximum room price that will be indexed over time to reflect inflation and other economic factors. Providers will also retain a small portion of refundable accommodation deposits, which will help them maintain and improve their facilities.

Aged care is a significant pressure on the budget, with spending expected to more than double as a share of GDP over the next 40 years. Currently, the Government covers 76% of residential care costs and 95% of home care costs. The reforms are projected to result in a net spend of $930 million over four years but save $12.6 billion over the next eleven years.

By 2034-35, annual growth in aged care spending is expected to decrease from 5.7% to 5.2%. Aged care spending as a share of GDP is projected to decrease from 1.5% to 1.4%, even as the number of participants increases. Under the reforms, the Government will cover 100% of clinical care costs, regardless of individual means. It will also pay 73% of residential care costs and 89% of Support at Home costs, enabling more people to access care in their own home.

If you’re a board member or executive working in the Aged Care sector, become a member of the Governance Institute so you can stay across all the regulatory and governance changes. For more information, head to our website. We also offer an extensive array of courses and certificates through our Governance Academy.