Federal Register of Legislation - Australian Government

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Principles as made
This instrument amends the Accountability Principles 2014 to provide greater transparency of the financial viability of approved aged care providers, enable the Australian Government to better identify and monitor at-risk providers earlier and improve the accuracy and validity of the financial reporting to government.
Administered by: Health
Registered 30 Jun 2021
Tabling HistoryDate
Tabled HR03-Aug-2021
Tabled Senate03-Aug-2021
Date of repeal 19 Oct 2021
Repealed by Division 1 of Part 3 of Chapter 3 of the Legislation Act 2003

EXPLANATORY STATEMENT

 

Issued by the authority of the Minister for Senior Australians and Aged Care Services

 

Aged Care Act 1997

 

Accountability Amendment (Financial Information) Principles 2021

 

Purpose

 

The purpose of the Accountability Amendment (Financial Information) Principles 2021 (Amendment Principles) is to amend the Accountability Principles 2014 (Accountability Principles) to provide greater transparency of the financial viability of approved aged care providers, enable the Australian Government to better identify and monitor at-risk providers earlier and improve the accuracy and validity of financial reporting to government.

 

The Amendment Principles are a legislative instrument for the purposes of the Legislation Act 2003. Details of the Amendment Principles are set out in the Attachment below.

 

Background

 

The Aged Care Act 1997 (Act) provides for the regulation and funding of aged care services. Persons who are approved under the Act to provide aged care services (approved providers) can be eligible to receive subsidy payments in respect of the care they provide to approved care recipients.

 

Section 63‑1 of the Act sets out the responsibilities of an approved provider in relation to accountability for the aged care provided by the approved provider through an aged care service. These responsibilities include any such other responsibilities as are specified in the Accountability Principles (paragraph 63‑1(1)(m) of the Act).

 

Section 96-1 of the Act allows the Minister to make Principles providing for various matters required or permitted by a Part or section of the Act. This includes the Accountability Principles.

 

The Accountability Principles describe:

  • the responsibilities of an approved provider to give certain information about a provider of residential care services to the Aged Care Quality and Safety Commissioner;
  • the responsibilities of an approved provider in giving certain information to the Secretary or the Minister about an aged care service;

·       the responsibilities of approved providers in relation to financial reporting;

·       the responsibility of an approved provider to participate in the aged care workforce census;

·       the responsibilities of an approved provider in relation to staff members and volunteers requiring police certificates; and

·       the reasonable steps that an approved provider must take to ensure that none of its key personnel is a disqualified individual.

 

As part of the 2021-22 Budget, the Australian Government announced the introduction of a new financial and prudential monitoring, compliance and intervention framework (the Framework) for aged care providers. The Framework is designed to increase government oversight of providers’ financial performance, improve the financial resilience of the sector, and boost the Australian Government’s intervention powers to ensure underperforming providers either improve or exit the market. The Amendment Principles implement legislative amendments for the first phase of the Framework.

 

Authority

 

Under section 96‑1 of the Act, the Minister can make Principles by legislative instrument. This is to provide for matters required or permitted by the corresponding Part or section of the Act, or that are necessary or convenient in order to carry out or give effect to that Part or section of the Act.

 

Reliance on subsection 33(3) of the Acts Interpretation Act 1901

Under subsection 33(3) of the Acts Interpretation Act 1901, where an Act confers a power to make, grant or issue any instrument of a legislative or administrative character (including rules, regulations or by-laws), the power shall be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoke, amend, or vary any such instrument.

 

Commencement

 

The Amendment Principles commence on the later of 1 July 2021 and the day after it is registered on the Federal Register of Legislation.

 

Consultation

 

In the 2018-19 Budget, the Australian Government announced that it supported strengthening the prudential framework for aged care providers (Better Quality Care ‑ Managing Prudential Risk in Residential Care measure). In 2019, the Department of Health released a public Discussion Paper Managing Prudential Risk in Residential Aged Care which consulted the sector and broader community about the issue of managing prudential risk in residential aged care. The Discussion Paper consulted on reform options recommended through two previous reviews; Ernst & Young 2017 Review of Aged Care legislation which provides for the regulation and protection of Refundable Accommodation Payments in Residential Aged Care; and the 2017 Legislated Review of Aged Care (Tune Review). 

 

Both reviews and the responses to the Discussion Paper supported greater transparency and improved provider disclosure in financial reporting.

 

The Framework also responds to recommendations 130‑137 of the Royal Commission into Aged Care Quality and Safety (Royal Commission), which recommended greater responsibilities and standards for prudential regulation, liquidity and capital adequacy requirements, more stringent financial reporting requirements, greater enforcement tools and building the capability of the Prudential Regulator. In the Australian Government’s response to the Final Report of the Royal Commission, the Australian Government accepted, or accepted in-principle, all of the relevant recommendations on prudential reform.

 


ATTACHMENT

 

Details of the Accountability Amendment (Financial Information) Principles 2021

 

Section 1 provides that the name of the instrument is the Accountability Amendment (Financial Information) Principles 2021.

 

Section 2 provides that the instrument commences on the later of 1 July 2021 and the day after the Amendment Principles are registered.

 

Section 3 states that the authority for making the instrument is the Aged Care Act 1997.

 

Section 4 provides each instrument that is specified in a Schedule to this instrument is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this instrument has effect according to its terms.

 

Schedule 1—Amendments

 

Accountability Principles 2014

 

Item 1 – Section 4

 

Item 1 inserts definitions of “financial support statement”, “subsidiary” and “ultimate holding company” into section 4 of the Accountability Principles. This is required to give effect to the other items in the instrument, which refer to these terms.

 

A “financial support statement” has the meaning given by new section 40 (see item 6 below).

 

The word “subsidiary” and the term “ultimate holding company” have the same meaning as in the Corporations Act 2001.

 

Item 2 – Subsection 35(2)

This item repeals the existing subsection 35(2) of the Accountability Principles and substitutes a new subsection 35(2). New subsection 35(2) requires that if an approved provider is not a State, a Territory, an authority or a State or territory or a local government authority, the aged care financial report (ACFR) must be signed by:

  • a director of the body corporate (if the provider is a body corporate that is incorporated under the Corporations Act 2001); and
  • a member of the provider’s governing body (in any other case).

 

If the approved provider is a State, a Territory, an authority of a State or Territory or a local government authority, the ACFR must be signed by one of the approved provider’s key personnel who is authorised by the provider to sign the report.

 

This item will assist in ensuring the accuracy of the information provided through the ACFR and ensure increased oversight of the providers’ financial position.

 

Item 3 – At the end of subsection 35(4)

This item inserts a new note at the end of subsection 35(4) to specify that if a non‑government approved provider of a residential aged care service is a subsidiary of another body corporate, the ACFR must also be accompanied by a financial support statement as specified in subsection 39(2).

 

Item 4 – Section 38 (heading)

This item repeals the existing heading of section 38 and replaces it with a new heading, “Service provided during part only of financial year”. The new heading clarifies what matters section 38 relates to.

 

Item 5 – Section 38

This item removes the text “complied with this Division” and substitutes the sections that section 38 applies to, which are sections 35 to 37A of the Accountability Principles. This clarifies that, if an approved provider of an aged care service was responsible for the operations of the service during part only of a financial year for the approved provider, the approved provider is taken to have complied with sections 35 to 37A in relation to the service for the financial year if the approved provider complied with those sections in relation to the service and that part of the financial year.

 

Item 6 – At the end of Division 2 of Part 4

This item adds new sections 39, 40 and 41 into the Accountability Principles.

 

Section 39

New section 39 sets out a new responsibility for certain approved providers to provide financial support statements as part of an ACFR.

 

New subsection 39(1) provides that this section applies in relation to an approved provider if the provider:

·         provides a residential aged care service; and

·         is not a State, a Territory, an authority of a State or Territory or a local government authority; and

·         is a subsidiary of another body corporate.

 

New subsection 39(2) provides that if an approved provider is required to give the Secretary an ACFR for a financial year (under section 37 of the Accountability Principles), then the provider must provide a “financial support statement” as part of the ACFR for the provider signed within the period of 4 months starting on the day after the end of the financial year.

 

However, new subsection 39(3) sets out that an approved provider will not have to provide a financial support statement if the ACFR for the approved provider includes an explanation of why the approved provider has not complied with the requirement in subsection 39(2) in relation to that financial year and the provider has a reasonable excuse for not complying with subsection 39(2) in relation to that financial year.

 

New subsection 39(4) provides that the Secretary may at any time, by notice in writing, require an approved provider to give the Secretary a financial support statement for the provider signed within the period for signing specified in the notice. New subsection 39(5) sets out that an approved provider must comply with this notice within the period for complying specified in the notice or, if no such period is specified in the notice, within 28 days after the day when the notice is given.

 

However, new subsection 39(6) provides that subsection 39(5) does not apply to an approved provider in relation to a subsection 39(4) notice if at or before the end of the period within which the provider would (but for this subsection) be required to comply with the notice, the provider gives the Secretary a written explanation of why the provider is not able to comply with the notice and the provider has a reasonable excuse for not complying with the notice.

 

New subsection 39(7) provides that the Secretary may request, in writing, further information or documents that are, or may be, relevant to assess whether a provider has a reasonable excuse for the purposes of paragraphs 39(3)(b) and 39(6)(b). An approved provider must comply with a notice under subsection 39(7) within the period for complying specified in the notice or, if no such period is specified in the notice, within 28 days after the day when the notice is given (new subsection 39(8)).

 

The failure of approved providers to meet certain responsibilities, including those specified in the Accountability Principles and under section 39, may lead to the imposition of sanctions on an approved provider under Part 7B of the Aged Care Quality and Safety Commission Act 2018.

 

Section 40

Section 40 defines what a financial support statement for an approved provider is, sets out who it must be signed by and what matters must be included in the financial support statement.

 

New subsection 40(1) provides that a financial support statement is a written statement by the ultimate holding company in relation to the provider that satisfies the requirements in subsections 40(2), 40(4) and 40(5).

 

The financial support statement must either state whether ultimate holding company is, or is not, willing and able (while the provider remains an approved provider) to provide financial support to the approved provider that is needed in order to enable the provider to pay their debts (new subsection 40(2)).

 

New subsection 40(3) clarifies that, for the purposes of paragraph 40(2)(a), the debts of the approved provider specified in relation to the financial support statement, whether or not the debts relate to the provision of aged care services by the provider, are:

  • any debts of the provider that are outstanding immediately before the start of the day (the giving day) when the statement is given to the Secretary;
  • any debts of the provider that:
    • are debts that become due during the period that starts on the giving day and ends immediately before the start of the first day after the giving day when the provider gives the Secretary another financial support statement for the provider; or
    • if the provider never gives the Secretary another financial support statement for the provider after the giving day—are debts that become due on or after the giving day.

 

New subsection 40(4) provides that, if the ultimate holding company is a body corporate that is incorporated, or taken to be incorporated, under the Corporations Act 2001, the financial support statement must be signed by a director of the body corporate for the purposes of that Act. Otherwise, the financial support statement must be signed by a member of the ultimate holding company’s governing body.

 

New subsection 40(5) sets out that the financial support statement must be in a form, if any, approved by the Secretary for the purposes of this subsection.

 

The intent of new sections 39 and 40 is to indicate whether the ultimate holding company is willing to provide financial support to ensure the approved provider can meet its debts as and when they fall due. This will assist government to identify and monitor providers in financial risk to ensure continuity of care for residents and aims to increase transparency around whether providers are likely to be able to refund Refundable Accommodation Deposits held.

 

Section 41

New section 41 enables the Secretary of the Department of Health to require approved providers to provide updated information, or specified information or documents, and validate information about matters that are included, or are required to be included, under an ACFR (including the annual prudential compliance statement, see the note to new subsection 41(3)) or general purpose financial report (new subsections 41(3) and 41(5)).

 

An approved provider must comply with a notice provided by the Secretary under subsections 41(3), regarding a notice to provide updated information, or subsection 41(5), regarding a notice to provide supporting information or documents, within the period specified in the notice or, if no period is specified in the notice, within 28 days after the day when the notice is given (new subsection 41(1)).

 

An approved provider will be taken to comply with a notice provided by the Secretary under subsections 41(3) or 41(5) only if the approved provider gives the information or documents in a form (if any) approved by the Secretary for the purposes of that subsection (new subsection 41(2)).

 

New subsection 41(4) provides that a notice under subsection 41(3) may require an approved provider to give updated information about a matter in relation to a period that is the same as the period to which a report for the provider relates, or different from the period to which such a report relates. This provision applies so that the Secretary may access updated information to:

  • to confirm that the requirements for an ACFR have been satisfied and information previously reported is accurate;
  • access updated information to determine the current financial position of the provider. 

 

To avoid doubt, new subsection 41(6) provides that a notice under subsection 41(5) may require an approved provider to give the Secretary information or documents, whether or not the information or documents are required by or under the Act to be included in an ACFR or a general purpose financial report. This is designed to enable the Secretary to validate and assess the accuracy of information provided through the ACFR and access supporting information or documents to determine the current financial position of the provider.

 

Section 41 is designed to assist the Department of Health to better identify, assess and monitor providers in financial risk to ensure continuity of care for residents and to protect aged care recipients.

 

Item 7 – At the end of Part 8

This item adds section 57 to the Accountability Principles, which is an application provision for certain amendments introduced by the Amendment Principles.

 

New subsection 57(1) provides that the amendments of section 35 and the addition of subsection 39(2) (items 2, 3 and 6 above) by the Amendment Principles apply in relation to an ACFR that is given to the Secretary on or after the commencement of the Amendment Principles, whether the financial year to which the report relates begins before, on or after that commencement.

 

New subsection 57(2) provides that new subsections 41(3) to 41(6) added by the Amendment Principles apply in relation to a report mentioned in paragraph 41(3)(a) or (b) of the Amendment Principles (item 6 above) that is given to the Secretary on or after 1 July 2021, whether the financial year to which the report relates begins before, on or after that date.

 

This is intended to ensure that the new provisions outlined in the Amendment Principles will apply to the ACFR provided in respect of the 2020‑2021 reporting period and future reporting periods. Approved providers will have 4 months after the end of the financial year they report on, to provide an ACFR including the additional requirements inserted by the Amendment Principles.

 


 

Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Humans Rights (Parliamentary Scrutiny) Act 2011

 

Accountability Amendment (Financial Information) Principles 2021

 

 

The Accountability Amendment (Financial Information) Principles 2021 (Amendment Principles) are 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) Act 2011.

 

Overview of the Legislative Instrument

The Amendment Principles amend the Accountability Principles 2014 (Accountability Principles) to provide greater transparency of the financial viability of approved aged care providers, enable the Australian Government to better identify and monitor at-risk providers earlier and improve the accuracy and validity of financial reporting to government.

 

Human Rights Implications

The Amendment Principles are designed to enable the government to better assess, monitor and mitigate financial risks in the aged care sector. In better managing financial risks, government is seeking to reduce the risk of a sudden cessation of care for aged care recipients. As a result, the Amendment Principles promotes the rights of care recipients to:

  • the highest attainable standard of physical and mental health, as contained in article 12(1) of the International Covenant on Economic Social and Cultural Rights (ICESCR);
  • an adequate standard of living including adequate food, water and housing and to the continuous improvement of living conditions, as contained in article 11(1) of the ICESCR; and
  • access to a social security scheme that provides a minimum essential level of benefits to all individuals and families that will enable them to acquire at least essential health care, basic shelter and housing, water and sanitation, foodstuffs, and the most basic forms of education, as contained in article 9 of the ICESCR.

 

Conclusion

The Amendment Principles are compatible with human rights as they promote the human rights to an adequate standard of living, the highest attainable standard of physical and mental health, and access to a social security scheme that provides a minimum essential level of benefits to all individuals and families.

 

 

 

Senator the Hon Richard Colbeck

Minister for Senior Australians and Aged Care Services