Productivity Commission reports on red tape in aged care

The Productivity Commission’s latest report, ‘Annual Review of Regulatory Burdens on Business: Social and Economic Infrastructure Services Sector’, identifies ways to reduce the regulatory burdens on businesses in aged care, health, and other areas.

The Commission found that much of the regulation in the sector has the desirable objective of managing risk and ensuring service quality. But it can have the unintended consequence of reducing businesses’ flexibility in responding to consumer and user requirements, as well as adding a cost burden to their operation.

The Commission identified several key areas where regulations can be made less burdensome for business while maintaining or improving services. These include exploring options to free up the supply constraints on aged care services.

Also the responsibilities between regulatory bodies should be clarified and a more targeted risk-management approach adopted in administering regulations in aged care.

The concerns with regulations raised by business to this review are varied, but many stem from broader ongoing deficiencies in regulatory processes. The Commission has recommended that there be greater transparency and consultation with stakeholders when developing and administering regulations.

The report says that without tackling the underlying policy framework that constrains the supply of aged care services, it is unlikely that the regulatory burden in the industry can be substantially reduced.

To reduce the burden associated with regulation and price controls, and to improve the quality and diversity of aged care services, the Government should explore options for:

• relaxing supply constraints in the provision of aged care services;
• providing better information to older people and their families so they can make more meaningful comparisons in choosing an aged care service; and
• removing the restriction on bonds as a source of funding – the aged care regulatory framework is fragmented due to regulation by numerous government agencies.

This should be addressed by the current reviews of the accreditation process and standards in consultation with state and territory agencies. There also needs to be more effective communication with the industry on the delineation of responsibilities between the Department of Health and Ageing and the Aged Care Standards and Accreditation Agency regarding monitoring of provider compliance with these standards.

The Productivity Commission’s recommendations to reform in aged care covered:

• Building certification, accreditation, enhanced consumer choice, conditional adjustment payment reporting;
• Delineating the roles of the Accreditation Agency and the Department of Health and Ageing to assist aged care providers to better understand the compliance roles of both bodies;
• Abolition of the annual Fire and Safety declaration; and
• Allowing client choice for accommodation payments.

The release of the Productivity Commission report was warmly welcomed by Aged Care Association Australia (ACAA), as “an endorsement of the industry’s position for many years that the Commonwealth funded aged care program requires some substantial reform”.

ACAA also welcomed the endorsement of the Productivity Commission’s report from the Minister for Finance and Deregulation, Lindsay Tanner.

ACAA chief executive officer, Rod Young, said that “it is hard enough to provide quality services and remain profitable within the current system without having unnecessary and complicated compliance rules and restrictive practices imposed by Government”.

Catholic Health Australia (CHA), which oversees the accommodation of one in ten of all older people living in aged care accommodation, has also renewed its calls for aged care reform following the report on regulatory burdens in aged care.