Accounting peak bodies label aged care funding “too complex”

A joint submission to parliament from some of Australia’s most influential finance and accounting peak bodies has labelled the new Aged Care Act’s proposed funding arrangements “too complex” and incompatible with other Government policy areas.

Key points

• Chartered Accountants Australia and New Zealand, CPA Australia, and the Institute of Public Accountants provided a joint submission in response to the Aged Care Bill
• They recognise “the urgent need for reforms to take place as soon as practicable in the aged care sector” but are concerned over the guidance regarding funding arrangements
• Alongside the complex nature of the funding arrangements, they also asked for clarification regarding the role of financial advisers under relevant Acts

When the exposure draft of the new Aged Care Act was released in 2023, funding arrangements had not yet been included in the document. Regardless, early feedback received by the Department of Health and Aged Care already said existing funding arrangements were too complex and difficult to understand.

This joint submission recognised this concern. It also picked up on the lack of detail surrounding the framework for aged care funding arrangements, although the promised draft rules for Chapter 4 will likely emerge following senate examinations.

“We note that the Department of Health and Aged Care has issued some case studies to provide guidance. However, these lack sufficient detail for us to make an assessment as to how the new arrangements will work in practice,” the submission continues. 

“Consistent with our feedback to other government consultations and inquiries, one of our main aims will be to ensure that the aged care funding system works harmoniously with the retirement income system, particularly social security benefits and the superannuation system. 

“We are of the view that, based on the structure of Chapter 4 and on the Department’s case studies, the proposed funding arrangements remain too complex and do not appear to have been designed to work harmoniously with other government policy areas.”

The group also shared its support for means-tested care, stating it should not only be fair, reasonable and equitable for all, but easy for individuals to determine their eligibility for Government assistance. 

Under the new Aged Care Act, there will be various co-contribution levels for older people depending on whether they receive the full Aged Pension, a part-pension or are self-funded retirees. Expenses will also vary depending on the service with direct care fully funded by the Government.

Clarification for financial advisers

There is additional concern over how financial advisers acting under the Corporations Act and Financial Planners and Advisers Adviser Code of Ethics will be recognised when working with aged care clients, including those acting as a client’s representative when interacting with an aged care provider.

“It is unclear how the function of financial advisers, defined under the Corporations Act as ‘relevant providers’, fits into the role of ‘advocate’, ‘representative’ or ‘supporter’ as described in the Bill,” the submission reads.

“The law must clarify how these definitions interact (and the intended role of a person acting under these definitions) and apply to the assistance financial advisers and others provide clients in relation to their aged care needs.

“Given the provision of financial advice is heavily regulated under the Corporations Act 2001 and the Code, with oversight by ASIC, we recommend clarification to ensure that ‘relevant providers’ operating under the Corporations Act are not inadvertently captured under the definitions or provisions in the Bill.”

Additional clarification is also sought for public practising members of Australian-based professional accounting bodies so they are not captured under definitions or provisions of the Bill. Nor do the peak bodies want to see anyone providing aged care funding assistance or advice to hold, or be an authorised representative of, an Australian Financial Service License.

As for Enduring Powers of Attorney (EPOA), their organisations would like greater national consistency in EPOA laws. 

The complete submission can be viewed here.