Government guarantee for aged care deposits in question Matthew CranstonEconomics correspondentUpdated Nov 28, 2016 – 12.44pm,first published at Nov 27, 2016 – 11.00pm
Federal cabinet has deliberated on potential changes to the guarantee the government gives to people who make refundable accommodation deposits (RAD)s for their aged care.The RADs - currently worth about $18 billion - are covered by the Accommodation Bond Guarantee Scheme which acts to ensure residents get their deposit back if their aged care provider goes broke. Very few do, but the guarantee is a cost to government.The RADs also serve as a key cheap funding tool for aged care operators in Australia who are trying to build new places for an aging population.Deposits for aged care have been guaranteed by the government, but at a cost. Pat ScalaThe Aged Care Financing Authority was asked by the government to examine the existing bond guarantee scheme and alternative approaches and to report its findings. However, following Freedom of Information requests by The Australian Financial Review,the government has refused to reveal two key documents, including one which shows deliberations made by cabinet and another which contains advice, opinions and recommendations to the Minister for Health in relation to the bond guarantee. AdvertisementThe Freedom of Information officer said the document contained "information that will inform the Minister's deliberations regarding the development of alternative options to the current Accommodation Bond Guarantee Scheme and other deliberative matters including the reporting arrangements of the Aged Care Financing Authority." The refusal to reveal the documents was due to a fear that revealing such information may perturb the industry players who are already facing funding cuts from the government and competition from stay-at-home aged care providers."Release [of the documents] would inhibit the ability of the government to develop effective arrangements for the guarantee of an aged care residents lump sum accommodation deposit by prematurely exposing preliminary advice being considered as part of the government's deliberations."Some industry operators have been suspicious that the government might impose a fee on aged care operators to cover the expense of the guarantee.However, two chief executives of major aged care providers said they did not expect the government to make any changes.Estia Health chief executive Norah Barlow said she had not heard anything on the government's deliberations."It would be a massive policy change if they were to do that," Ms Barlow said, "And smaller companies would be badly impacted."Another chief executive said the risk of defaulted bonds was very low."The short answer is that the government hasn't made a decision. It is their decision, but I think the default rate is very low."The government has not yet indicated an intention to change the existing scheme.Currently the government guarantees the return of the lump sum to the resident at no cost to either the provider or resident.https://www.copyright link/property/government-guarantee-for-aged-care-deposits-in-question-20161125-gsxgfb
Government guarantee for aged care deposits in question Matthew...
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