Pearls and Irritations

Observers of the Aged Care Royal Commission were witness to an unprecedented sight at its final public hearings last week when the two Commissioners disagreed publicly on the future governance arrangements for Australia’s failing aged care system.

As the Aged Care Royal Commission moves into its final phase, Senior Counsel for the Commission have presented 124 propositions for the two Commissioners to consider before their final report in February 2021. Some recommendations are novel, most are recycled. Some are excellent and really hit the mark. Others miss it. Sadly, they do not hang together as a coherent package. If this foreshadows the final report, the Royal Commission will be inviting the government to pick and choose.

Observers of the Aged Care Royal Commission were witness to an unprecedented sight at the final two days of hearings on 22 and 23 October at which the two Senior Counsel presented their final submissions outlining these propositions. Speaking from the bench, the two Commissioners disagreed publicly on the future governance arrangements for Australia’s failing aged care system with one disagreeing with the governance propositions put by Senior Counsel and the other supporting them. In doing so, they handed the government a get out of jail card.

The depth and breadth of problems in the aged care sector were eloquently set out in the October 2019 interim report simply titled ‘Neglect‘. But, while there may be agreement on the problems, there are big gaps between the interim report and the final submissions.

This probably should not come as a surprise. While the legal process of a Royal Commission is good for identifying problems, it is not necessarily the best way to identify solutions. This appears to be the case in this Royal Commission, with final submissions running to hundreds of pages that are full of technical detail but not grounded in a strong public policy framework.

The one issue almost everyone does agree on is that the aged care system is underfunded. The Commission has been unable at this stage to articulate a financing strategy. That is yet to come. However, the reality is that, irrespective of the detail, the aged care sector will continue to be funded substantially by taxpayers with a minor contribution by consumers.

In their final submissions, Senior Counsel are very critical of government for capping funding to aged care and identify this as a root cause of the widespread failure of the aged care system. In doing so, they sheet primary responsibility onto government rather than providers and propose a solution focused largely on more funding and regulation.

The core of their governance proposals is a new Aged Care Act and an uncapped open-ended entitlement-based funding model. While it is undoubtedly true that the sector has been underfunded, the substantial conclusion in final submissions is that government budget processes are at fault. Other contributing factors – including the lack of good policy and population aged care planning, the lack of a policy on excessive profit, too cosy arrangements between government and industry and the lack of a demand management strategy among other problems- are largely ignored.

The proposed solution put by Senior Counsel is indeed novel. Counsel propose to take away the elected government’s power to determine aged care funding and to remove aged care from the government’s normal policy processes. Commissioner Briggs described this proposal as courageous. I would describe it as naïve.

They suggest creating two new Commonwealth corporate entities, one to be responsible for policy, training, standards and complaints and the other for funding. They also propose a third body to provide oversight of these two.

Responsibility for policy and related functions would sit with an Australian Aged Care Commission. It is not an advisory body to government. It makes the decisions. The only role for government is to appoint the commissioners and then leave it up to them.

Responsibility for determining how much taxpayers money is spent on aged care, and how much older people will pay for aged care, is handed over to an Independent Aged Care Pricing Authority. The pricing authority is extremely powerful and, indeed, will have more power than the Commission itself. Yet it is unelected and publicly unaccountable.

Both bodies are overseen by an Inspector-General of Aged Care. The Inspector-General, that seems to be modelled on the Inspector-General of Taxation, is given the job of monitoring the other two.

Under Senior Counsel submissions, the role of government is passive. It is purely to pay the bills. This of course fails all tests of good governance. The pricing authority has all power but no responsibility. The aged care commission is responsible for policy but devoid of responsibility for the cost of implementing that policy. There is no independent ombudsman to investigate consumer complaints. Instead, the aged care commission will be investigating complaints arising from its own policy. In the light of the problems set out in ‘Neglect’, this is surely a conflict of interest.

The problem of inadequate funding and inadequate accountability for funding decisions identified in ‘Neglect’ is real. Unfortunately, the proposed solution put by Senior Counsel is naïve. No government is going to uncap aged care funding simply because the bureaucracy is reorganised. It is also incompatible with our Westminster system of government in which the relevant Minister is responsible.

It is a very cosy set of arrangements that would, in practice, result in even less accountability than exists at present. Who would actually be publicly accountable for the adequacy, quality, safety and equity of aged care? Well, no one. The government just passively pays the bills using taxpayer funds. The Commission, the Authority and the Inspector-General are all care but no responsibility. Their only accountability is an annual report to parliament.

Commissioner Briggs did not support this package of governance propositions at the final hearing. She argued instead that governance should remain with the Department of Health. In doing so, she recognised most of these issues. However, her comments were internally inconsistent. She objected to the idea of an Australian Aged Care Commission but not to the idea of an Independent Aged Care Pricing Authority. Yet the arguments against both are identical.

Irrespective, Commissioner Briggs has handed the government a get out of jail card on aged care system governance. Not that the government would need much persuasion. No government, regardless of political party, would sensibly adopt the triumvirate governance framework proposed by Senior Counsel.

Yet leaving aged care reform in the hands of the Department of Health as it is currently structured and operates is also not the answer. The Department has a long history of being too cosy in its relationships with advocacy bodies and too easily influenced by them, too slow to move and too easily overruled by Treasury and other central agencies.

There is a fundamental question about whether the Commonwealth has the capacity to directly govern a complex human service system such as aged care. The expertise of the Commonwealth public service is in administering Commonwealth funding programs and financial transfer systems. Not surprisingly, it is within this paradigm that it has administered aged care for the last two decades. It does not have the culture, the mandate, the infrastructure or the expertise to do it any differently.

The problem is that aged care is much more than just a Commonwealth funding program. Australia’s aged care system is a complex and critically important social care system and it needs to be governed as such.

While the governance propositions put by Senior Counsel are not the answer, neither is maintaining the status quo. It is yet to be seen whether the Commissioners can suggest a better alternative in their final report. If not, leaving aged care in the hands of the Department of Health is a safer bet for now. The ‘once in a lifetime opportunity’ to fundamentally redesign aged care will need to wait till next time.

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