User Rights Amendment Principles 2011 (No. 3)1
Aged Care Act 1997
I, MARK BUTLER, Minister for Mental Health and Ageing, make these Principles under subsection 96-1 (1) of the Aged Care Act 1997.
Dated 23 September 2011
MARK BUTLER
Minister for Mental Health and Ageing
Contents
                        1      Name of Principles                                                                             2
                        2      Commencement                                                                                  2
                        3      Amendment of User Rights Principles 1997                                          2
Schedule 1                  Amendments commencing on 1 October 2011                                   2
Schedule 2                  Amendments commencing on 1 February 2012                                 9
 
 
1              Name of Principles
                These Principles are the User Rights Amendment Principles 2011 (No. 3).
2              Commencement
                These Principles commence as follows:
                (a)    on 1 October 2011 — sections 1 to 3 and Schedule 1;
               (b)    on 1 February 2012 — Schedule 2.
3              Amendment of User Rights Principles 1997
                Schedules 1 and 2 amend the User Rights Principles 1997.
Schedule 1        Amendments commencing on 1 October 2011
(section 3)
  
[1]           Section 23.3, boxed note
after
·           extra service agreement
insert
·           formal agreement
[2]           Section 23.3, boxed note
after
·           income support payment
insert
·           permitted (in relation to use of accommodation bonds)
[3]           Section 23.34, definition of 2005-2006 financial year
omit
[4]           Section 23.39
omit
[5]           Subsection 23.40 (1)
omit
provider (other than the 2005‑2006 financial year),
insert
provider,
[6]           Paragraph 23.40 (1) (a)
substitute
                (a)    the following information:
                          (i)    the total number of bond balances held by the approved provider as at the end of the financial year;
                         (ii)    the total value of bond balances held by the approved provider as at the end of the financial year;
                        (iii)    the total value of accommodation bonds received by the approved provider during the financial year;
                        (iv)    the total amount deducted by the approved provider during the financial year from accommodation bond balances in accordance with section 57‑19 of the Act;
                         (v)    the total amount deducted by the approved provider during the financial year, in accordance with section 57‑19 of the Act, from accommodation bonds that were received during the year;
                        (vi)    the total value of bond balances refunded by the approved provider during the financial year;
                       (vii)    if, during the financial year, bond balances were not refunded in accordance with subsection 57‑21 (3) of the Act (other than an accommodation bond balance in relation to which the approved provider has made an agreement as mentioned in subsection 57‑22 (1) of the Act) or an applicable formal agreement — the information specified in subsection (2);
                      (viii)    if, for the whole or a part of the financial year, the approved provider was not permitted to charge an accommodation bond for entry by a care recipient to any aged care service that the approved provider is responsible for operating — the period or periods during which the approved provider was not permitted to charge an accommodation bond, and the aged care service in respect of which each period specified applies;
                        (ix)    the use of accommodation bonds by the approved provider during the financial year;
                         (x)    whether any use of accommodation bonds by the approved provider during the financial year:
                                   (A)     was not permitted under section 57‑17A of the Act; and
                                   (B)     was a use of an accommodation bond in accordance with subitem 12 (2) of Schedule 1 to the Aged Care Amendment Act 2011, within 2 years after the commencement of that subitem;
                        (xi)    the total amount expended by the approved provider (whether or not obtained from accommodation bonds) during the financial year on capital expenditure for which use of an accommodation bond would be permitted under paragraph 57‑17A (1) (a) of the Act;
                       (xii)    the total amount expended by the approved provider (whether or not obtained from accommodation bonds) during the financial year on investment in financial products for which use of an accommodation bond would be permitted under paragraph 57‑17A (1) (b) of the Act;
                      (xiii)    the total amount expended by the approved provider (whether or not obtained from accommodation bonds) during the financial year on loans for which use of an accommodation bond would be permitted under paragraph 57‑17A (1) (c) of the Act;
                      (xiv)    the total amount expended by the approved provider (whether or not obtained from accommodation bonds) during the financial year on repaying debt accrued for the purposes of:
                                   (A)     capital expenditure of the kind described in subparagraph (xi); or
                                   (B)     refunding accommodation bond balances;
                       (xv)    the total amount expended by the approved provider (whether or not obtained from accommodation bonds) during the financial year on repaying debt that accrued before 1 October 2011 if the debt was accrued for the purpose of providing aged care to care recipients;
                      (xvi)    the total amount expended by the approved provider (whether or not obtained from accommodation bonds) during the financial year on meeting business losses for which use of an accommodation bond would be permitted under section 23.64B of these Principles;
                     (xvii)    the amount that has been returned to the approved provider during the financial year from the sale, disposal or redemption of financial products covered by paragraphs 57‑17A (3) (b) to (e) of the Act that the approved provider invested in after 1 October 2011, whether or not the investment was obtained from accommodation bonds;
                    (xviii)    the amount identified in the approved provider’s liquidity management strategy, as at the end of the financial year, as the minimum level of liquidity under paragraph 23.37 (1) (a);
                      (xix)    any other information determined, by legislative instrument, by the Secretary; and
[7]           After subparagraph 23.40 (1) (b) (v)
insert
(vi)          paragraph 57‑2 (1) (k) of the Act; and
[8]           Subsection 23.40 (2)
omit
(1) (a) (iii),
insert
(1) (a) (vii),
[9]           Sections 23.42 and 23.43
substitute
23.42      Disclosure to care recipients
         (1)   Within 7 days of an accommodation bond agreement being entered into between an approved provider and a care recipient, the approved provider must give the care recipient (or the care recipient’s representative):
                (a)    a copy of the agreement; and
               (b)    if an accommodation bond has been paid, or will be paid, for the care recipient’s entry into the aged care service operated by the approved provider — a copy of the written guarantee of refund of the accommodation bond balance; and
                (c)    a written statement that the approved provider will provide within 7 days of a request:
                          (i)    a summary of the permitted uses for which accommodation bonds have been used during the previous financial year; and
                         (ii)    information about whether the approved provider has, during the previous financial year, complied with paragraphs 57‑2 (1) (k) and (ka) of the Act; and
                        (iii)    information about the number of accommodation bond balances that, in the previous financial year, were not refunded in accordance with subsection 57‑21 (3) of the Act or a formal agreement; and
                         (v)    a copy of the audit opinion mentioned in paragraph 23.40 (1) (e) for the previous financial year; and
                        (vi)    a copy of either:
                                   (A)     the most recent statement of the audited accounts in relation to the aged care service; or
                                   (B)     if the aged care service is operated as part of a broader organisation — the most recent statement of the audited accounts of the organisation’s aged care component; and
                       (vii)    a copy of the entry in the bond register that relates to the care recipient, as at the time of the request.
Note   For bond balance — see subsection 23.3 (1).
         (2)   Within 4 months after the end of each financial year for an approved provider, the approved provider must give to each care recipient (or to the care recipient’s representative) in respect of whom a bond has been paid for entry to the aged care service operated by the approved provider:
                (a)    a copy of the entry in the bond register that relates to the care recipient as at the end of the financial year; and
               (b)    a written statement that the approved provider will provide, within 7 days of a request, the information and documents mentioned in paragraph (1) (c).
Note   For bond — see subsection 23.3 (1).
         (3)   Within 7 days of a request from a care recipient in respect of whom a bond has been paid for entry to the aged care service operated by an approved provider, or from the care recipient’s representative, the approved provider must give the care recipient (or the representative) the information and documents mentioned in paragraph (1) (c).
Note   For bond — see subsection 23.3 (1).
23.43      Disclosure to prospective care recipients
                Within 7 days of a request from a prospective care recipient or a prospective care recipient’s representative, an approved provider must give the prospective care recipient (or the representative) the information and documents mentioned in subparagraphs 23.42 (1) (c) (i) to (vi).
[10]         After Part 4, Division 8
insert
Division 8A           Permitted use of accommodation bonds
23.64A   Purpose of Division (Act, s 57-17A)
                This Division:
                (a)    specifies permitted uses of an accommodation bond by an approved provider for paragraph 57‑17A (1) (g) of the Act; and
               (b)    specifies financial products for paragraph 57-17A (3) (e) of the Act.
23.64B   Accommodation bond may be used to meet reasonable business losses in first 12 months
                Use of an accommodation bond by an approved provider is permitted if the accommodation bond is used to meet reasonable business losses that are incurred in the period:
                (a)    beginning when the approved provider begins receiving:
                          (i)    residential care subsidy in relation to a residential care service; or
                         (ii)    flexible care subsidy in relation to a flexible care service; and
               (b)    ending 12 months after the approved provider begins to receive the subsidy in relation to that service.
23.64C   Unregistered schemes for investment in aged care are financial products
         (1)   Any of the following in relation to an aged care investment scheme are financial products covered by subsection 57‑17A (3) of the Act:
                (a)    an interest in the scheme;
               (b)    a legal or equitable right or interest in an interest covered by paragraph (a);
                (c)    an option to acquire, by way of issue, an interest or right covered by paragraph (a) or (b).
         (2)   In this section:
aged care investment scheme means a scheme established for the purpose of investment in residential care or flexible care that:
                (a)    is a managed investment scheme within the meaning of the Corporations Act 2001; and
               (b)    is not a registered scheme within the meaning of the Corporations Act 2001.
Schedule 2        Amendments commencing on 1 February 2012
(section 3)
  
[1]           Paragraph 23.32 (c)
substitute
                (c)    arrangements by approved providers for the management of accommodation bond balances (the Governance Standard); and
               (d)    provision of information about the financial management of approved providers (the Disclosure Standard).
[2]           After Part 4, Subdivision 3.3
insert
Subdivision 3.3A        Governance Standard
23.38A   Requirement for governance system
         (1)   An approved provider that holds one or more accommodation bond balances must implement and maintain a governance system that:
                (a)    ensures accommodation bond balances are used only for permitted uses; and
               (b)    ensures accommodation bond balances are refunded to care recipients in accordance with section 57‑21 of the Act.
         (2)   Without limiting the matters that a governance system may deal with, the system must provide for the following:
                (a)    allocating responsibilities to the key personnel of the approved provider in relation to the management of accommodation bond balances held by the provider;
               (b)    monitoring and controlling any delegation or outsourcing of the allocated responsibilities;
                (c)    reporting mechanisms for the allocated responsibilities that ensure the key personnel who are responsible for the executive decisions of the approved provider can effectively monitor and control the use of accommodation bond balances;
               (d)    ensuring that key personnel who are allocated responsibilities, and persons to whom responsibilities are delegated or outsourced, are aware of the requirements of the Act and these Principles in relation to accommodation bonds;
                (e)    detecting, recording and responding to any failure to comply with those requirements.
         (3)   An approved provider must:
                (a)    keep written documentation describing the provider’s governance system; and
               (b)    ensure that the written documentation of the provider’s governance system is up to date; and
                (c)    modify or replace its governance system if the provider becomes aware that the system no longer complies with the requirements set out in subsections (1) and (2).
23.38B   Requirement for investment management strategy
         (1)   An approved provider that invests an accommodation bond in a financial product covered by paragraphs 57‑17A (3) (b) to (e) of the Act must implement and maintain a written investment management strategy that sets out:
                (a)    the approved provider’s investment objectives; and
               (b)    the approved provider’s assessment of the level of risk to the provider’s ability to refund accommodation bond balances in accordance with the Act; and
                (c)    a strategy for achieving the investment objectives while ensuring that the approved provider is able to refund accommodation bond balances in accordance with the Act; and
               (d)    the asset classes the approved provider may invest in; and
                (e)    investment limits for each asset class that are consistent with the investment objectives; and
                (f)    key personnel with appropriate skills and experience who are responsible for implementing the investment management strategy.
Note   Financial products for paragraph 57-17A (3) (e) of the Act are set out in section 23.64C of these Principles.
         (2)   The investment management strategy must be approved by the key personnel who are responsible for the executive decisions of the approved provider.
         (3)   An approved provider must:
                (a)    ensure that any investment of accommodation bonds is in accordance with the provider’s investment management strategy; and
               (b)    ensure that the provider’s investment management strategy is up to date and complies with the requirements set out in subsection (1); and
                (c)    modify, or replace, its investment management strategy if the provider becomes aware that that the investment management strategy no longer complies with the requirements set out in subsection (1).
[3]           Paragraph 23.40 (1) (b)
substitute
               (b)    a statement about whether the approved provider has, during the financial year, complied with:
                          (i)    Subdivision 3.2 of Division 3 of Part 4 of these Principles (the Liquidity Standard); and
                         (ii)    Subdivision 3.3 of Division 3 of Part 4 of these Principles (the Records Standard); and
                        (iii)    Subdivision 3.3A of Division 3 of Part 4 of these Principles (the Governance Standard); and
                        (iv)    Subdivision 3.4 of Division 3 of Part 4 of these Principles (the Disclosure Standard); and
                         (v)    paragraph 57-2 (1) (e) and sections 57-21, 57-21A and 57-21B of the Act; and
                        (vi)    subsection 23.28 (3), and Divisions 2 and 5 of Part 4, of these Principles; and
                       (vii)    paragraph 57‑2 (1) (k) of the Act; and
[4]           Paragraphs 23.40 (1) (d) and (e)
substitute
               (d)    if the approved provider has not complied with the Governance Standard — a statement about why the approved provider has not complied with the Standard; and
                (e)    if the approved provider has not complied with the Disclosure Standard — the information specified in subsection (3); and
                (f)    an audit opinion, provided by the person who provides the independent audit mentioned in section 23.41, on whether the approved provider has complied with this Division in the relevant financial year.
[5]           Subsection 23.40 (3)
omit
(1) (d),
insert
(1) (e),
[6]           After subparagraph 23.42 (1) (c) (iii)
insert
                        (iv)    if the approved provider is investing accommodation bonds in financial products covered by paragraphs 57‑17A (3) (b) to (e) of the Act — the approved provider’s investment objectives and the asset classes the approved provider may invest in, as recorded in the approved provider’s investment management strategy; and
[7]           Subparagraph 23.42 (1) (c) (v)
omit
(1) (e)
insert
(1) (f)
Note
1.       All legislative instruments and compilations are registered on the Federal Register of Legislative Instruments kept under the Legislative Instruments Act 2003. See http://www.frli.gov.au.