Background of the Aged Care Act
Warning: To understand the issues and problems with the new aged care act we need to understand what happened and how we got to this point and this act. Michael Wynne (MW) at Aged Care Crisis, had a long experience of ideologies and failed systems going back into the 1930s. He had studied the social science that examined these problems and the way people who believed in them behaved. In 1999, MW supplied data from the USA where the aged care system was already in crisis and warned the government that the new marketisation policies adopted by the 1997 Aged Care Act would fail in the same way. He was ignored.
In the USA, accreditation was not used in aged care and had failed in health care because it was too close to industry (called capture). In 2006 MW criticised our far greater reliance on the accreditation process to regulate aged care and documented the many allegations of failures that were already occurring. The more onerous regulatory processes taken in response were burdensome for motivated staff who were taken away from care. They were not responsible for the failures. The increased regulation hindered and did not help.
Some background: A World Medical Association directive states that “Should medical practitioners perceive circumstances which might adversely affect patient health (and should authorities not respond then) the medical practitioners concerned have a duty to take further actions”. In meeting these obligations MW had blown the whistle on ‘National Medical Enterprises (NME), a hugely profitable healthcare multinational that entered Australia in 1991. It was welcomed because of its hugely successful business practices.
He was attacked by industry and described as vengeful and not objective. The company’s CEO tried unsuccessfully to silence him by taking legal action. The information he collected resulted in four state health departments advising that licenses for the company be denied or withdrawn, something not accepted by the federal government until NME pleaded guilty in the USA in 1994. It paid a massive fine, and reached large settlements with insurers and the patients it had harmed. It was required to sell over half of its US hospitals where patients had been exploited and many harmed in order to defraud their insurers.
When faced by more information implicating its management team in Australia, the company sold its hospitals in Australia. After the World Medical Association made these documents available to other countries the company sold almost all its international operations and returned to the USA. Several years later it was involved in another large scandal. Its American CEO in Australia in the 1990s was now in overall charge and heavily involved in its most profitable US hospital. It had done in the region of 800 unnecessary major heart operations. This might have happened in Australia and one state health department had warned its government about this in 1993.
NME (renamed Tenet Healthcare) was not alone and most of its large US competitors were behaving similarly. They paid large settlements when action was taken by regulators. The Howard government welcomed several of them into Australia but when information was made available, they either abandoned this or soon departed. The Howard government’s policies for health care were frustrated and they were not happy about this. His objectivity was and sometimes still is challenged but he has been right on multiple occasions. There is nothing unusual about this. It is a feature of ideologies as believers usually attack the messenger.
In December 2021 (updated 2023) we wrote an analysis ‘Why our society and human services are in trouble’. On pages 5 to 9 of this 45-page analysis of what was happening in society and aged care we used health care as an example of the way various 20th century ideologies have impacted vulnerable sectors and led some of those who cared to harm those they cared for. On page 25 we list the warnings about the current ideology that were ignored and link to sources. We describe how these issues played out in aged care and continued to do so after the Royal Commission.
What happened in Australia: Over the years government and industry have insisted that we had a ‘world class’ aged care system. They supported this claim by using the way in which the accreditation system showed a steady increase in performance from perfect accreditation scores in sixty percent of providers to almost ninety eight percent of assessment between 2000 and 2016.
Aged Care Crisis collected data and made multiple submissions over the years showing that this was deceptive and that the system was failing. We were critical of the policies and the politicians who implemented them. We were criticised and attacked for this. The ABC 4-Corners Program ‘Who Cares’ and the interim report of the Royal Commission’s that followed both show that we were correct.
The Royal Commission: In 2018 we engaged with Minister for Aged Care, Ken Wyatt and were included in a meeting he held. We had studied what was happening and were aware that the policies that failed were based on an ideological belief in free markets. Politicians saw believers as credible and appointed them to lead inquiries. Critics who challenged were attacked and lacked credibility.
This is why a deeply flawed system lasted for so long. Few of these reviews and inquiries would confront ideology and when they did, they were ignored. Much later the Royal Commission’s own Background Paper 8, ‘A history of aged care reviews’ concluded that “The overarching question that arises is why, after all these reviews, the aged care system still fails to support an appropriate quality life for the most frail and vulnerable members of our community.” The Royal Commission refused to confront this issue and ended by behaving in much the same way.
We had warned Wyatt not to appoint Commissioners whose background was too closely tied to policy but this was largely ignored. In 2021, after the release of the final report we wrote a web page, ‘An opportunity missed: Aged Care Crisis attempts to persuade the Royal Commission’. This described our warning to Wyatt and our attempts in the several submissions we made to challenge the approach that the Royal Commission took as a consequence of the deep conflict within it that arose because this advice was ignored.
What happened: Government appointed the Royal Commissioners and also Counsel assisting them. Judge Tracey initiated proceedings and the interim report described their finding of a system that was so deeply flawed that we should be ashamed. It promised to address these flaws. Tracey had a long association with government and this may well have surprised them. Sadly, he died before the deep flaws were addressed and recommendations made. He was replaced by Judge Pagone.
In the interim, Commissioner Briggs took control of the proceedings and moved in a very different direction. The deep flaws were ignored, the problems in the system were not confronted and recommendations from the Commission’s own investigations that challenged belief were ignored. When Justice Pagone realised what was happening the two Commissioners argued and clearly disagreed. This was reflected in the final report where the two commissioners advised very different systems.
Briggs left the structure of the system unchanged and Pagone described her model as a ‘renovation’ approach which failed to address the flaws in the system and would not work. He clearly understood the problems in government policy and wanted to rebuild and so restructure the system to make it independent of government. He also advised decentralising management and oversight. This would have made it difficult for the providers to influence and control the system. It ensured more balanced insights could confront belief. In our view this was a move in the right direction.
Government’s response: The Morrison government and probably some believers in Labor clearly were believers in the current captured system and could not accept the findings of the interim report. Pagone’s recommendations were ignored and the renovation model adopted. They clearly believed that aged care was a market and not a humanitarian service based on our humanitarian community values.
The Morrison government appointed multiple marketplace advisors including KPMG and PWC to help them ‘renovate’ this deeply flawed market. Neither Labor nor the press challenged the deceptive information that was given to the public. Most of the crossbench seemed to be out of their depth and most criticism was muted. We felt that our citizens had been promised real reform and that government had betrayed them and said as much.
Instead of fixing the problems, the focus has been on ever more complex centralised management and regulation. In our view regulation is necessary, but it is not a useful response to a flawed system. It comes under continued pressure and does not resolve the underlying problems. Analysts have described the ‘regulatory trap’, where repeated attempts to regulate create a situation that compounds the problems. It is would be much more sensible to fix the broken system so that regulation rests lightly and is seldom needed.
The web page ‘A new model for regulating aged care’ describes the context, gives a short overview and then links to of our detailed submission and its nine appendices, responding to the proposed regulatory changes. These describe and analyse the problems and the failure of regulation in depth.
The consultation process into the new Aged Care Act
The extensive consultation process with citizens and roundtables with community groups has been largely managed by marketplace consultants like KPMG or by COTA and OPAN. KPMG has been the go-to consultant in aged care for several years. COTA and OPAN were involved in developing the system that failed and then working with government in maintaining it. We feel they were all conflicted and unwilling to address fundamental problems in the model that both political parties had adopted.
We participated in both sorts of discussions and round tables. We attempted to challenge the centralised model supported because local communities and local councils were being excluded. We pressed for more community involvement and for accountability to them. That was not welcomed.
Several other groups did not agree with the position taken by COTA and OPAN and we also refused to support their submission. We formed a second group and continued discussions. The Aged Care Justice Group (ACJ) prepared a submission on our behalf and we all put our name to that. Justice Pagone is a patron of the ACJ. Groups also made individual submissions.
Aged Care Crisis did not oppose the submissions and the changes that were proposed. Many were constructive improvements on the wording and details of the Act. Instead, we focussed on the omission to address the deep flaws in the system. The Act failed to address these. We focused on five key problems. The changes we proposed would have addressed these and opened the system to alternate views. It would open the door to addressing the perverse pressures responsible for failure. This would allow remedial efforts to addressed the many other issues. It would protect them from ongoing challenge and erosion by the power imbalance and the perverse pressures. On the web page ‘Consultation of the new Aged Care Act’ we summarise our submission and then link to it.
During the consultations
In January 2024 during the round table discussions run by COTA and OPAN, we prepared an information paper as a resource. It was a critical analysis of what was happening in the sector before, during and after the Royal Commission. It attempts the sort of analysis that the Royal Commission failed to do. It was sent to the 30 individuals representing different community groups including COTA and OPAN.
- A.
Introduction to an analysis of the new Aged Care Act and proposals for change461.47 KB: The 34-page analysis starts by criticising the way the act has been developed without “addressing the many concerns and criticisms being made of our society and of the system” and the way in which discussions have instead been focussed on details in the wording of the Act.
In order to explain what is happening, the analysis starts by briefly exploring the nature of mankind and society. It looks at the relevant history of 20th century society and the development of economic policy. It examines the consequences for society. It describes the influence this had on the development of policies in aged care in 1997. It explores the consequences of the ideology including the issues of state and regulatory capture. It explains how the pressures generated caused the failures that led to the Royal Commission.
It describes what happened at the deeply divided Royal Commission, the way the Morrison government picked what it wanted from the final report and then deceived the public. It notes how neither Labor nor the press challenged this. It concludes by looking at the factors that have been responsible, including capture. It looks at the consequences for the public service and for aged care. It explores the social science that explains what is happening to them. It looks at what needs to be done to address these issues in the Act.
After all the consultations
We realised that the department was trapped and had little choice but to support government. Our best hope was to find politicians with the insight to understand what was happening in the hope that they would press for amendments when the final draft was tabled. We prepared a number of documents and sent them to members of the Crossbench as well as some Labor politicians. We also linked to other relevant material.
They included the following documents:
- B. “The problem of ideology and what to do about it573.36 KB” (July 2024): This examines the durability and intractability of ideological beliefs focusing on neoliberalism, tracking how it failed in the USA and yet was introduced into Australia in the face of multiple scandals and irrefutable evidence of failure and warnings. It describes how the ideology has and is responding to threats by hunkering down, controlling information and excluding critics. The new Aged Care Act is a graphic example of this. We list the basic amendments needed to open the system to critical analysis and steady reform. It will take years to undo almost 60 years of flawed policy.
- C. Aged Care Act: Background and information for politicians (Part 1)897.39 KB – (May 2024): This paper documents the strong criticisms of the new Aged Care Act, then explains the significance of the ideology underpinning the Act and how its failures have resulted in strong criticism globally, particularly from economists including those at the International Monetary Fund (IMF). It describes some of the societal consequences. It describes what happened at the Royal Commission and quotes from our criticisms as we saw what was happening. We describe how governments misrepresented the findings quoting from critics at the time. We described the response of the industry. We list five key failures in the act and look at the sort of amendments needed to address them.
- D. Aged Care Act: Background and information for politicians (Part 2)417.99 KB – (May 2024): We discuss the consultation and round table meetings conducted with community groups. Several groups including Aged Care Crisis were unhappy with the recommendations that were being promoted by vested interests and established a new roundtable. The Aged Care Justice Group, whose Patron is Commissioner Pagone drafted a combined submission which we supported. Many critical submissions were made by independent groups and individuals. We briefly outline the thrust of those who shared them with us.
- E. Comment on the Feedback Report on the draft Aged Care Act (June 2024258.06 KB): In this we respond to the overview of the consultations released by the department comparing it with our submission. We summarise the social science that illuminates what has been happening and its implications.
- F. Joint Submission in Response to the Exposure Draft – Aged Care Bill 2023 (March 2024)441.38 KB: This is the submission developed by the Aged Care Justice (ACJ) Group on behalf of the community groups who would not sign up to the submission developed by COTA and OPAN after their consultations. While as lawyers ACJ were focused on the wording of the Act they recognized that a well-structured system was needed for it to be effective and not one that was under ongoing competitive pressures to subvert it.
Links to Additional potential Resources
- G. 'Why our society and human services are in trouble’: One of the big problems we feel is that believers cannot accept that this system they have devoted their lives to has failed so badly. The content in the interim report of the Royal Commission was inconceivable for them and we give examples in the linked document. We described this sort of behaviour after the Royal Commission in Part 6 (page 33) of this analysis, which we wrote in 2021 and then updated in 2023. The department at the time were restricting the size of submissions and not publishing them so that it was impossible to adequately explain why what they were doing was a problem. This analysis enabled us to mention the issues in the submissions and link to this web page for the explanation.
- H. Reforming aged care. A practical plan for a rights-based system: The Grattan Institute Nov 2020: Pagone’s rebuild model of aged care was buried by both governments. It was based on the Grattan Institute’s earlier submission to them. Perhaps because they saw what was happening at the Royal Commission the Grattan Institute consulted with several others including Aged Care Crisis and then published this version.
There is a lot about funding but we are listing it because of their strong criticism of centralisation and its consequences in the past. They advocate strongly for a decentralised model. Pagone clearly recognised this problem and tried valiantly to address it but that was buried by government. In this extended model the Grattan Institute included Aged Care Crisis' proposals for local community aged care advisory committees to be formed and for a centralised community representative body to represent them at a central level.
