Hamilton Stone supported the Aged Care Financing Authority with its project on the aged care bond guarantee scheme, through stakeholder engagement, planning, and preparing the report.
The Report recommended that aged care providers should contribute to the costs of any scheme guaranteeing lump sum accommodation payments if the benefit exceeds the cost. They should not be able to opt-out from a scheme and provide their own guarantees. ACFA outlined the following options for government:
· retaining the current scheme where the minister can decide to implement a levy after an event,
· an automatic retrospective levy on providers, or
· a guarantee fund pool with prospective levy.
Other options on the table included industry arranged bank guarantee and private and pooled insurance models.
In line with Productivity Commission recommendations and the National Commission of Audit recommendations, ACFA said that providers should pay towards the costs of the guarantee, but only if the benefit of a levy was greater than the cost. If government retains the current scheme, ACFA has recommended bond defaults to date be quarantined from future levies and a formal process for notifying the sector about costs of a default and whether a levy would apply.
ACFA found that the automatic retrospective levy option was effective for consumers, but left providers facing issues of uncertainty and inequity. It said the guarantee fund pool could be effective for consumers, providers and government and offered an alternative solution to those issues. Allowing providers to opt-out from a scheme would likely impair its sustainability by requiring a higher levy from fewer participants as well as be complex to administer and manage, it found.
David Tune's Legislated Review - which Hamilton Stone also supported - made further comments on the bond guarantee scheme, see here.