Social Security (Long-term Residential Care)Amendment Bill

I find myself taking a keen interest in the bill, and an even keener interest in Part 2—which, of course, is where we are up to at present. I note that Part 4, the three schedules, and, of course, the title clause still have to be debated prior to the conclusion of this matter. Turning specifically to Part 2, it seems that the Social Services Committee spent some time on proposing minor amendments to the principal Act relating to—

💬 Hon Ruth Dyson: Part 3.

Yes, quite right—but in Part 2 of the bill. Perhaps the Minister in the chair, the Hon Ruth Dyson, would like to take a call and clarify the issue for me. This part makes minor amendments to the principal Act relating to new Part 4, which is, as the Minister rightly points out, now in new clause 3A. Specifically, and interestingly, it repeals paragraph (c) of section 61EA(4) of the Act and substitutes a paragraph that unequivocally states: “is a resident assessed as requiring care (as defined in section 136)” of the principal Act “in respect of whom a funder (as defined in that section)”, which is presumably section 136 of the principal Act, “is paying some or all of the cost of contracted care services (as defined in that section)”—which is presumably, again, a reference to section 136—“under section 141 or section 142;”. To the uninitiated in respect of this bill, that amendment may at first glance appear confusing. That would be understandable, but legislation such as this needs to be, if nothing else, clear, unambiguous, and easy to follow.

I noted last night that when we were debating this bill in Committee the Minister was reluctant to take a call, although members of the Opposition who have extensive knowledge of these matters were contributing to the debate on Parts 1 and 2. I do not fit into the category of being a member who has extensive knowledge of these matters, so I ask the Minister directly to take a call and explain the impact of the new provisions in Part 2 to the uninitiated—in other words, to all the members of the New Zealand public who are not intimately involved in this industry, and who at some stage in the future may well need to have matters relating to their long-term residential care clarified, as they reach the magic age at which they have predetermined they will seek such care. There will be members of the public who find this legislation very confusing, indeed.

The Minister, to be fair, is regarded as a fair Minister, although she is one who has clearly been beaten down by her Cabinet colleagues on the issue of asset and income testing with regard to this bill. I think that is disappointing, and I have said so prior to the Committee stage; in fact, I may well have said so during the first or second reading debates on this bill. I get around the sector a bit, and I know that the Minister is regarded as, if not a bit left wing, somebody whose words can be relied on from time to time. And now the Minister finds herself in the situation where that is not actually the case. The Minister has been trampled by her Cabinet colleagues into backing away from a pre-election promise on asset and income testing, and a pale imitation of that campaign promise is what the Committee now has before it.

It would help the Committee if the Minister would rise and do us the courtesy of clarifying for the benefit of those members who are less informed on these matters—such as me—the impact of new clause 3A in a way that leaves those who wish to take up long-term residential care at some stage in the future in no doubt as to their entitlements and their obligations, and, more important, their own responsibilities when moving into such care.

I rise on behalf of the National Party in relation to Part 2—which, of course, is slightly confusing to anyone listening, because this part actually inserts a new Part 4 into the principal Act, so we have a Part 2 and a Part 4 together. I note that the National Party is supporting the amendments in Part 2, in order to assist where we can in this area—an area, of course, where we have some extremely vulnerable people. I am sure that all of us here either have had or do have very elderly parents, so I think we understand that they are people who need to be looked after—and, for some, the relationship between parent and child is somewhat reversed in the process. Obviously we are very pleased in many ways to be able to support these particular amendments.

A few issues have been brought up in relation to the report back to the House. In particular, there is an issue about conjugal status. The Social Services Committee made a comment about the wording of section 152 inserted by clause 4, in relation to whether it is actually sufficiently clear.

There are also issues in relation to the change in asset value and maximum contribution, and in particular to the cap of $636 per week. That sounds like an awful lot of money—and of course it is—but when we look at the cost of looking after someone in what is really a hospital situation, we see that it is not that much more. In fact, that cost is often cheaper than the cost of a lot of motel rooms over a weekly period. So to have that cap put in legislation like this, I think, can be very, very difficult, particularly for the providers.

I am very concerned that there are people in this industry who have indicated they will exit the industry, because they feel that they just cannot make ends meet. One of the problems in the industry is that it has a lot of groups of people operating in it who comprise not-for-profit organisations. Normally, we would say that that was a good thing, and that they are organisations, such as The Salvation Army, who are able to provide a good standard of care. But the trouble is that The Salvation Army is now getting out of that provision of care, because it cannot make ends meet.

The irony is that the people who can just survive happen to be the bigger commercial operators, because the smaller commercial operators are certainly finding that there really is not enough in the rates that are paid to make it worth their while. Not only are they in the situation of having to provide a good standard of care but they are also in the situation where they care for people who are often in great need and who are now coming into this sort of care much later in life.

About 20 years ago elderly people would often live in the situation of long-term residential care for maybe 15 or 20 years before they died. So they were going into care in a much better physical, mental, and emotional state than the state they are often in now. As I recall from the Social Services Committee hearings on this bill, people said that the average time the elderly now stay in residential care is, I think, about 6 months. I am sure the Minister will know that more precisely than I do, but it is a much shorter period of time. I ask the Minister whether that is right.

💬 Hon Ruth Dyson: Eighteen months.

Eighteen months, is it? It is certainly not what it used to be. I am sure that many of the members of the Committee, like me, were trotted around by their parents to go and visit elderly great-aunts and other relatives who had been living in rest homes for many, many years. Certainly that is not a situation we tend to have now, because people are more often staying in their own homes. There are caregivers coming into those homes, which I think is a very, very good thing, but we do need to have better services and wages for caregivers. I think we here can all agree that caregivers are people who help our elderly to stay in their own homes. It takes a huge weight off their families to know there is someone going in every day or every second day to make sure that something is happening for them.

I would like to make some comments on Part 2 of this bill, and in particular I want to look at schedule 27, “Means assessment under Part 4”, substituted in schedule 1. It takes us through the changes that will be effected until the year 2026 and shows the progressive increases in the threshold.

But what I really want to talk about is whether this legislation is good legislation. The initial cost of the bill will be about $110 million. I understand that that amount will increase by about $15 million a year as the threshold increases and more people retire. I also understand that in 30 years’ time the cost of this legislation could be as much as $1 billion a year, and I ask the Labour Government whether it has the right to put in place such a small bill—which it is; there are only two parts to it—that will cost this country so much, when the important point is that the cost burden will fall on families who are struggling to get by. Those families will be forced to pay higher and higher taxes as the years go by, and to pay taxes for people who can afford their own care. I think that that is the important point.

There has been a means-tested regime in place and, although not everybody thinks it is fair, it has forced New Zealanders to look at the fact that if they can afford to pay for rest home care, then they have been asked to do so. This bill changes all that, and it will force poor, struggling families to pay for people who could well afford to pay for themselves.

I say that that is poor legislation. It is ill-advised, and it is not based on real need but simply on the need to buy votes. That is what this bill is—vote-driven legislation. I say shame on the Labour Government for doing that, because of the huge cost burden that it will put on New Zealand. In particular, it is what we call inter-generational theft, where one generation has to pay for another generation.

I say that the answer to the problem of elderly care is to make sure that people can save up and have resources in their retirement. Then, if they have some unforeseen event, they have the financial means to be able to cope with it.

However, the second point about this bill is that most of the submissions made to the Social Services Committee talked about the fact that this was a broken promise of the Labour Party. Labour charged into power in 1999 promising to abolish asset testing, and all submitters, including many elderly submitters from Grey Power, essentially asked: “Why have you broken your pre-election commitment to the elderly? Where have your principles gone, Labour Party?”. They went on to say that they believed that this bill was a breach of faith, and they strongly opposed the Government’s move to bring this bill into Parliament. They said it was simply not good enough.

I concur with them that this is a Government that tries to pretend it is doing the right thing, but we see with this bill that it is not. It is simply making a sop to that elderly vote. The Government has not abided by its election promises and, as a result, I think that members are sitting here tonight, voting on poor legislation.

A more worrying part of this bill has already been brought up in this debate. It is the fact that many of the social service providers who have been in this sector are essentially saying that unless the Government does something to assist them to make ends meet, they will have to quit the sector. We have already seen that with The Salvation Army, and that situation is not good enough.

I rise on behalf of United Future to speak on Part 2 of this bill. As I was beginning to say last time, when I ran out of time and the bell rang, it is interesting to hear the voting record of all the parties on this particular bill. Even though there have been adverse comments against the bill, most parties are supporting it.

I think that when we are caring for the elderly, we need to be well aware of the shortage of staff in rest homes. I also think that in a busy society like we have today, we all tend to want things to be done instantly; yet people running rest homes and care centres for the elderly are really being totally frustrated at the present time by the Government’s inability to make a decision on things that are basically essential for those people to be able to continue running their homes. They need to employ staff for a 24-hour facility and, with holiday pay amendments and all those things, their costs are increasing; yet they are hamstrung by being unable to recoup those costs.

In rest homes that cater for the elderly, there is obviously a lot of difference between one that has been established for many, many years and one that has been built today. With the current costs of building a rest home and putting all the facilities into it, it would be nigh impossible to be able to get one under way. That is a shame when we consider the elderly. Many of them would want the more comfortable facilities that are perhaps available today, yet because of the delays in addressing the major issues that continually came through in the select committee process, people just cannot do it.

When we see The Salvation Army pull out of providing a service, we know that we are dealing with a serious issue, because The Salvation Army would be one organisation that would fall over backwards to try to cater for this group of people. Yet, sadly, we heard just recently that it is no longer able to continue with one of its services, and a rest home has had to be closed down.

The owners of one of the rest homes I visited—and rest homes, of course, have numerous rooms in them, mostly catering for just one person per room—told me that they are now looking very closely at the viability of turning the rest home into student accommodation. That has to be a major concern for us. We have to address the concerns that the submitters have brought to us. I believe—and we have been told—that it is squarely in the Government’s quarter. It is not anything to do with this legislation; it is a Government decision. I again encourage the Government to make these decisions quickly because it is a very, very important issue.

I think that when we come into those twilight years, as will happen to us all, if people have the ability to pay for a better type of care, then they should be free to do that. We have to look seriously at how we are dealing with these people. We have a growing sector of the population coming up here. It is an increasing market, and United Future believes it is well time that the Government addressed this issue very speedily. That is all I will say on this particular clause.

I raise a point of order, Madam Chairperson. I ask for clarification. When the debate resumed in the Committee stage following the dinner break, my recollection is that Mr Paul Adams, the member who has just spoken, had some time left on a call from when the Committee previously met to discuss this bill. For one reason or another Mr Adams was not available to take up that call, at which point I took the call. I just wonder how the apportionment of calls is to operate in an environment where National had two members seeking the call, yet the call was handed to United Future in a situation where, on only two calls prior to that, Mr Adams had the opportunity to complete his call from the last time the Committee met but did not take that opportunity.

The CHAIRPERSON (Ann Hartley): The member is completely wrong. It is my responsibility to give the call as per the Standing Orders. Mr Adams was quite entitled to the call.

I move, That the question be now put.

As the debate resumes on this very important bill, I think it is important to talk about honesty. Members opposite when in Opposition travelled from one end of New Zealand to the other talking about how they would abolish asset testing for the elderly. Helen Clark kissed and hugged a lot of elderly folk all over the country, then said that the Labour Party would abolish asset testing—not get rid of it, not partially remove it, but totally abolish asset testing. How it has changed its tune now it is in Government!

Today the debate started with Government members talking about honesty. They gave us a series of lectures on honesty. One could say: “If only they would listen to their own advice.” If there is one thing that New Zealanders crave from Governments it is honesty. There has been an honesty deficit from this Government. If Government members were to turn up at any public meeting that was not organised by their own party, they would hear from members of the public about honesty. Guess who said: “People want some honesty about asset testing.”? It was Annette King when she was the Opposition spokeswoman on health. Throughout Hansard Annette King has made comment after comment, not about partially removing asset testing, not about kinda, sorta, nearly, or almost getting rid of asset testing, but about totally abolishing asset testing. If Labour Party members want to talk about honesty, one would think they would do it while they were in Government. But, no, they have changed their tune since they were in Opposition.

💬 Judith Collins: The “h” word.

The “h” word, as my learned colleague Judith Collins has said They have changed their tune, because they know they cannot deliver on that election promise. It is just not possible at this point.

We are debating a bill that is very complex, but in reality I think we will create a few problems out there in the residential-care sector. We have already seen The Salvation Army pull the pin. Members of The Salvation Army came before the Social Services Committee and told us they were having difficulty. They told us that they would have to reconsider their investment in the residential-care market if they were unable to cover the basic costs of looking after the elderly in their care. Some of the select committee members scoffed, and said: “This is just posturing designed to convince the Government that they are serious.” Unfortunately, some of the Government members did not take The Salvation Army seriously, and we read in the paper only yesterday that The Salvation Army is to exit the residential-care market. It is putting 12 of its facilities on the market—one of them, Red Roofs, happens to be in Dunedin—and will get out of that part of the business altogether.

One of the things that the Government should be concerned about is what will happen if there is a mass exodus from the residential-care market. Who will provide all those beds? Of course, more and more New Zealanders will look to the hospital system to provide that care. If we talk to any carers out in the community—any nurses who are out there working on the ground—they will say that too many people spend too long in their own homes these days. It is almost as if the pendulum has swung too far. That is why some of the residential carers say that when people come into their residential-care facilities, they have more extreme conditions than perhaps they did 10 or 20 years ago, when people used to drive to the care facility as opposed to being brought in by ambulance. That is why the facilities are seeing people who need longer stays, people who have more extreme health conditions, and people who require a higher standard of care than perhaps was the case earlier.

With that higher standard of care comes, of course, a cost. One of the things that is of great concern in this part of the bill is the fixing of the pricing cap—the $636 cap that people talk about. One of the strange things about this bill is that the Government is saying that it will determine not only what the people who are funded by the public system will pay, and be asked to pay, but also what the private sector can ask private payers—people who contract and make their own decisions—to pay. That, in a sense, is price fixing. The Government has not attempted to do it in any other sector, but it is doing it in the residential-care market.

I move, That the question be now put.

We left this debate last night, of course, but I think it is worth reminding ourselves every time we stand—and my colleague who spoke previously did this—that in 1999 this Government promised to remove asset testing. This bill does not do that. What this bill does is lift the levels at which those requiring long-term care cannot be assessed on, but we think it has lifted those levels far too high. Actual care in rest homes is only part of this whole scenario. One would have thought that after 6 years the Government would be a lot more intelligent about the way it reordered this whole area. Of course, what we have is providers feeling that they cannot hack it any more. It will be worse, even for those who think that they can.

But there is an issue about the carers, as well. As the Government puts more money into this area, as provided for in the bill, one has to ask about the carers. As we know, there is only a certain amount of money to go around in any particular area. This is a Government that has previously said that it stands for carers, but there is no increase in funding at all for carers. There is none for those who care for the elderly so that they can stay in their own homes. In 5 years there has been no increase in the earnings of carers. We all know just what a job, a task, a mission it is for those wonderful people in our communities who care-give to those of our senior citizens who remain at home. They do things like giving them a shower, helping them with their dressings or medications, and cooking them a meal. Carers do not get funded even for transport.

A National Government would have increased the amount that people can keep before liabilities kick in. We think that is certainly justifiable, but on the other hand this Government has basically chosen to put all its eggs in one basket. The total long-term care scenario has been neglected. This is a Government that has continually said it cares for all sectors of this industry. The Minister in the chair, the Hon Ruth Dyson, is sitting there with her chest puffed out and no doubt feeling very proud of herself for what has been delivered in the bill, but there is a whole side of this issue that is not being taken care of or being addressed.

💬 Steve Chadwick: We’ll get there bit by bit.

That is OK. Getting there bit by bit is one thing, but the Government will find that the cost structure that has been built in will be so high, plus a number of barriers and hoops are being put in place that increase the bureaucracy. It will be unmanageable. Getting there bit by bit is OK, but the Government has to be sure that as it gets there bit by bit it is able to meet the bits by bit.

How long will the bit be? It has taken 6 years for a Government that promised all sorts of things when it was in Opposition, and it certainly is not delivering them in this bill. We will see what the senior citizens think. No doubt they will feel let down again by a Government that made out the previous National Government to be hard and uncaring. It turns out that this Labour Government is much the same in any event, even if that were true of the previous Government, which of course it was not. We can see that it is justifiable to increase the level of income that a person requiring long-term care can keep before the liabilities kick in. But we think that this legislation has gone too far, to the detriment of other parts of the sector.

The other point I want to address briefly is in Part 1 and Part 2. Clause 3(d) in Part 1 states that one of the purposes of the bill is to clarify the funder’s obligations to pay for contracted care services associated with long-term residential care. New Part 4, “Long-term residential care in hospital or rest home”, in clause 4 provides a definition of what contracted care services means.

I raise a point of order, Madam Chairperson. I seek a point of clarification. Yesterday the debate on Part 1 was truncated after a fairly short-lived debate. The Chairperson at the time said that on Part 2, which is clearly the larger part of this bill, members would be given the opportunity to debate it widely. The Government has already moved one closure motion to try to stop this debate. I ask you, because this is such an important bill and this is the main part, to ensure that Opposition members are given an opportunity to speak on it.

The member is wrong in his first premise. He stated that the debate on Part 1 was truncated. Debates are not truncated. Members move a closure motion and it is up to the Chairperson whether that is accepted. The Chairperson last evening decided to accept the closure motion on Part 1 because he had heard the arguments and Part 1 was short. We have had a long debate on Part 2, but the key point is that it is not appropriate for members to raise points of order to give you the value of their opinion on how long they believe the debate should run. You are the sole judge of that, Madam Chairperson. If a Government member moves a closure motion, only you determine whether that should be taken into account. Although we value Dr Hutchison’s opinions on other matters, on procedural ones we do not.

The CHAIRPERSON (Ann Hartley): There is no debate on the closure. Members should know that by now.

I raise a point of order, Madam Chairperson. With respect to the previous speaker, the Chairman did take the unusual call of explaining to the Committee that he had accepted a closure after one closure motion having been moved by the Government because he felt that the Chair would then allow a far wider debate on Part 2. If Mr Hughes is trying to pretend that the Chairman did not give us that assurance, then he is misrepresenting what happened last night.

The CHAIRPERSON (Ann Hartley): It is at the discretion of the Chair whether to accept a closure motion. That is the end of the matter.

I move, That the question be now put.

I was interested to hear Darren Hughes say just a short while ago that tonight the Government is delivering. There is no doubt that what it is delivering in this bill is a legacy of broken promises. Part 2 is testimony to that when one goes into its details, particularly in new section 153 in clause 4.

I see the Minister in the chair, the Hon Ruth Dyson, is smirking. We have repeatedly asked her to take a call to explain to the Committee why she and the Labour Party went around the country for a decade campaigning on abandoning asset and income testing. They modified it towards the end of the decade to abandoning just asset testing. All that this bill does is modify or change the amount that the elderly have to pay. We must again remind the Minister in the chair what the Prime Minister said about asset testing. She said: “We say asset testing older people is wrong. It will go.”

What do we have in new section 153(1) in clause 4? It states: “The maximum contribution is the amount, to be prescribed by an Order in Council made by the Governor-General, that is $636 per week adjusted by an amount that reflects the movement in the All Groups …”. The concern about this provision is that it is totally unrealistic. As I pointed out in the debate yesterday, it was The Salvation Army spokesperson, Major Alistair Herring, who said that The Salvation Army believes that this bill should at the very least commence with the adjusted figure of $757.14, which adjusts the rate back to 1994 when Jenny Shipley set the initial figure of $636. The effect of this has been the absolutely unrealistic stance that the Labour Government has taken towards the elderly and elder care in the last 5 to 6 years.

I will go back for a moment to a comment on the Ministry of Health’s response to the PricewaterhouseCoopers report, which was that since receiving the final report on residential care pricing implementation in June 2000, the ministry has attempted, first, to change the report’s intended purpose, and, second, to selectively use the findings to suit its own cost parameters. In Port Waikato, the electorate I so proudly represent, I know that rest homes up and down the electorate are closing because of this Government’s absolutely unrealistic pricing policy. It goes further than that, because it extends throughout New Zealand.

Of course, we have heard the news that The Salvation Army is closing its residential units. It is an indictment on the Minister in the chair, Ruth Dyson, that during her watch, The Salvation Army is exiting residential care. It is one of the trusted organisations in New Zealand, and an organisation that the elderly do trust. Why is it exiting? It is exiting because of the refusal of this Government to acknowledge just what it costs to run residential care homes. Every time I have spoken in the debate I have asked the Minister to come and tell us why the Government reneged on the promise it campaigned on for 10 years. Is she prepared to front up and explain that to people of New Zealand, particularly the elderly?

There is no doubt that National supports improving asset testing for the elderly, but we support it being done in a realistic way. We support this bill, but we are deeply concerned about the absolute inconsistency that the Government has displayed in bringing the bill to the House.

DARREN HUGHES (Junior Whip—Labour): I move, That the question be now put.