Social Security (Long-term Residential Care)Amendment Bill

I move, That the Social Security (Long-term Residential Care) Amendment Bill be now read a third time. The bill significantly increases the amount of assets that our older people requiring residential care can retain. The New Zealand population is expected to age significantly in the coming decades. This is likely to increase demand for funding for aged-care services. So to address this issue in a fiscally responsible manner, a staged approach to reduce the impact of asset testing has been chosen. From 1 July next year the asset threshold for single people will rise from $15,000 to $150,000. That new threshold also applies to couples with both partners in care. Asset testing will be completely removed for people aged 50 to 64 from the same time.

The Government considers that it is legitimate to expect people to contribute towards some of the costs of their care, because those costs would need to be met while they are living at home. As such, the income test is retained. From 1 July next year, residents will be required to pay only the district health board contract price for rest-home care in their local area for the basic package of services. However, as is the current situation, residents will be able to pay additional fees for services that are clearly additional to the contract. The total cost of the changes is forecast at $110 million in the first year of implementation. This figure will rise substantially over time, reflecting the $10,000 annual increases to the asset thresholds and the growing number of people in our older population. The Government has made separate provision for the additional funding to pay for these changes. This funding will not reduce the amount currently allocated to disability and health services.

The bill sets out the residential care subsidy scheme in a clear and comprehensive manner, and includes aspects of the income and asset-testing regime that are currently found only in administrative policy and practice. That includes processes for needs assessment, financial means assessment, and matters such as gifting, allowances, and the residential care loan scheme. The changes provided for in the bill will make substantial progress towards fair and affordable policies for older people who need long-term care, while retaining an appropriate mechanism for older people to contribute to those costs of care they would expect to pay if living in their own homes.

In conclusion, I thank particularly the health officials who have worked so hard on this legislation, but also the members of the select committee for their valuable contribution towards its progress.

In following on from the Minister, I tell the House that I was a member of the Social Services Committee for part of the process of this bill, so I would like to thank her for acknowledging the work of the members of that select committee. Unfortunately, often in the House Ministers thank only the chair of a select committee, and forget that committees sit only because there is a quorum, and only because other members are involved and take an active part in committees. In terms of this particular bill, we in the National Party are supporting it, but not without some reservations. Certainly, the area of long-term residential care for the elderly is absolutely fraught with difficulties. We have an ageing population. At the moment when other people look at the population and see people of my age, they ask whether there will be anyone available to pay for our old-age care. That is a long-term concern, and it is why some of the changes were made in the last decade in relation to trying to keep people in their own homes for as long as possible. That was one of the reasons for that, because obviously the taxpayers of New Zealand could not continue to keep paying for the full cost of care for people unless there was a real and an absolute need.

Some particular concerns were raised at the select committee. I would like to thank the submitters to the select committee, because those people were from various walks of life. They put together submissions that were incredibly helpful, because they often spoke from personal experience. In this particular area, submissions came from people who provide, or have provided, care for the elderly and also for family members of the elderly, from the New Zealand Law Society—which always puts in very sensible submissions—and from groups like Age Concern, which I have had quite a bit to do with recently over a matter. In relation to the submissions, one of the most disturbing things was to find that agencies like The Salvation Army are finding it, and have now found it, just too hard to be providers in this area. That is to do with costs.

We already know that we cannot have a bottomless pit when it comes to the costs of caring for the elderly, but unfortunately the costs imposed on the industry extend well past the very small increase that it had in about 2002, I think it was—or something like that. That was a very small increase. Since then, the industry has had extra occupational safety and health costs, extra accident compensation levy costs, and the Holidays Act costs. And, of course, the businesses are a 24-hour, 7-day-a-week job, so they cannot say they are going to close on some days— they cannot take that measure. Then there has been the extra cost of rates. Many of us who own property know that council rates have gone up. There is also the cost of food, which has risen substantially in the last 5 years, and the providers have had to wear that increase. Then there has been, of course, the sherry tax. The one little bit of gladness that many of the elderly have is a little drop of sherry, but its cost has gone up.

The biggest increased cost that the elder-care area is about to face is in the wages of caregivers. We in the Health Committee—a different select committee—have been hearing submissions in relation to the wages of caregivers, and I think that it is appropriate to discuss at this moment the fact that we know that caregivers who work in long-term residential care establishments are not being paid enough. We know that many of those people work for less than the minimum wage, if we take into account some of the costs they have to incur, and that they are in fact the people who keep our elderly going. It is a real travesty that on the one hand we are saying that we will increase the asset-testing level for the elderly—which National supports—but on the other hand we have whole groups of providers in the industry, like The Salvation Army, going out of business. At the same time, we have the caregivers existing on wages that are simply not acceptable in a country that likes to think of itself as part of the First World.

One of the interesting things I found was the fact that the not-for-profit organisations that own residential care facilities were often in a tougher position, and were finding it harder to survive, than some of the bigger profit-based organisations. I think that that is to do with the fact that the not-for profit organisations are often looking after older premises, and the cost of maintaining them is often higher than that of newer premises. In fact, those organisations may not have the same business systems in place as the profit-based organisations, or they may have cultures that are not necessarily focused on being able to do the best they can. Often they cut corners, which is really hard for the elderly. It is an absolute tragedy that Presbyterian Support services have exited the area, and that The Salvation Army has said it will sell all its facilities—that is, if it can find a buyer. One of the really sad things is that it has to be able to find a buyer—and for what? Yet at the same time The Salvation Army is being told in legislation that there is a set amount it will be paid. I cannot for the life of me understand why we stipulate in legislation exactly what the price is to be, when we should take into account the fact that prices must and do rise with inflation, and the fact that there will be extra fuel costs and extra heating costs. Electricity costs, for instance, have gone through the roof in the last 5 years.

We should be able to have a mechanism in the bill that states to the people who do provide long-term residential care for the elderly that we can, as a country and as taxpayers, take those costs into account. So I do not know why we are putting through legislation that states the exact amount of the payment, when that could be more easily and much more succinctly dealt with in terms of regulations, or even by way of a ministerial or a Ministry of Health ruling. Putting the amount into legislation sets it now, and we will not be able to change it for some time because of the long legislative process that that involves. The Government has been sitting on this legislation for the last 5 years, so there has hardly been a fast turn-round. I do not think a change will happen for a little while yet—not until after the next election, when we are in power.

One of the things that is very, very important is to keep promises. The Labour members told people all the way through the 1990s and all the way through the last couple of elections that they would remove asset testing for the elderly. They knew that there was no realistic opportunity to do that without putting the country into a dire financial situation, and they said it anyway. Unfortunately, Labour has delivered to the elderly in New Zealand yet another half-truth. Unfortunately, it has said to the elderly it will pass this legislation for them, but it will make it harder for them to even get a place in long-term residential care because it will make it harder for the providers to make a living and because the wages of the caregivers, as we know, are very low. Labour has gnashed its teeth and talked about this issue a lot. It has been in power for 5 years, and has not done anything about it.

We now have an aged-care situation that is absolutely chronic. I have a family member who works in that area, and I know that the people who work in the area go the extra mile. They are often dealing with people who are much more unwell and elderly than they were 20 years ago when they went into rest homes, private hospitals, or long-term residential care. Now we have a situation whereby, as the Minister said to us last night, the elderly going into those facilities stay, on average, only 18 months. Twenty years ago the average might have been 10 or 20 years—a much, much longer time. That is because people are going into care later in life, when they are much more elderly and much sicker. They are often near the very end of their lives, so the intensity of care and nursing has increased. Yet we are keeping the providers down to levels of pay that basically mean that staff have not had pay increases for over a decade. That is a travesty, and it is one that we in the National Party are very concerned about. We are very concerned that that strategy does not help our elderly and does not help their families.

It is my pleasure to take a call in the third reading of this bill. This is yet another promise delivered from the Labour Government. The older people in our communities know that we went out in 1999 and said that this is exactly what we would do. If only the Opposition understood about fiscal responsibility. When we got into Government and began to cost this bill in order to keep the promise, we found the cost to be exorbitant. With the fiscally responsible hands of Dr Cullen on the tiller and the urgings of Ruth Dyson as the Minister responsible for older persons, we have delivered a package today that the older people in our communities will be more than happy with. They also do understand, because they are sensible and wise, that we will implement this strategy over time. I am delighted to have this bill in the House today. I support it.

First of all, New Zealand First would like to thank the Minister and those members who were on the Social Services Committee for their contribution to the Social Security (Long-term Residential Care) Amendment Bill. We have all had the opportunity to peruse this bill. Statements concerning promises made by the Labour Government to the elderly have really had a good airing in the House in the last 2 days. There have been concerns raised repeatedly, but New Zealand First is here to ensure that our elderly will have the entitlements that they deserve. This bill does not entirely implement what our elderly deserve, but it is a step in the right direction. New Zealand First is well aware of the shortcomings of the bill, and our advice to the elderly is to be patient, as help is on the way. New Zealand First is committed to supporting this bill and the accompanying Supplementary Order Papers, bearing in mind that we are not entirely satisfied with all the details. However, this legislation is a move in the right direction and has the potential for improvement. I will be brief. New Zealand First urges the Government to bear in mind that not all the elderly are in the same circumstances financially or with regard to assets. If, in the future, adjustments need to be made, we urge the House to look upon the situation sympathetically. New Zealand First supports this bill.

The ACT party will oppose this bill on the basis of three different arguments. The first is that it is an example of poor policy. It is based on the need to buy votes, not on the needs of those people at whom it is targeted. The second reason is that it will impose an enormous cost burden on New Zealand taxpayers into the future, and particularly on our younger people. In a way, it could be described as intergenerational theft. The third reason we will oppose the bill is that, in effect, it is the nationalisation of aged care. The Government is driving out providers in the marketplace—providers like The Salvation Army, which has been there for almost 100 years. We will end up with a situation where the Government is the monopoly purchaser of residential care for the elderly. I would like to discuss each of these three points in my contribution.

I go first to the policy issue—the fact that it is poor policy. There are really two reasons why laws are passed by Parliament. The first is that Government agencies have looked at a problem that confronts New Zealand society and have come up with some sensible solutions whereby laws need to be changed so that those concerns can be addressed by the Government of the day. The second reason why policy is passed into law by Parliament is that a political party decides it wants to do so, usually because it is appealing to a particular voting group.

In the 1999 election promises made by an airbrushed Prime Minister, Helen Clark, she essentially gave the promise that Labour would abolish asset testing of the elderly. She said in a brochure: “We say asset testing of older people is wrong. It will go.” Five years down the track, here we are with a bill that gets started on the path towards removing asset testing for the elderly. The problem is that the promise was made in 1999. It is now 2004, and this bill will come into force in the middle of 2005. That is the first problem. The people who voted for Labour because they thought asset testing would go have had a long wait.

The second point is that if we look at the detail of the bill we find that the year in which asset testing actually does go is 2026. A large number of the submissions to the select committee said that this is simply not good enough, because the bill represents a broken promise by the Labour Party. Labour said it would abolish asset testing, and it is doing no such thing. It is making a little move in that direction, but it will actually take over 20 years for asset testing to go. New Zealanders who will be voting for Labour on the basis of this legislation had better hope they are here in 20 years’ time so that they live to see the promise become reality.

Good policy is based on meeting a need. This bill will, over time, abolish asset testing for all New Zealanders who might need elderly care, and the problem is that many of those people will be able to afford to pay for that care themselves. Here we are in Parliament passing a piece of law that will put an enormous cost burden on families who are struggling to make ends meet, and who are trying to pay taxes that are far too high. The reason why taxes are far too high is, as every New Zealander knows, that the Government is sitting on a huge surplus. Governments should take just as much as they need. We have a Labour Party that is so greedy it takes way more than it needs, and here it is burdening the taxpayers of the future with a piece of legislation that will cost them very dearly.

If the Government were passing legislation now to help people in genuine need, ACT would support it. But because it is not—because it will be asking struggling taxpayers of the future to pay for people who could well afford their own elderly care—we will not support it.

The second issue is the cost burden. We have been told that the legislation will cost about $110 million a year. I understand that there are about 15,000 people retiring every year at the moment. In 30 years’ time, that number will be something like 55,000. One does not have to be a mathematician to be able to figure out that the $110 million will blow out in the future, as our ageing population goes into retirement and goes into the position of needing such care. The calculations I have seen put the eventual cost of this legislation—the simple bill we are passing into law today—at about $1 billion in the future.

We just have to ask ourselves whether it is fair of the Labour Government to commit future generations of taxpayers to having to fund such a costly piece of legislation. Many of the people retiring in the future will not actually need to be supported by the taxpayer but will, of course, accept that support, because the bill is being passed and will be available. I say that it is intergenerational theft.

I heard a contribution from a Labour Party speaker who talked about fiscal responsibility. This bill is the antithesis of fiscal responsibility. This is a Government that simply wants to buy votes at the next election. It is a Government that says: “Oh, gosh, we made a promise; we’d better look like we’re keeping it.” It is not keeping its promise, but it wants to be able to bluff voters into thinking that it is keeping its word when it is not. This is an appalling piece of legislation, because it is not based on future need; it is based on political expediency now.

The third issue is the nationalisation of the aged-care sector. We heard during the select committee process from many of the social care providers—I suppose we could say they are part of civil society, because they are not Government agencies; they are charitable organisations, trusts, church-based groups, and the like—that have traditionally provided aged care. We heard them telling us that unless the Government did something pretty quickly, they would be driven out of the business. As we said in the debate earlier on this week, already The Salvation Army has decided it will sell those facilities that it has been operating for many years.

Those people told us that the straw that was breaking the camel’s back was the costs that this Labour Government has been imposing on them; the cost burden of extra regulation that they are having to comply with, and then the additional costs of industrial relations, including the extra costs of holiday pay, ACC levy, Occupational Safety and Health Service regulations, and the 4 weeks’ holiday a year that will come up. The submitters told us that there are so many additional costs to employers these days, they simply would not be able to continue to operate under the additional costs that have been put on by this Labour Government, so they would look at having to quit.

We have to say to ourselves that, as a country, having a flourishing sector providing those types of services is what we should be aiming for, and it is a sad day when we have a bill that is driving that sort of provider out of New Zealand society. It is a sad day when I say that we have to oppose this bill.

The Green Party will be supporting this legislation, because it is our policy to abolish asset testing for residential care for the elderly. Like many of the submitters to the Social Services Committee, we see the current asset-testing regime as iniquitous, as it discriminates against one part of the population—the elderly. We note that in 1999 the Labour Party did make a solemn promise to remove asset testing. At that time the Labour Party seemed to appreciate—as the Green Party does—that older people have already spent a lifetime paying taxes, which they presumed would assist with their care and support in later life when they would need help the most. Through the asset-testing system, they now become the only category of citizens who are required to pay twice for long-term residential health care—once out of their taxes, and then all over again if they have sufficient income and assets. They are essentially taxed twice.

The bill moves in the direction of Green Party policy with regard to asset testing, but it only moderates asset testing for residential care rather than abolishes it, as other speakers have pointed out, and it will not be removed for another 20 years.

The Labour Party announced before the 2002 election that it would introduce legislation before the end of 2002 to phase out the asset test for residential care. So the bill is a year late in that context and, furthermore, it does not phase out asset testing, as promised by the Labour Party.

However, we do feel that although it does not go far enough and remove asset testing altogether, we will be supporting it, but we are also concerned that it does not solve the other very real problem of adequate funding for residential care all around. However, it does take some steps in the right direction. Like most other submitters, apart from the ACT party—I am not sure what those members’ intentions might be for the elderly, or how they envisage they will be treated when they are unable to care for themselves or for their own care—we support the legislation.

I would also like to touch on the other issue that a number of other members in the debate have already touched on, which is the incredible state of crisis in the aged-care sector. It is basically that the aged-care sector is in a state of crisis. Only today the Health Committee has released a report. We were looking in particular at home-care workers in the aged-care sector, but the Health Committee in its entirety acknowledged that the sector is in a state of crisis. We were warned by submitters during our select committee inquiry that the entire sector could hit meltdown at Christmas if urgent action is not taken to not only significantly increase home-care workers’ wages, but also the wages of aged-care workers in residential homes. We are extremely concerned that this would put the safety and care of vulnerable, elderly New Zealanders at risk; in fact, we believe that the crisis in the sector is already putting the safety, not to mention the quality of care, of our elderly at risk.

There are turnover rates of home-care workers in some areas of New Zealand of 88 percent, and it is 40 percent all around the country. Providers are pulling out of the market because of the acute, chronic underfunding of the sector. So we believe that elderly being looked after in their own homes and in aged-care residential homes are becoming increasingly vulnerable, and their care is at risk. Frankly, the wages and conditions are rock bottom, workers in the sector are being treated like Third World workers, and home-care workers themselves are expected to provide their own transport and pay for their travel costs from their already rock-bottom, meagre wages. It is in our view, quite frankly, shocking. As a result, home-care workers and others are walking away from the industry, which was already in crisis.

The Government must do something to address this crisis other than pass this legislation, because otherwise, the elderly will really be at risk in their own homes and in the aged-care sector.

It is tragic to see a wonderful institution like The Salvation Army, which has been providing care for more than 70 years, announcing that it is pulling out of the sector. It is a well-respected carer. I remember The Salvation Army marching alongside the Labour Party on the Hīkoi of Hope, and now it is having to pull out of providing what it wishes to do. It has been providing care for the vulnerable elderly of New Zealand for 70 years in a very respected way. It is having to close down for no other reason than lack of funding.

I have a release here from the sector basically stating that, make no mistake about it, there is a direct correlation between the Government’s mean-spirited 1 percent funding offer and The Salvation Army being forced out of residential care for the elderly. That release is from Martin Taylor, the chief executive officer of Residential Care New Zealand. The question we have to ask is what this says about the values of a Labour Government that would let this situation happen. The sector is basically urging at least a 3 percent counteroffer from the Government to address this year’s inflation. If it does not offer that, what will happen to the elderly in New Zealand?

I am sure that all of us in this House and most New Zealand families have elderly relatives in residential care and aged-care facilities. We are acutely aware on a daily basis of the crisis that is affecting the elderly. I have a number of direct family members in the aged-care sector, and in their particular home there was a crisis. There was a threat and a risk that the whole home would be shut down. That is tragic to someone who has been living there for a number of years. What do we do with them, and what do we do with that sector?

In summary, the Greens are pleased to support this bill. It takes a modest step in the right direction, although it does it over a much longer period of time than we would wish. It is our policy to abolish asset testing for residential care altogether. We do believe that it is iniquitous. We are extraordinarily concerned, as other speakers have said, about the deepening crisis in the aged-care sector and in residential care homes. We urge the Government to listen to the two petitions and the select committee report today, and to do something to increase the wages of homecare workers. The truth of the matter is that when we take out the cost of driving between clients, homecare workers are receiving below the minimum wage, and in some cases as little as $2 to $3 an hour. That is scandalous.

I rise on behalf of United Future to speak to the third reading of the Social Security (Long-term Residential Care) Amendment Bill. This bill has had the support of the entire number of parties in Parliament apart from ACT. In all fairness, the deputy chair of the Social Services Committee, Muriel Newman, made some great contributions towards this bill during the committee’s discussions on it. I believe she had her head round the issues that we are talking about today and that have been coming through in the majority of the speeches from the Opposition parties, but, because of the philosophy of her party, she has chosen to vote against the bill, and I respect that.

However, as we discussed these issues at the select committee, the main thing that came up from contributor after contributor from all the parties apart from Labour was the unanimous agreement that there were issues that we needed to deal with. Strangely, only the Government members of the committee were very quiet on those. This is a Government bill. I am only a first-term MP, and I could not understand why those issues, which had been very clearly put before the select committee, were not being dealt with. All the non-Government members sitting around that table voiced their concern and said that the issues that had been brought to our attention definitely needed to be dealt with. It was unanimous. Yet when we questioned the officials, we were told time after time that those issues had nothing to do with the legislation, and could be dealt with only by Government policy.

These are serious issues affecting the elderly in this nation. Those people have, in many cases, been through two world wars. They have been through the Depression. They have seen Government after Government. I clearly remember my dad saying to me that if he had to tighten his belt one more time, he would have to cut himself in half. Now those people are in rest homes and care centres throughout this nation.

It is not that there are not people who want to care for them, because there are. We heard from some wonderful groups of people who were passionate about caring for the elderly. But they have had a ceiling put on their funding. There has been no allowance for inflation. Those people have had burden upon burden put upon them as they have had to deal with compliance cost after compliance cost. They have had to operate in an environment in which we have a low unemployment level—which we are very joyful about. They run a 24-hour care service, and have to compete against the nursing sector and hospitals for staff. Those people are being squeezed out. As I said previously, when a well-respected organisation like The Salvation Army says it cannot afford to help and care for elderly people, then I say to the Government “Shame! Shame on you if you will not take the time to address these issues!”.

If these issues are a case of Government policy, then United Future stands again in this third reading and says that the Government needs to bring that policy to its Cabinet table. I believe that all Opposition parties in this House would agree with me and would echo my concerns that it is absolutely and totally unacceptable that we can put this sector at risk—and it is definitely at risk now. Yet there is nothing on the visible horizon that it can see that can help it. That is a concern to me.

I have also previously said that these issues occur not only amongst those who care for the elderly; the very same issues affect those who look after the disabled in this nation. They do a fantastic job, yet they are hamstrung by lack of finances.

I say that these elderly people, who have worked hard and diligently in this nation, deserve better in their latter days. United Future will support this bill because a small part of it removes asset testing. I do not believe that anybody believes that these people in their last days should have to go through such a regime. But really that is the only issue that this bill is dealing with. All the major issues concerning the elderly in this nation have not been dealt with in this bill, because they are Government policy. United Future says to the Government that it should address that Government policy urgently, for the sake of the elderly in this nation.

It has been an interesting debate. When we look back to 1996 at the Labour Party’s policy in this area, it said in its manifesto that it would remove asset testing. Labour repeated that at the 1999 election and many older folk voted on the basis that asset testing would be reduced. This was not about reducing or diluting asset testing, but in fact that it would be abolished. This bill moves in the right direction, but still does not go as far as National would have expected. Although we will be supporting this, as we have done thus far, we have some major concerns in the whole aged-care area—home care, rest homes, and other residential-care facilities. In fact as one member previously said: “It is in crisis mode.” I have been to see a number of rest homes in my Piako electorate, in Cambridge, Matamata, and Huntly, over recent times and they tell me that the viability of their operations is becoming very suspect. It is suspect, because of increasing costs that they are having to incur with the movement of people from the district health board hospitals back out into rest homes. They are not able to handle it. They have a fixed price in which to operate, and are expected to pick up more and more of the costs for those residents.

I have heard the Government say “Ah, but rest homes are doing extremely well.” Well, some are. But if we look at those that have done well, they have been cross-subsidised. They are being subsidised because they have a hospital unit attached to them, or more particularly, they have a retirement village associated with them. So if we were to look at those in their context one could say that with a degree of cross-subsidisation they are doing OK. But those stand-alone rest home operators who have to have a registered nurse on call 24 hours a day are at the stage now where the viability of their operation is very, very suspect. In fact, in our area there is one operator that is moving into receivership. I have met with them, and the viability and the whole concern over patient care, rest care, and security for those residents is very much up in the air.

If we were to look at what is happening in the home-care sector, that astounds me as well because of the low pay that we are expecting the providers to give to their workers. I had a lady come to me about a month ago who had not had a shower for 10 weeks because the provider providing that service, and being paid for it, did not turn up. I have certainly taken that on board.

The other area where there have been huge costs associated with this sector is in the certification. Members will be aware that certification came in in October, and all rest homes had to meet certain standards. That is fine. There is no difficulty with that. But when it comes off the bottom line, and the costs of some of the certification have reached in excess of $30,000 to $40,000, then that is very hard to recoup. With the audits that will come up on an 18-month basis, once again, there will be compliance costs that are not being funded by the Government, or by the residents who, in most cases do not have the ability to pay.

On top of that, the other compliance costs that have been mentioned by previous speakers, in the Holidays Act, the Employment Relations Law Reform Bill, and Occupational Safety and Health Service regulations, all impose great constraints on the ability to be able to operate a viable proposition.

Where there is only one rest home in an area, that becomes the focal point for a lot of people in that region. In the electorate I represent, that is the case. When that rest home closes and moves into receivership, there is a crisis at hand. The Government should say that it will provide security, and supply the quality of care that is important for our ageing population. While asset testing, and what this legislation aims to do, is fine in that respect, it will be no good for those who need rest home care when there is no place for them to go. I am afraid that that is what is happening in rural areas in particular, where costs are extremely high, people need to have transport to get to the doctor, and to be able to bring in supplies. It is not like living in a city where people can go to the local pharmacist and people can get to the local hospital if they need to be there. In provincial New Zealand the task is serious.

To the Government I say that this is a very serious matter. While we agree with and support the bill in its context, major challenges are ahead and they rest in the Government’s hands.