Arthur Koumoukelis and Lucinda Smith

More reforms coming in wake of Aged Care Royal Commission

Arthur Koumoukelis and Lucinda Smith

September 21, 2021

Aged Care Retirement Villages Royal Commission

The Australian Government has introduced the Aged Care and Other Legislation Amendment (Royal Commission Response No. 2) Bill 2021 (the Bill) aimed at delivering the second stage of aged care reform in response to the Aged Care Royal Commission’s final report.

In this blog post we’ve provided a high level overview of what you need to know about the legislative amendments proposed by the Bill which is 151 pages and accompanied by a 216 page Explanatory Memorandum.


The Australian Government has moved quickly to introduce reforms in response to the Royal Commission’s final report. On 27 May 2021, the Government introduced the Aged Care and Other Legislation Amendment (Royal Commission Response No. 1) Bill 2021 – the first step in the implementation of the Government’s $17.7 billion aged care reform package.

The latest Bill, introduced on 1 September, represents the next stage of legislative reform. Below is a brief overview of each of these key measures and the likely timeframe for commencement.


The Bill provides for significant changes to governance requirements for approved providers. Some of the key changes include:

  • a new requirement to ensure that a majority of the members of the governing body of the provider are independent non-executive members; and at least one member of the governing body of the provider has experience in the provision of clinical care;
  • limited circumstances in which the new governing body membership requirements do not apply – this will be a key area for many closely or privately held providers;
  • a new requirement to establish, and continue in existence, a quality care advisory body;
  • new requirements for the governing body around assurance of staff skill mix and access to opportunities to develop capabilities;
  • changes to suitability matters and other arrangements for key personnel;

These changes (and more) are due to commence on 1 March 2022. Some provisions as to membership of bodies and forms of constitutions are postponed to 1 March 2023 for providers in existence as at March 2022. It is important that all providers understand and prepare for these changes, which are likely to pose a significant challenge for many providers to implement.

Financial and funding changes

The Bill will change the funding and finance landscape in three areas:

  • the introduction of a new residential aged care funding model known as the Australian National Aged Care Classification (AN-ACC), which will replace the ACFI;
  • the introduction of new powers for the Department of Health (DoH) and Aged Care Quality and Safety Commission (ACQSC) to request information about loans made using refundable deposits: and
  • the establishment of the Independent Hospital and Aged Care Pricing Authority (the Pricing Authority) which replaces the existing Independent Hospital Pricing Authority.

AN-ACC funding model

  • Providers will already be familiar with the proposed AN-ACC funding model, with shadow assessments having commenced from April 2021 alongside the ACFI.
  • The AN-ACC is aimed at achieving a more equitable funding model that better matches funding to resident needs. It has three components, being a variable component; a fixed amount related to the characteristics of the service (eg remote location); and a one-off entry payment.
  • In relation to the variable component, each resident will be independently assessed and have their care needs aligned with one of the case classifications of the AN-ACC, with this assessment then influencing calculation of the subsidy paid to the provider.
  • The AN-ACC funding model is proposed to commence on 1 October 2022, with ACFI payments continuing as usual until this date.

Use of refundable deposits

  • The Government’s response to the Final Report included a commitment to work with the aged care sector and relevant stakeholders to develop a reformed residential aged care accommodation framework, to commence from July 2024. These latest amendments demonstrate that the Government is eager to strengthen the regulation of refundable deposits in the intervening period between now and when further decisions are made about refundable deposits and alternative methods for raising capital.
  • The amendments give the DoH and the ACQSC new powers to request information or documents from a provider or borrower of a loan made using a refundable deposit. This includes the ability to request personal information (eg details of who executed the agreement) and other information. New strict liability offence provisions will apply to deter non-compliance.
  • There is clear direction as to the components of a loan agreement that must exist. These directions are retrospective.
  • The period of liability for the existing offences for the misuse of refundable deposits prior to an insolvency event will be extended from 2 years to 5 years.
  • These amendments are proposed to commence from 1 July 2022.

Independent pricing authority

The functions of the renamed Independent Health and Aged Care Pricing Authority will be expanded to include:

  • providing advice to Government on aged care pricing and costing;
  • conducting costing and other studies to inform advice given to Government;
  • publishing reports and papers relating to the new functions; and
  • other associated functions.

These changes are proposed to commence 28 days after the Act receives Royal Assent.

Information sharing

The Bill proposes a number of changes to the way in which information is shared.

These changes will see greater information sharing between Commonwealth bodies across aged care, disability and veterans’ affairs in relation to non-compliance of providers and workers.

These changes are proposed to commence the day after the Act receives Royal Assent.

Workforce management

The Bill proposes to introduce a number of new workforce management measures, including changes to employment screening and the introduction of a new Code of Conduct.

Employment screening

  • A new nationally consistent pre-employment screening process will be introduced for aged care workers and ‘governing persons’.
  • Governing persons is a new term, to be defined in the Aged Care Quality and Safety Commission Act, which means a member of key personnel under section 8B(1)(a) or (b) of the ACQSC Act, ie key personnel who is:
    • a member of the group of persons responsible for executive decisions of the approved provider entity; or
    • any other person who has authority or responsibility for, or significant influence over, planning, directing or controlling the activities of the approved provider entity.
  • Relevant screening information will be held in the ‘Aged Care Screening Database’ to be maintained by the ACQSC. Access will be granted to approved providers and other employers to check aged care workers have the relevant clearance.
  • There will be mutual recognition of screening checks across aged care and disability support.
  • These changes are likely to commence from 1 July 2022.

Code of conduct

Under the proposed changes the ACQSC will be responsible for developing, implementing and enforcing a Code of Conduct that will apply to approved providers and aged care workers, including governing persons. The proposal includes the following changes:

  • powers for the ACQSC to deal with information received about alleged breaches and take enforcement action for substantiated breaches;
  • powers for the ACQSC to impose banning orders on aged care workers and governing persons of approved providers, prohibiting or restricting them from being involved in specified activities;
  • civil penalties for approved providers, workers or governing persons for breaching a banning order;
  • the creation of a register containing certain information about individual subject to a banning order.

It is expected these changes will commence on 1 July 2022.

Serious Incident Response Scheme

SIRS will be extended to home care and flexible care in a home or community setting commencing 1 July 2022. The DoH is currently consulting with industry about the extension of SIRS and further detail about the practical application of the scheme to home care is likely to be known soon.

We have prepared a short summary table to highlight the changes and the commencement dates to assist approved providers to map timeframes. If you have any questions about the changes or would like assistance complying, please contact a member of our Health, Aged Care and Retirement Villages team.


Arthur Koumoukelis | Partner | +61 2 8248 3437 |

Lucinda Smith | Partner | +61 2 9020 5748 |

Madeline Walsh | Partner | +61 7 3338 7906 |