Social Security (Long-term Residential Care) Amendment Bill — In Committee 
Social Security (Long-term Residential Care) Amendment Bill — In Committee 
[Volume:622;Page:17276] 
Social Security (Long-term Residential Care) Amendment Bill 
In Committee 
Part 1 Preliminary 
Dr LYNDA SCOTT (National—Kaikoura) 
: 
 Today we heard that the Salvation Army is selling all its residential homes. I wonder what this Government has to say about that—this Government whose members when in Opposition professed to care so much about older New Zealanders. However today there is no comment from it as the Salvation Army following the example of Presbyterian Support Services decides to sell all its residential homes. Why is the Salvation Army selling up? Two years ago Dave Nelson brought a petition to the Health Committee about aged care and residential care that stated that his home which was mainly geriatric hospital beds could not keep going at the current rate of funding. The reason he could not keep going and said that they would have to cut care cut costs or close was this bill. 
This bill the Social Security (Long-term Residential Care) Amendment Bill is the income and asset testing bill. It has a very long history with a promise that this Government made time and again to older New Zealanders to remove income and asset testing. The money it has put aside to increase the assets a person can keep is why the Salvation Army is selling all its homes and why Presbyterian Support Services has already sold all its homes. Kemp House says that it will have to cut corners or close because it has had so little increase in funding when increased costs have gone up that it cannot manage to deliver aged-care services at a level that it finds acceptable. So this Government which proposes that it really dislikes private providers is pushing all of aged care into the hands of private providers and that is because of this bill. 
Before I came to Parliament I worked as a geriatrician through the 1990s so I have a lot of experience of rest homes dementia units hospitals and the assessment of elderly people. I heard the promises from the Labour Party year after year up and down this country saying that it would get rid of income and asset testing. It started back in the early 1990s. The history of this bill is that we have an ageing population. In the early 1990s a lot of aged care was provided by local public hospitals. Over the 1990s public hospitals became a place to deliver acute-care services but not to deliver long-term care. During that time the decision was made to move people into the community rest homes hospitals and dementia units. 
In 1994 10 years ago $636 was the amount set by Jenny Shipley for hospital care. However when this Government came in no change was made to that amount. Previously rest homes used to subsidise the hospital section. Now unless there is a retirement village that can subsidise the rest home and the hospital section proprietors cannot afford to stay in business. They cannot afford to pay the wages the increased electricity and food costs or to keep paying medical expenses and the cost of taking people to doctors. Today The Salvation Army decided to pull out. 
We heard Labour say continually that it would get rid of income and asset testing. However this bill the Social Security (Long-term Residential Care) Amendment Bill does not do that. In no way does it do that. What it does do is increase the level of assets that can be kept. A means test on income still will occur the regulations and the actual legislation remains and all that is changed is the amount that a person can keep when he or she goes into residential care. People may be able to keep more money but they will have to start paying for a whole lot more when they get into residential care. We will see a two-tier level. We will see that those homes that are paid the contract price only and provide only that level will go back to having more than one person in a room. I can bet anything one likes that that will be the only way unless rest homes can on-charge for extra services. That is what will happen I say to the Minister. If the Minister travels around the world he will see that aged-care services in New Zealand have been delivered at an extremely high standard. I have been to homes in the UK Australia and the USA where there are two three or four elderly people in one room—but not in this country. 
BILL GUDGEON (NZ First) 
: 
 New Zealand First will support the bill with the recommended changes by the Social Services Committee. This bill amends the income and asset testing regime that applies to residents of long-term residential care regardless of what National has said. Along with that the resident can if he or she wishes access financial support for care costs administered by the Ministry of Social Development. The purposes of the bill are to progressively increase the value of assets that people may retain before being required to use those assets to pay for care. At one stage this was never ever deliberated on or taken care of but for New Zealand First this is a step in the direction that will help people retain more of their assets. 
The bill will remove asset testing for those aged 50 to 64 who are at present being required to use their assets to pay for their care. It will exclude from the income test the earnings of the spouse of a person in care and it will specify that $636 per week is the maximum contribution adjusted annually. New Zealand First has always been concerned about the care of our elderly in rest homes. Whether or not they have been taken care of privately we have always been concerned. 
I refer to the main changes that will take place. One change is the maximum contribution and setting mechanism. The next is the meaning of “region” and those things that are concerned with the region. There is also the matter of gifts and means assessment and the mechanism for adjustment of excluded income. 
My comments on this bill will be very brief. We have committed ourselves to accepting this bill and the changes that will take place. New Zealand First recognises that there is a need to support residents who are in long-term residential care as a token of respect for and recognition of their contribution to the nation and to our society and community. New Zealand First will support this bill and hopefully in the future as time goes by adjustments will be made as we look at the economy the contribution of our nation and as we look at and respect the dedication and support that our elderly folk have contributed to our nation. So without further ado we support this bill and we will ensure that we hold the Government to account for any changes that will take place in the future. Those changes if recommended should contribute to a more enjoyably lifestyle for our elderly folk. 
KATHERINE RICH (National) 
: 
 As I rise to speak in the Committee stage of the Social Security (Long-term Residential Care) Amendment Bill I have a question for the Minister in the chair Ruth Dyson. If this bill is so great why was there almost universal opposition from most of the residential care providers who came before the Social Services Committee to tell us of their views on this bill? We heard from far and wide. We heard from a lot of the groups that have been involved in long-term residential care for many many years. They are not fly-by-nighters. Rather they include groups like the Christian-based groups such as Presbyterian Support New Zealand The Salvation Army and Age Concern. Group after group came before the select committee and pointed out what they thought were some pretty serious errors in the bill. Groups like Presbyterian Support told us that if changes were not made to the present mode of funding there would be a mass exodus from the industry. Presbyterian Support as one example pointed out that it had already exited long-term residential care over a period of years but that it would be forced to further leave the industry if it was not in a position where it could cover its costs. Group after group particularly our Christian-based social services said they were actually cross-subsidising their long-term residential care and using money they were getting from other areas to put into their care services. That was something that was of huge concern to us. 
The select committee also heard from The Salvation Army. It said that it was at that point considering departing from the provision of long-term residential care. At the time some members scoffed. They believed that that was just something that was trumped up as a way of making the point at the select committee but it was interesting was it not to read the newspaper today and see that after many many decades of providing residential care— 
Dr Lynda Scott 
: For 70 years. 
KATHERINE RICH 
: My learned colleague tells me they have been providing that care for 70 years. After 70 years of providing care in this community it is now saying that it has had enough. It is getting out of that particular area of work and will move to helping people more in their own homes. Well that does not suit everybody. One of the things the residential carers were saying was that the people coming to their facilities were people who had significant problems because they had waited in their homes for too long. The Salvation Army at the time it came before the select committee had 13 facilities. I have read in the paper that it now has 12 which it is going to put up for sale. 
We have to look at that mass exodus from the industry and start to ask why. This Government likes to champion public provision yet it is creating an environment where those public-spirited organisations and those that are not private providers are frankly not in a position where they can stay and provide services. Like many of my colleagues in this Chamber I have had letter after letter from groups from parents from children and from all sorts of workers in the sector who are saying that working in this particular area is just not an easy job. I have here sitting on my chair about a hundred different letters and that is just one of the files I have brought to the Chamber. 
Here I have a letter from a daughter of a resident at St Barnabas. She says: “Each day I see the tremendous job the staff do. It is not an easy job to care for frail elderly people who can be very demanding.” She goes on to say that she is concerned about the legislation because she sees some of those who provide the services as simply not being able to stay within the sector if they are not compensated to a level that allows them to stay in business. We are going to see a continuing exit from the sector—that is for sure. Groups like Presbyterian Support New Zealand are saying: “We are providing these sorts of services as much as we can but we are not going to be mugs about it. If we are not going to be compensated if we are not going to be in a position where we really can cover our costs we can’t continue to cross-subsidise this part of our work with other areas we work in.” 
I think it will be a shame. A lot of these groups are the ones that look after those who do not have too many other options. One of the things that will happen as many groups leave the sector is that we will see more reliance on the Government. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 In many ways this bill epitomises the deceit of the Labour Party. During the 1990s—and I hope the Minister will take a call— 
The CHAIRPERSON (Hon Clem Simich) 
: Would the member withdraw that word please. 
Dr PAUL HUTCHISON 
: I am prepared to withdraw it but I must say I believe that the Labour Party has been somewhat slippery. I hope the Minister will take a call and tell us what she campaigned on during the 1990s because the clear message from the Labour Party was that it would remove asset testing for the elderly. In fact it started off as more than that: it said it would remove asset and income testing for the elderly. That was altered slightly as the decade wore on but during the 1999 election campaign the clear message was that the Labour Party would remove asset testing. 
Let us have a look at this bill. When do its provisions commence? On 1 July 2005. That is almost 6 long years since the Labour Party campaigned on an absolutely clear-cut issue—categorically it would remove asset testing for the elderly. But what is this bill really about? If we look at it we see that it is to progressively increase the value of assets that people may retain. There is nothing about removing asset testing and though I am not allowed to use the “d” word I do believe that it is quite right to say that the Labour Party has been as slippery as a Waikato River eel in terms of that—and that is insulting the Waikato River eel! [ 
Interruption 
] That is right—absolutely. But this is a very serious matter. Obviously that was a promise to older people and the Labour Party has made an absolutely clear backdown on it. 
A little while ago my colleague Dr Linda Scott was talking about The Salvation Army withdrawing from the residential care sector. I was not on the Social Services Committee during the submissions but I note that Major Alistair Herring said that the legislation was based on the false assumption that the bottom-line weekly payment of $636 represented the actual cost of providing basic residential care for an older person. He said that a more realistic bottom-line figure would also take into consideration the 21 percent increase in the consumer price index since 1994. Again the Labour Party has absolutely ignored that. It has absolutely ignored the reality of what has happened since 1994. 
Clause 3 the purpose clause goes on to state that the bill’s purpose is: “(d) to clarify the funder’s obligations to pay for contracted care services associated with long-term residential care;”. What does Major Herring say about that? He says he believes that there will be many opportunities for district health boards to disagree about payments for services deemed by the provider to be additional services. That is a sort of fine-tuning and an example is specialised equipment such as a shower chair for a morbidly obese resident. There could be disagreement between providers and district health boards as to whether a shower chair is covered in the contract and there will be example after example in terms of the detail. Yet that has been totally ignored by the Minister. I hope the Minister will take a call and explain just where this very very important fine detail is indeed defined in the bill—because it is not. This Labour Government has presided over the genesis of one of the most complicated health bureaucracies ever known to mankind. 
PAUL ADAMS (United Future) 
: 
 I rise on behalf of United Future to speak on this section of the bill. I was on the Social Services Committee as this bill progressed. That was probably one of the most frustrating times I have had on a select committee because we discovered that the majority of the submitters’ concerns were not actually being addressed in this legislation we are dealing with tonight. 
The elderly are a segment of the population that we really do need to be concerned with and care for. We will all become elderly and some of us sooner than others of course. I am probably in the latter category. One of the major concerns submitters had was the cost of caring for the elderly. Apparently it is a Government decision to increase it and it is not dealt with in this legislation. That frustrated me and frustrated a lot of submitters but I think the main concern we have as has previously been said is that these particular facilities are closing down. We just cannot have that. We even have major problems with the pay structure for those who care for the elderly and it is a competitive market out there. We are thankful in this country that we have low unemployment but when we are starting to deal with the elderly and these types of issues we need to be very careful that we do not put those in desperate need into an even more desperate situation. 
I believe that the Government has a responsibility to attend to the conditions and careers of carers in New Zealand especially that dedicated group of people who care for the elderly in rest homes. I believe that if the Government is sincere in its intention to promote the care of the ageing in those homes then it must walk the talk. United Future has previously spoken on this bill and called on the Government to take the initiative gather the sector’s stakeholders and find a way out of this hole in respect of care for the aged. I note that around 31000 people—which is 7 percent of those aged 65 and over—are in long-term residential care. That is a lot of people. 
Dr Lynda Scott 
: An ageing population. 
PAUL ADAMS 
: It is an ageing population as my colleague has just said. On average people spend 2 years in long-term residential care and I know that many members in this Chamber would have gone through some of those rest homes and seen those people. They would have seen how they enjoy the company of others how they are well cared for how they are taken out on trips and that they do many other things. In those final years that is very very important. United Future is supporting this bill because we welcome the fact that asset testing has been removed— 
Dr Lynda Scott 
: It hasn’t been removed. 
PAUL ADAMS 
: —well it has been improved dramatically—but we have major concerns with the fact that we need to address the issues of the costs of the homes and the pay rates of the staff. Those issues are highly important to us and we hope that the Government will address them sooner rather than later. 
Dr MURIEL NEWMAN (Deputy Leader—ACT) 
: 
 I rise on behalf of the ACT party to speak during the Committee stage of the Social Security (Long-term Residential Care) Amendment Bill and I have to say from the outset that our party will be opposing this legislation. 
I would like to start my contribution by noting that the date for commencement of the Act which is written in Part 1 is 1 July 2005. I make the point to the Committee that that seems to me to be yet another Labour Party election bribe. If we have an early election we can just imagine what the Labour manifesto will say: “Vote for us if you are an elderly New Zealander and we will remove asset testing.” If the election comes after 1 July 2005 then the election manifesto will say: “Look at the Labour Party. Aren’t we clever? We have started to remove asset testing.” But is it not interesting that I seem to recall from a few years ago that a promise was made that the Labour Party would remove asset testing—full stop? But here we are; we have a half-hearted attempt to start backtracking because—guess what? We have an election around the corner and the Labour Party is positioning itself with the elderly vote in its sights. 
I would like to make the point here that the cost of this legislation will be literally hundreds and hundreds of millions of dollars a year as time goes by. Others in this debate have already made the point that we have an ageing population and what will happen is that people who could well afford to pay for themselves in residential care will be subsidised by hard-working taxpayers who can ill afford to pay their mortgages let alone the high taxes that will be necessary as time goes by and as the changes to the asset-testing regime progress. 
 I would say that this bill has to be one of the most irresponsible bills that any Government could bring in. The Labour Party knows full well that by the time it has long gone from the Treasury benches some other poor Government will have to pick up the cost of what will be hugely expensive legislation. As we all know it is very difficult to repeal a lot of social legislation once it has been put in place. 
I have to say it is bizarre that the day the Committee stage of this bill is taking place is the day on which The Salvation Army has signalled that it will get out of the residential care business. It warned the select committee in no uncertain terms that unless the Government changed the legislation in a way that would allow such social service providers to be in this business it would simply have to quit. Did the Government listen? No way! The Government did not listen. The Salvation Army also warned in its submission that Labour's removal of the asset-testing regime signals that the Government will become a monopoly purchaser of residential care services. It is the nationalisation of residential care for the elderly by stealth. That is what we are seeing today because almost no one eventually will have assets that are high enough for them to pay privately. 
Members of the Opposition who are opposing this bill as well as people listening are seeing another example of nationalisation by a Labour Government that wants to regulate almost every sector of our society. It is hitting hard at private charities—organisations like The Salvation Army and Presbyterian Support New Zealand an organisation that has been around for 100 years. They have been around and in the business of providing care for the people who most need it and the Labour Government in a bizarre fashion is forcing them out of the business because it thinks that the Government knows best. I say to the Minister in the chair Ruth Dyson that if I have that wrong I would like her to stand take a call and explain to members why it is that today The Salvation Army is quitting the business. 
Hon GEORGINA TE HEUHEU (National) 
: 
 The Social Security (Long-term Residential Care) Amendment Bill is a perfect example of what is produced by a cynical Government that campaigns on one thing and then delivers exactly the opposite. Colleagues who have spoken earlier have asked the Minister in the chair Ruth Dyson to take a call. I reiterate that request. I want the Minister to stand up and reconcile this matter for those who are listening—probably the elderly because the elderly often listen to the radio at night. Some elderly people cannot get to sleep at night and so unlike lots of others who are doing other things they often listen to the radio—[ 
Interruption 
]. The Minister is very much awake. Mature New Zealanders often listen to the radio at night. Although sometimes I wonder why in the case of this legislation I have no doubt at all that some of our senior citizens will be listening to the debate. I think it is only fair that the Minister should stand take a call and respond to the question of why she was happy to be part of a Labour Opposition that campaigned on a plank of getting rid of asset testing. 
My colleague Dr Hutchison says that Labour started off the first part of its 9 years in Opposition by saying it would abolish asset and income testing. By the time we got to 1999 it was promising to abolish asset testing only. Of course this bill does not deliver this. Labour has been in Government for nearly 6 years now and one has to ask when it will deliver on its promises. This bill does not do that. It creates a huge expectation for one part of the community but lays some costs on another part. I want the Minister to stand up and explain why she was happy to say in the second reading of this bill: “We consider that it is legitimate to expect people to contribute towards some of the costs of care because those costs would need to be met if the person were living at home. As such the income test is retained.” That is in direct contrast to what I have no doubt that the Minister as part of the Labour Opposition— 
Dr Lynda Scott 
: It's the “Maharey principle”. 
Hon GEORGINA TE HEUHEU 
: My colleague Dr Scott calls it the “Maharey principle” which means to say one thing when in Opposition and do exactly the opposite when in Government. I know that this Minister does take calls so I ask her to seriously consider getting to her feet and explaining why she can sit there with her chest puffed out and be proud of what this Government is doing in what is really a shambolic bill and answer the question of why Labour is not doing what it said it would do when it was in Opposition. We know why: the reality is that once a party gets into Government it has to come up with solutions. I would not say that this bill is a solution though. 
I have to agree with the previous speaker Muriel Newman who raised the issue that this legislation will in the long run create huge huge costs. In pretending to be doing something that is close to what it promised but not actually going quite to the point of getting rid of asset testing Labour is piling on a huge cost factor which we will all pay for some time in the future. Given that there are now providers exiting the sector we will probably start paying that cost a lot sooner than anybody thinks. I think it is a cynical Government that will do this to some of the most vulnerable people in our community. However I am sure that in our senior citizenry we have intelligence and common sense. Those citizens will not be fooled by this—they just will not be. They deserve far better than this at their time of life. It is not right that not so very long ago promises were made that today can be seen for what they are—a total sham. It is obvious that the Minister will not get to her feet and she should. 
SANDRA GOUDIE (National—Coromandel) 
: 
 In speaking to the Social Security (Long-term Residential Care) Amendment Bill I would like to echo the words of my colleague— 
Hon Ruth Dyson 
: Is that because you've got her speech in front of you. 
SANDRA GOUDIE 
: No no. I say to the Minister that we do not necessarily always speak from prepared speeches. 
We know the intention of this bill and we are incredibly concerned. As members have already heard providers are getting out of residential care because they are not being supported by the current Government. One has to ask oneself why they are not being supported by the current Government. I am reminded of a press release written by Simon Carlaw. He used the words socialisation and de-privatisation to describe this Government's policy and direction. De-privatisation is exactly what the Government is going to get because residential care providers are getting out of the business. 
The Salvation Army is getting out. It is getting out of Ohinemuri an aged-care house in my electorate. It is no longer worth The Salvation Army's time and effort to go down this path when it is not supported by the current Government. That is a huge concern. What will happen? Where will those old folk go? 
The current ideology is that all those old folk will be looked after in their own homes. Well that is really fine and dandy. Who will help to look after them in their own homes? Caregivers are in crisis at the moment because they are not getting funding or support either. So what will happen to those old folk? Is this really going to cut much mustard with them? 
Yes the Government was going to scrap income and asset testing but with this bill it has allowed old folk to keep at least more of their assets. But how will that help them? What actual benefit will that be to them if they require caregivers or residential care? Who will provide those services? Will it be the Government? Hello no; I do not think so—because it is not cutting the mustard right now. It is not doing that. 
Here I have a press release from Mayor Lawrence Yule of Hastings. He is ready to go to Wellington to fight funding cuts for the elderly and disabled in Hawke’s Bay. Why is that? Because agencies there are grappling with what he states is a multimillion dollar cut in funding for the elderly and disabled. 
So I ask the Government what this bill is really doing for the elderly? The Government is just not doing anything. 
Dr Lynda Scott 
: Where is all the money going? 
SANDRA GOUDIE 
: That is a good question. That is something we find difficult to understand with this Government. The money certainly is not going into looking after the elderly. It is not going to residential care providers and it is not going to caregivers to help them to look after the elderly in their own homes. 
All we have to do is to look at the multitude of press releases about caregivers: “Low pay for caregivers blamed on woes”; the numbers are not there. “Radius polishes its services via home-help stake”; they are not there! “Qualified caregivers ‘will be sought after’ ”—why? Because they are not there. “Seminars boost for caregivers”; look there is a whole heap of hooey and no “do-ey”! There is review after review and pilot programme after pilot programme—and what is happening? Caregivers are still in crisis and old people are not getting residential care because people are getting out of the business. 
This bill does not help that in any way shape or form. Although those elderly people can retain a greater proportion of their assets it does not help them. If they cannot go into residential care provided by a private provider then will the Government provide residential care? I would think not and if it did I would be very sorry to see that day arrive. 
This bill also provides for an increase in the consumer price index. That will not go anywhere near matching compliance costs and increased costs. [ 
Interruption 
] Yes I am talking about the preliminary provisions in the bill; I understand that we are talking about Part 1 “Preliminary”. The bill does allow for an increased consumer price index but nothing is allowed for the cost of the Holidays Act—because the Government did not allow for it either. It did not assess the impact on the health and disability sector and of course there are all those other increased costs from employment occupational safety and health requirements electricity cultural sensitivity and goodness knows what else in order to meet obligations requirements and standards. 
Dr LYNDA SCOTT (National—Kaikoura) 
: 
 As we have been hearing tonight Part 1 states that we will see the implementation of this legislation in 2005. Back in 1998 National increased the income and asset level that people could keep when they were in residential care. At this time 6 or 7 years later I certainly support an increase once again in the level of assets that people can keep when going into care. It is a principle that National established and the level has increased over time. The problem is that this bill will not be implemented until 1 July 2005. The reason the date is so far away is that when Labour became the Government it realised how much this promise would cost. This legislation is costly because we have an ageing population and aged-care services are expensive. 
Members should think about what the elderly can get for $636 per week. We are talking about specialised care. No longer do rest homes have to have a set number of parking spaces for residents. People do not drive to the door of a rest home any more—they come in an ambulance. The level of disability and the level of care is much much higher than it was in 1994 when the figure of $636 was set. The people who come in an ambulance to a rest home are generally very physically frail or have some form of dementia. They may not be bad enough to go into a dementia care unit—if they are basically in a semi-terminal phase they will go into a hospital—but rest home services provide very high levels of care now. What do residents get for $636? They want to have a rest home with good facilities in terms of the size of the rooms and the showers. The home has to have equipment. It has to pay for doctors be warm provide good food and often cater for special diets. The home has to provide for medications. All those things come out of that figure—one does not get a lot for $636 per week. 
Time after time the Social Services Committee heard submissions from the rest home sector which was concerned about that $636. The Salvation Army has said clearly today that after 70 years it can no longer afford to provide rest home care. This Government has kept between $100 million and $200 million in order to honour part of a promise. While in Opposition Labour members irresponsibly said that Labour would take off income and asset testing. It came into Government found out that that was an extremely expensive promise and has backed off it ever since. It has come up with what we see in Part 1 today which allows people to keep $150000 worth of assets. Those assets really are for the relatives not for the person in care; it is the relatives who get those assets when someone dies. 
That change means people will have to pay for a lot more services. Part 1 clearly clarifies: “… the funder’s obligations to pay for contracted care services”. District health boards are now contracted funders. District health boards from all over the country are screaming about the risk that has been handed to them by our aged-care services. Every district health board that came to the select committee said that it was really worried about the devolvement of aged-care funding to district health boards and the financial risk they were taking on. We see that they have offered rest homes a 1 percent increase in funding when the rest home and hospital sector says it needs at least a 20 percent increase. This Government has devolved its responsibility to district health boards and has kept the money that should have gone into improving services in order to fulfil the half-promise that it irresponsibly made to older New Zealanders. 
National has never promised that it would totally remove income and asset testing. We have never said that. We certainly support increasing the asset level but we have not broken a promise. We realise the financial implications of this legislation for New Zealand given our ageing population. 
KATHERINE RICH (National) 
: 
 The residential care sector has changed dramatically in the last 30 years. As my colleague Lynda Scott said not only have expectations of the level of care changed—people arrive at the facilities with more extreme conditions less able to look after themselves and more in need of quite specialised care—but the expectations of family members and residents have changed as well. I visited the Montecillo Veterans’ Home and Hospital in Dunedin just before it was decided to move the facility altogether. The person who ran that facility said that when family members come to look at the facilities now they have a much higher expectation of what they want for their parents than they did even 10 or 20 years ago. Families are no longer satisfied with little shoebox rooms and single beds. They want en suites colour televisions and a lot of the other things that residents were used to when they lived independently—and rightly so. They want a standard of care that they feel comfortable about putting their parents and other family members into. 
That has meant that a lot of residential care facilities have found it very difficult to upgrade. I believe that is why some of the Christian-based social services agencies are getting out of providing residential care—because they simply cannot look at refurbishing their facilities given the $636 cap on the funding that the Government offers them to provide care. That is why we are seeing a greater amount of cross-subsidisation than we had in the past. In my home town of Dunedin we have a number of very good facilities such as Taieri Court Rest Home Birchleigh Village and Ross Home and Hospital—all facilities that have looked after many friends of our family and also members of my own family. But I must admit I do worry when I get an increasing number of letters from the staff of those facilities from family members of residents and from clients—from residents—who are simply worried and who express concerns about how those services are going to continue in light of the present environment. 
We have heard a lot about broken promises. That is something we do not hear Labour mention in this debate. Labour members say they deliver; they say they keep their promises. I think this would be a good idea for a new Tui beer commercial if Age Concern wanted to pay the money: “Let’s get rid of asset testing. Yeah right.” That is basically what Labour said in the 1990s it would do and it has not done it. Labour is going to make a song and dance about partially keeping a promise but how does one partially keep a promise? The removal of asset testing is one thing that Labour has not delivered on although Helen Clark went from Kaitaia down to Invercargill telling elderly folk that that was exactly what she was going to do. She has not done it and I do not think that has gone unnoticed by Age Concern and Grey Power who are deeply disappointed that the Government has not kept its promise. The Government got all the kudos and the bouquets at the time when it announced that policy and yet when push comes to shove it has not been able to deliver. That promise was not on the pre-election credit card funnily enough because even when the Labour members were in Opposition they knew I think that that promise would be very difficult to deliver on simply because of the cost. When we on the Social Services Committee looked at the cost projections of this particular piece of legislation we got into quite large sums of money that are difficult to imagine particularly when looking at the baby-boom bump coming through in the demographic profile. 
I think one of the ironies of this legislation is that it will put the squeeze on the not-for-profit sector. At a time when the Government is making it far more difficult for private providers to continue to provide early childhood education it is doing exactly the opposite of that when it comes to providing residential aged care. We will see an increasing number of groups leave the residential care market. 
Hon CHRIS CARTER (Minister of Conservation) 
: 
 I move  
That the question be now put 
. 
A party vote was called for on the motion  
That the question be now put 
. 
Ayes 74 
New Zealand Labour 51; New Zealand First 13; United Future 8; Progressive 2. 
Noes 45 
New Zealand National 27; ACT New Zealand 9; Green Party 9. 
Motion agreed to. 
The question was put that the amendments set out on Supplementary Order Paper 281 in the name of the Hon Ruth Dyson to Part 1 be agreed to. 
A party vote was called for on the question  
That the amendments be agreed to 
. 
Ayes 111 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 9 
ACT New Zealand 9. 
Amendments agreed to. 
A party vote was called for on the question  
That Part 1 as amended be agreed to 
. 
Ayes 111 
New Zealand Labour 51; New Zealand National 27; New Zealand First 13; Green Party 9; United Future 8; Progressive 2; Maori Party 1. 
Noes 9 
ACT New Zealand 9. 
Part 1 as amended agreed to. 
The CHAIRPERSON (Hon Clem Simich) 
: Before I go to the next part I note that there seemed to be some surprise that I took the closure on Part 1. I gave it a lot of consideration actually. I did think that that particular part was constraining members because they were wandering fairly widely in a way that I thought would be more appropriate to Part 2. 
Simon Power 
: I raise a point of order Mr Chairperson. While you are making that point of clarification in respect of the closure motion I wonder if you could advise the House whether in fact that was the first closure that was sought. 
The CHAIRPERSON (Hon Clem Simich) 
: Yes it was. That is why I commented on it. To save members continually repeating themselves I thought we would move to Part 2. I thought that was appropriate. 
Part 2 Amendments to principal Act 
Dr LYNDA SCOTT (National—Kaikoura) 
: 
 The debate on Part 2 is much wider ranging because there is a lot more detail in this particular part. One question that really concerns me when we are talking about being able to pay a maximum contribution of $636 is whether that applies just to rest homes and hospitals. In the past it was for hospitals. In 1994 when it was brought in it was for hospital level care and the Government gave a top-up on top of that. Rest home care at that time was about $450 per week so it was much less. Now it is $636. Most rest homes are asking that; that is the minimum one pays for rest home care. Then there is a hospital care top-up on top of that. So even if people are paying $636 for contracted services the Government will face quite a price to pay the top-up for people even in rest home level care and hospital care. Home cannot deliver quality care at that price. They will exit.  
 I become concerned about the merging of rest home and hospital level care. In the past hospital level care was for those people who needed the care of a registered nurse. They needed to have a registered nurse on duty 24 hours a day to provide a much higher level of care. Rest homes are required to have a nurse for so many hours per day but the nurse does not have to be there at all times. Hospital level care means care for people who are very disabled. We often have people who are dying of cancer who have tracheotomies who have advanced Alzheimer’s and need a lot of care or people who have catheters. They need registered nursing care. 
To get a registered nurse these days with the very low unemployment rate that we have is very difficult and these homes can no longer afford to employ nursing staff. Therefore most of them are looking to the Philippines and other overseas countries to be able to bring in nurses to staff these facilities. They have found it so hard with the payments they receive to be able to have qualified nursing staff. It has been very very difficult. [ 
Interruption 
] I do not know the actual level of ability of nurses who are brought in from overseas but presumably they would have to meet New Zealand standards to be able to work here. However it does mean that it is very difficult for rest homes to be able to do that. In fact the increased asset money will go to the relatives of the people going into care. That is where the money will go. From July 2005 people can keep $150000 worth of assets when they go into care but it is not the elderly person who will benefit. It just means that the person’s relatives will benefit. 
Although National would support the increasing of the asset level it has come at the cost of all other aged-care services. We have seen all over New Zealand people having difficulty with access to equipment difficulty with assessment to get into rest homes and hospital care and difficulty with being able to pay for home-care workers so that people can remain within their own home. The whole sector is under pressure because of this bill that we are debating tonight. 
I would like the Minister to take a call and explain to us why the Government set the asset level where it did at the expense of all other aged-care services in this country. Because that is what is happening. This Government came into office having irresponsibly gone from one end of this country to the other saying it would remove income and asset testing but it was not able to deliver on that promise. I want to hear from the Minister why she thinks the asset level the Government has set is the right level when all other levels of aged-care services in this country are under pressure. They are under so much pressure that the not-for-profit organisations in the sector have had to exit. Presbyterian Support Services has exited and The Salvation Army today announced it is exiting and that is the reason. Those providers who came to the Social Services Committee were very concerned about the $636 which was going to be the maximum contribution someone could pay. Their concerns were that they could not deliver the services at that level. What is happening is that public patients who may be in a public hospital who then go into a hospital in the community are being subsidised by private patients. 
BRENT CATCHPOLE (NZ First) 
: 
 I just want to express my disappointment at the announcement today that The Salvation Army is pulling out of providing services. The Salvation Army has done a tremendous job in providing services for aged care up until now. 
I wonder whether the Minister could take a call and clarify some concerns that I discussed with somebody yesterday. The person called me from a retirement village in Auckland and put its case to me. There are 37 residents in that retirement village and of those 37 two are in long-term residential care. The organisation claims the $636 figure for each of those two persons but the cost to the organisation is actually in the vicinity of $750. It has applied for a top-up and it receives $1 a day per person which is a long way short of the $750. 
I see that the Supplementary Order Paper does go some way in amending that and taking that $636 limit to be adjusted and decided in regulation and in regional divisions. So perhaps Auckland could be at a higher level but there is no guarantee. The Supplementary Order Paper does not guarantee that that figure of $636 will be increased in areas of high demand and high cost. It states that if any area is under that figure then the maximum amount is set at $636 and it remains at that until that particular region supersedes the $636. But nowhere does it explain whether that $636 is going to be increased other than by the consumer price index adjustments. 
The rest home was concerned that it was providing a service to those two long-term residents in its retirement village. One of them is not able to pay any additional fees but the other one does have the means to pay and is willing to pay but the village is under the apprehension that $636 or whatever the regional limit is going to be is all they can collect from that resident. Its decision has to be whether it pulls out of long-term residential care—in other words pushes its clients out of the retirement village—or reduces the services it is providing to those two individuals. The rest home’s concern is that if it has to push them out where do they go? Do they end up back in their homes with their families looking after them? 
Those two individuals do not want to be a burden on their families any further. That is why they went into a retirement village and they do not want to go back into their homes or outside of the retirement village and be looked after by their families until such time as they have to be hospitalised. That is another phase. When they go on to be hospitalised then they do require additional services and additional care. But it is during that in-between stage—when they are in long-term residential care—that those people want a reasonable level of care and service and some of them are willing to pay for that but the retirement village is uncertain as to whether it can ask them for additional funds. If it can ask them then that is fine. But what is the mechanism that allows the village to charge those clients for additional funds? I ask the Minister to take a call and explain that so I can get back to that retirement village and explain it. 
Dr MURIEL NEWMAN (Deputy Leader—ACT) 
: 
 I would like to take a call on Part 2 of this Social Security (Long-term Residential Care) Amendment Bill and I would like to refer to the promise that the Labour Party made in its 1999 election brochure that it was all about people not money. That was the election brochure where Helen Clark’s photo was airbrushed; members will remember the lovely airbrushed photograph. Anyway the brochure stated: “Labour will abolish its asset testing. We say asset testing older people is wrong. It will go.” Now if members refer to schedule 1 of the bill which contains the new schedule 27—which clause 5 of the bill proposes to substitute for the current twenty-seventh schedule of the Social Security Act—they will see a table that shows asset testing being abolished but does it happen next year? No. Does it happen the year after? No. Does it happen the year after that? No. It happens in the year 2026. That is when the asset-testing regime will go. So can the people of New Zealand rely on Labour Party promises? The answer is no absolutely not. 
While we are talking about promises—because this bill is meant to be the delivery of an election promise—I remind members what Helen Clark our current Prime Minister said in this brochure: “Under my leadership a Labour-led Government will deliver public health services we can all be proud of. We are going to put the heart back into the health system.” What do we think the more than 3000 New Zealanders who died on the waiting list think about that? Will they believe— 
Hon Richard Prebble 
: Not much I don’t think. 
Dr MURIEL NEWMAN 
: No I do not think they can think of much because they are not actually here! The Labour Party Government’s health system failed those New Zealanders. What about the hundreds of thousands of people waiting on the waiting list? 
Hon Richard Prebble 
: 173000. 
Dr MURIEL NEWMAN 
: There are 173000 people waiting on the waiting list for health services. What will they say? They will say that Labour’s delivery of health services to New Zealanders is an absolute disgrace. 
We have another failed Labour Party promise in this bill before us now. Labour said it would be used to abolish asset testing. I say that this type of bill from Labour is wrong. In this case it is intergenerational theft. It is asking future generations of New Zealanders—our children of today—to pay huge amounts of money for an asset-testing regime that this country does not need. What it needs is an ability for older New Zealanders to retire with money in the bank. To enable New Zealanders to afford to save a decent amount for their retirement this Government should be introducing tax cuts. If we had tax cuts then this sort of bill would not be needed. Tax cuts is an idea whose time has certainly come. We have the Progressive Party the Government’s own coalition partner agreeing that taxes are too high in New Zealand. We need tax cuts to allow New Zealanders to retire with money in the bank; then this sort of poorly designed legislation would not be needed. That is why the ACT party is opposing this bill. 
A point that submitters made one after another was that this type of residential care for the elderly this type of business is increasingly difficult to provide not because of a whole bunch of other stuff but because of the Labour Government increasing the regulations on their sector and in particular increasing the cost of wages and salaries and industrial relations concerns. The Government has regulated the labour market so much that organisations like The Salvation Army find that they no longer have the money to be able to keep their care facilities ticking over. The costs have now gone beyond the pale and they have had to close their doors. 
KATHERINE RICH (National) 
: 
 One of the things that Part 2 deals with is changes in the provisions relating to needs assessment. At present there is a very complex process for working out who gets what. In talking with the people at the Montecillo Veterans’ Home and Hospital in Dunedin I was concerned at the long drawn-out process that needs assessment currently involves. Sometimes it can take months and months of caring for a person before the hospital or residential care facility gets its first payment. There is so much toing and froing between the district health board and the residential care facility that it is no wonder there is a lot of concern about how this part will be interpreted. That concern led not only to quite a few minor amendments to the bill but also to some major ones seeking clarity on that particular point. 
There is one aspect in this part that I do agree with. It is that those New Zealanders who are aged between 50 and 64 will be captured within the funding so that if they are in need of residential care they will not be in the position of having to sell everything in order to pay for their care. The reason for that is that some New Zealanders from the age of 50 and onwards suffer from the early onset of for example Alzheimer’s disease and from other sorts of disabilities and illness that required them to go into residential care facilities to be looked after much earlier than most other Kiwis would like to go into such facilities. 
Muriel Newman in her speech read out two very pertinent points from the brochure. One of them was that Labour would abolish asset testing. It did not state Labour would kind of abolish asset testing nearly remove asset testing or partially change asset testing; it stated Labour would abolish asset testing altogether. The second part of what Labour stated in its brochure was if my memory serves me correctly that the asset testing of old people is wrong. Well has Labour not changed its tune I say to the ladies and gentlemen sitting over there on the Government benches as arrogantly as ever about what it will actually deliver? Young Darren Hughes can be as smug as he likes because basically this legislation will be fully implemented by the time he retires. I can see why he is smiling: he is thinking that this legislation will be in place ready for when he retires. I think he will be very disappointed. One of the things we have seen is a number of groups say that they will get out of the provision of residential aged care altogether. I wonder who will be providing those services when members of Parliament who are here today require that level of care. 
As we have heard from previous speakers we have seen quite a change in the residential aged-care market over a period of time. I think that some of the amendments to Part 2 will introduce greater clarity to the understanding of the sector but I am concerned about the complexity of the legislation. That was something that was brought up by submitter after submitter to the Social Services Committee. People were unsure how an eligible person would be defined. They were unsure of what constituted a contracted service of what was a specific service incorporated within the $636 funding cap and of what was part of the contract and what was not. One of the things that indicates that ideology plays a part in this legislation is that the Government is not only stating what the publicly funded providers can charge but also telling private providers exactly what they will charge. In any other business that is called price fixing. The Government is getting involved in meddling in areas that it should not be involved in. 
MARTIN GALLAGHER (Labour—Hamilton West) 
: 
 I move  
That the question be now put 
. 
Dr PAUL HUTCHISON (National—Port Waikato) 
: 
 This bill has been characterised by the absolute silence of the Minister in charge of it the Minister for Senior Citizens. For a decade she went around campaigning that Labour would remove asset testing. She has not denied that and neither has the Government removed asset testing. Despite many of my colleagues asking for her to take a call she has failed to do so. It almost epitomises that little saying: “What a tangled web we weave when first we practise to break election promises.” I was not going to say the “d” word again but really that is what should be said. 
Part 2 is unnecessarily very complicated. It has various sections relating to needs assessments clothing allowances residential care schemes and means assessments. Yet if Labour had kept its promise and removed asset testing as in 1999 it said it would all this complicated legislation and this complicated Part 2 would not be here before us. After all as Muriel Newman read out Labour’s 1999 election brochure said very clearly: “We say asset testing older people is wrong. It will go.” So here we have Part 2 with this highly complex tortuous piece of bureaucracy which requires everything from needs assessments to means assessments clothing allowances and residential care schemes. All those things would not be necessary if Labour was prepared to keep its promises or even if Labour was prepared to make legislation simple and straightforward. But oh no it has gone ahead over the last 6 years and introduced one of the most complicated health systems known to personkind with 21 district health boards. That is just being repeated 6 years later by this very complicated Social Security (Long-term Residential Care) Amendment Bill. 
Section 153(1) in clause 4 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 …”. It is very salutary to see what Major Alistair Herring of The Salvation Army told the Social Services Committee. He said: “The Salvation Army believes that the bill should at the very least commence with the adjusted figure of $757.14.” Not to do so is to continue the situation of underfunding that the residential care sector has experienced over the past 9 years. Right throughout Port Waikato almost on a weekly basis I hear the same cry that the Labour Party Government fails to recognise that residential home care and institutions are going under because it is not prepared to be realistic about funding. It has totally ignored the Price WaterhouseCoopers report of 1999-2000—absolutely ignored it. Instead it has watched as home after home has closed down. 
It is a particular tragedy when we hear that The Salvation Army itself is exiting from residential care. That is one organisation that most New Zealanders trust. It is an indictment on the Labour Party Government that it has presided over the time when The Salvation Army which has been in the business of looking after the elderly for 70 years has due to the Government’s absolutely unrealistic formulations exited the industry. 
PAUL ADAMS (United Future) 
: 
 I rise on behalf of United Future to speak on Part 2. It is interesting to see the voting by all the parties here in the Chamber. This bill has been severely criticised and major concerns have been brought to the Government’s attention not by parties that oppose the bill but rather by parties that support it. It should be a major wake-up call to the Minister in the chair the Hon Ruth Dyson and to the Government that those who support the basic principle of this bill which is the removal of asset testing are speaking out so fervently and bringing such major concerns to the attention of the Government. 
Progress reported. 
Report adopted.