Dyson Ruth: Social Security (Long-term Residential Care) Amendment Bill — First Reading 
Dyson Ruth: Social Security (Long-term Residential Care) Amendment Bill — First Reading 
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Hon RUTH DYSON (Minister for Senior Citizens) 
: 
 I move  
That the Social Security (Long-term Residential Care) Amendment Bill be now read a first time. 
 At the appropriate time I will propose that the bill be referred to the Health Committee. The bill fulfils the Government’s commitment to introduce legislation to remove asset testing. The current legislation regarding the income and asset testing of older people in residential care is quite frankly unfair. Older people are required to use up their assets to contribute to their care costs whereas other users of health and disability services do not have to do so. In deciding the best way to change the current policy the Government had the difficult task of balancing considerations of fairness for older people against the significant cost of changing the current asset-testing provisions and the demands of other priorities for social spending. This bill correctly balances those considerations. 
The asset-testing policy is very complex. The current legislation is the result of many legislative amendments and additional regulations over many years. We now have the opportunity to set out the changes in plain language in a straightforward bill that contains all the related provisions. That will help everyone’s understanding of the requirements. As the proposed changes to asset testing are significant the Government wants to encourage people to make submissions on the legislation and to allow full examination and debate at the select committee stage. 
The key proposed changes in the legislation are as follows. From 1 July 2005 people aged 65 and over who require residential care indefinitely will retain significantly more of their assets than under the current regime. Currently single people in care can retain $15000. Couples where both partners are in care can retain $30000. That figure will increase to $150000 from 1 July next year. Couples where one partner is in care can currently retain $45000 plus their home and car. That figure will rise to $55000 in 2005 with the retention of the home and car as exempted. The amount that both single people and couples can retain will increase by $10000 every year after that. 
We consider that it is legitimate to expect people to contribute towards some of the cost of their care because those costs would need to be met if the person was living at home. As such the income test will be retained. At the moment the partner of a person in care is required to contribute up to $636 per week towards the cost of the partner’s care. That is considered unfair and it creates significant disincentives to working. Therefore from 1 July next year the partners of older people in residential care will not have to contribute from their personal earnings from paid employment towards the cost of their partners’ care services. 
People will be able to retain a substantially increased amount of assets. Income from those assets such as rent will be included in the income test. The first $780 of income from assets per person per year will be exempt from income testing. That is broadly equivalent to the interest generated by $15000 in the bank. The bill also states that people who are needs-assessed as requiring care have to contribute a maximum of $636 a week towards the cost of their care only if they have assets above the exemption thresholds. From 1 July 2005 that amount will be adjusted in line with inflation. 
The bill sets out the residential care subsidy scheme in a clear and comprehensive manner including the obligations to pay for care and the processes of needs-assessment and financial means - assessment. Those changes will make further progress towards fair and affordable policies for older people who need long-term care. At the same time there is an appropriate mechanism for older people to contribute to the costs of care that they would expect to pay for if living in their own homes. 
The changes are forecast to cost $110 million in the first year of implementation. That figure will rise significantly over time reflecting the $10000 annual increase in the exemption threshold and the growing number of older people in our population. The Government has made separate provision for the additional funding needed to pay for these changes. That funding will not reduce the amount allocated to current health and disability services. 
At the same time that the progressive removal of asset testing is implemented non-residential services are to be improved to support people to remain living safely in their own homes and their communities. That recognises that in contrast to earlier decades people are choosing to stay in the community longer and are now entering residential care at an older age and for a shorter period when they are frailer have complex needs and require a high level of care. That is consistent with the objectives of the positive ageing strategy 
and the Health of Older People Strategy. They promote the development of flexible and coordinated community-based services to enable older people to stay at home if that is their choice. Improving services to support older people in the community is the key to developing a successful integrated continuum of care whereby older people can access the services they need at the right time in the right place and from the right providers. 
The new $150000 threshold substantially increases the assets that people can keep. Single and widowed people will be $135000 better off than at present and married couples where both partners are in care will be $120000 better off. For many people their houses will be immediately exempt. People who have sold their houses will be able to keep a significantly increased level of saving. All assets will be eligible for exemption including people’s home holiday home car shares bonds and savings. That supports our objective of encouraging retirement savings. 
It is estimated that 31000 or 7 percent of older New Zealanders are currently in long-term residential care. The new policy will benefit people already in care who are not currently eligible for a residential care subsidy and all new people who are assessed as needing long-term residential care from 1 July 2005. The new policy means that 5600 additional people will be eligible for the subsidy from that date taking the proportion of those in care who receive the subsidy to 70 percent. 
To conclude the progressive removal of asset testing for older people in residential care recognises that older people have the same rights as all other New Zealand citizens and acknowledges their important contribution to our communities. I commend the progress of this bill to the House.