Dyson Ruth: Social Security (Long-term Residential Care) Amendment Bill — Second Reading 
Dyson Ruth: Social Security (Long-term Residential Care) Amendment Bill — Second Reading 
[Volume:621;Page:16760] 
Hon RUTH DYSON (Minister for Senior Citizens) 
: 
 I move  
That the Social Security (Long-term Residential Care) Amendment Bill be now read a second time 
. The current legislation regarding income and asset testing of older people in residential care is unfair. Older people are required to use up their assets to contribute to the cost of their care whereas younger people do not. In deciding the best way to change the 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. The New Zealand population is expected to age significantly in the coming decades. This will increase demand for funding for age-care services. So to address this in a fiscally responsible manner a staged approach to reduce the impact of asset testing has been chosen. 
 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. The regime is complex and setting it out clearly in one piece of legislation is a significant step forward. The Social Services Committee has reported the bill back to the House after receiving and considering 33 submissions. It made a number of changes clarifying some of the definitions and other aspects of some of the provisions. From 1 July next year 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 and this figure will increase to $150000 from 1 July next year. 
However the committee made a substantive change to the bill regarding the asset threshold for couples with one partner in care. It changed the provisions so that couples with one partner in care can opt instead to be tested against the $150000 threshold which will also rise by $10000 a year. I support that change. It will bring greater equity to how different types of assets are treated. It is also consistent with the asset threshold for single people and couples with both partners in care. 
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. At the moment the partner of a person in care is required to contribute towards the cost of his or her partner’s care up to a maximum of $636 a week. This creates disincentives for paid work. Therefore from 1 July next year the partner of an older person in residential care will not have to contribute from his or her personal earnings from paid employment for the cost of his or her partner’s 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 will be exempt from the income-testing regime each year. That is broadly equivalent to the interest generated from $15000 in the bank. 
The select committee amended the provisions regarding the respective liabilities of people requiring care and district health boards to pay for care for clarity. It is now clearer that a resident can choose to pay more for services that are additional to those covered by the contract between the district health board and the provider. The committee also amended the regulation-making power. It now provides for some of the amounts in the bill such as for prepaid funerals and gifting to be amended providing greater flexibility. 
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 $10000 annual increase to the asset threshold and the growing number of older people in our population. The Government has made separate provision for the additional funding to pay for the changes in the legislation. 
I have released a Supplementary Order Paper to the bill that addresses further issues including the maximum contribution the gifting provision and the income from assets exemption. The maximum contribution at present sets the amount at $636 a week adjusted annually in line with the consumer price index from next year. Many of the submitters commented on that to the select committee. The Supplementary Order Paper proposes that people who pay privately for their care should not be required to pay more than the Government for the same set of services. Therefore we intend to amend the maximum contribution to set it at the same level as the price of the contract between district health boards and residential care providers in each region. 
To ensure that providers are not worse off than at present where the rest home contract price is below $636 per week the maximum will remain at that level. A minor amendment is proposed to the gifting provisions. At present a person applying for the residential care subsidy can gift up to $5000 per year for up to 5 years prior to entering care. That time period and amount are currently set out in the bill but are able to be amended by regulation. For greater flexibility the Government proposes to remove that period and amount from the bill so that they can now be prescribed by regulation. As I have stated the first $780 of income from assets is to be exempt. The Government proposes to adjust this amount annually to reflect changes in the consumer price index so that the amount does not lose relative value over time. 
In concluding I sincerely thank the Social Services Committee for its consideration and amendments. I also thank the officials for their considerable work on this legislation. I commend its progress to the House.