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Reduction in red tape with the release of the new Allocation Principles

By Julie McStay25 May 2016

The Allocation Principles 2014 have now been amended in response to the Aged Care Amendment (Red Tape Reduction in Places Management) Act 2015 (Red Tape Act) which came into force earlier this year.

Delay in the release of the amended Principles created some uncertainty about the criteria the new Principles would include and the effect the amended Principles would have on provisional allocation periods and arrangements for transferring residential aged care places, including provisionally allocated places (AIPs).  Fortunately, the new rules carry few surprises and bring good news for providers.  

Provisional allocation period and extensions

As we know, the provisional allocation period is now four years. A first and second extension of up to 12 months per extension (up to 6 years total) may be granted on the basis that the extension is ‘justified in the circumstances’. 

Extensions beyond six years will only be granted in ‘exceptional circumstances’. The new Principles set out the matters the Department of Health (Department) must have regard to when considering whether there are exceptional circumstances justifying the granting of a further extension, namely:

  • whether there are any unusual or unforeseen matters outside the control of the provider, including but not limited to a natural disaster or emergency situation, preventing the approved provider from making the places operational;
  • whether the provider’s ability to be in a position to provide care within the period of the extension; and
  • whether granting the extension is necessary because no other provider can satisfy the care needs in the region.

The policy position the Department has taken throughout the red tape reduction changes is that extensions beyond six years will be managed tightly by the Department. The new rules for granting further extensions are yet to be tested. However, the new Principles indicate that the Department may be willing to consider circumstances beyond just a natural disaster or emergency. 

New arrangements for transferring places, including provisionally allocated places 

The Red Tape Act introduced a streamlined method to transfer places, by filing a transfer notice. At this stage the Department is yet to release the streamlined transfer notice, leading to some uncertainty.

The amended Principles illuminate the likely contents of the new transfer notice.  The main criteria the parties must demonstrate have been retained, however, the new notice will require significantly less detail to be provided for the transfer of operational places and AIPs.   For example, when seeking to transfer AIPs from one approved provider to another:

  • The transferee is still required to provide information about:
    • How it will meet its responsibilities under the Act;
    • How it will provide accommodation and care for care recipients with special needs
    • The description and detailed timetable of the project
    • How the transferee will comply with any existing conditions of allocation and any conditions that are to be varied under the application
  • The transferor is no longer required to provide information about why it has not been able to make the AIPs operational.
  • The transferee is no longer required to provide last audited company statements. The latest financial statements will now suffice. 

Smaller Government reforms

The Aged Care Planning Committee has been abolished as part of the Smaller Government reforms that were announced in the 2014-15 Mid-Year Economic and Fiscal Outlook.  The relevant sections of the Allocation Principles have been repealed giving effect to these changes.

What the new Principles mean for providers

The key takeaway information from the amended Principles is:

  • The exceptional circumstances criteria set out a clear direction for providers to be guided by when applying for extensions of places greater than six years.  
  • The streamlined transfer notice form is yet to be released, and we will update you when this occurs.

If you have any questions or concerns about the latest amendments to the Allocation Principles, please contact Julie McStay Director - Aged Care and Retirement Living, Hynes Legal.

This content is not intended to be a substitute for legal advice.



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