Aged care revolt over threat to introduce criminal penalties

Aged-care operators have warned that Anthony Albanese’s plan to impose criminal penalties on management will trigger an exodus of key personnel and expose them to costly compensation claims.

Aged Care Minister Anika Wells. Picture: NewsWire / Martin Ollman

Aged-care operators have warned that Anthony Albanese’s plan to impose criminal penalties on ­directors, executives and nursing managers will trigger an exodus of key personnel – many of whom are volunteers – and expose them to costly compensation claims that will threaten the survival of some providers.

The Prime Minister’s election promise to introduce criminal penalties, including jail time of up to five years for “dodgy aged care providers”, has been mired in ­delays as the government seeks to negotiate bipartisan support for its Aged Care Act.

The Australian can reveal Labor will move on the act and respond to recommendations from its Aged Care Taskforce following the winter break, with expectations that legislation will be tabled in August.

The government, which needs to pass the act ahead of its commencement on July 1 next year, has been accused of failing to provide clear guidance to aged-care operators and boards about its more extreme proposals.

Amid industry uncertainty about the government’s legislative response to the Aged Care royal commission, aged care sector leaders have warned of perverse outcomes around criminal liabilities they fear could have a chilling effect on the industry.

Aged Care Minister Anika Wells, who was criticised by advocates after the May 14 budget over the pace of reform and slow action on recommendations from the government’s Aged Care Taskforce, has been accused of not adequately consulting with industry on penalties.

Regional aged-care groups, metropolitan operators and the Australian Institute of Company Directors on Tuesday warned that “layering liability on top of existing obligations is going to deter good people from serving”.

The government, which released its draft exposure legislation in December, published a consultation feedback report in May flagging that “subject to parliamentary processes the new Act will commence on 1 July 2025”. More than 10,000 people engaged in the consultation, with 320 submissions received.

Ms Wells said advocates of older people were “strongly in support of criminal penalties”.

“The new Aged Care Act will include new statutory duties to hold responsible people to account when their actions put the health and safety of older people at serious risk, or cause actual harm or death,” she said.

“In response to the damning findings of the Royal Commission into Aged Care Quality and Safety, Labor promised to introduce tough penalties to stop dodgy aged-care providers neglecting and mistreating their residents.”

RSL LifeCare chair Ewen Crouch said Labor’s proposal on criminal penalties was not what was recommended by the royal commission.

“Penalties for non-compliance need to be consistent with the fault-based regimes in other industries, such as the healthcare sector and the workplace health and safety system,” he said.

Tasmanian-based Community Based Support chief executive Allyson Warrington, who leads an organisation with 300 staff and $20m in revenue, said the government’s proposed measures “went too far” particularly in a sector already struggling with workforce.

“The last two times that we’ve gone out for board directors with clinical governance experience, which is also actually now a requirement as part of the aged-care standards, we haven’t been able to get any director to join our board,” she said. “Board directors are volunteers and yet they still have the responsibilities as other paid board directors have.

“It’s already challenging to attract people to the sector as directors without already adding some of these additional liabilities.”

Ms Warrington said her executive team agreed there was need for reform and that some operators did better than others, but the move towards criminal liability would ultimately make it hard for providers “to be sustainable and survive in that situation”.

Mercy Health chair Virginia Bourke, whose organisation employs about 10,000 people across not-for-profit aged-care operations in four states, “welcomed the reforms”, which she said would have a strong human rights focus, but that the “poorly designed” draft proposals were prompting directors to “seriously consider their roles” going forwards.

“There’s been a very strong reaction to the statutory duty and the sector is extremely concerned about the imposition of what are very significant (liabilities),” she said. “The actual penalty provisions, I think, are poorly designed, and they’re punitive in their effect … there is no doubt that it has a deterrent effect on directors and certainly I have heard from a number of really seasoned, mature directors who are highly committed to the aged care sector that they would seriously consider their roles as directors, given the personal liabilities that these penalty provisions would involve for them.”

Many of the organisation heads who spoke to The Australian urged the government to drop the criminal liability element of its reforms, limiting its punitive measures to be civil only.

But AICD managing director and CEO Mark Rigotti said his ­organisation did not want criminal or civil liabilities enforced on directors. “We need high-quality directors willing to lead their organisations,” he said. “Layering liability on top of existing obligations is only going to deter good people from serving, just at the time when the sector needs them more than ever.”

Goodwin Aged Care Services chair Liesel Wett, who runs the largest provider in Canberra and delivers services on the NSW South Coast, said attracting “skilled and competent directors” would be more challenging if criminal liability codes were applied: “The issue of criminal liability for nurses and nurse unit managers at each site, including residential facility managers, senior executives, people like me (and) company directors that are experienced and skilled – it’s going to become more and more difficult with those criminal liabilities.”

Ms Wett said the reforms risked “undoing the good work we’ve done”. “We saw such egregious things come out in the royal commission I can understand that government wants to make sure those things don’t happen again, but I think there are other ways they can do that in an environment that’s already so highly regulated, with other pieces of regulation and legislation that mean that we need to meet certain rules and laws,” she said.