Alexandra Private Geriatric Hospital Pty Ltd (trading as Alexandra Private Nursing Home) v Blewett, Neal (who is sued as the Commonwealth Minister for Health) & Anor [1984] FCA 223

Federal Court of Australia|1984-08-07|Before: Woodward J, Lawrie J

CATCHWORDS ADMINISTRATIVE LAW - Judicial Review - decision fixing nursing home fees - considerations to be taken into account - staffing

levels and profit - reliance on departmental policy - viability of

nursing home - purpose of legislation - effect of amendment to

STATUTES - Interpretation - use of extrinsic material to determine purpose of amending legislation - Minister's Second Reading

Administrative Decisions (Judicial Review) Act 1977 s.5

ALEXANDRA PRIVATE GERIATRIC HOSPITAL PTY. LTD. (trading as "Alexandra Private Nursing Home")

NEAL BLEWETT (who is sued as the Commonwealth minister for Health)

and LAWRIE J. WILLETT (who is sued as the Permanent Head of the Commonwealth Department of Health)

NEAL BLEWETT (who is sued as the Commonwealth Minister for Health) and LAWRIE J. WILLETT (who is sued as the Permanent Head of the Commonwealth Department of Health) Respondents

NEAL BLEWETT (who is sued as the Commonwealth Minister for Health) and LAWRIE J. WILLETT (who is sued

as the Permanent Head of the Commonwealth Department of Health) Respondents

This is an application by a nursing home to review an administrative decision made within the Commonwealth Department of Health, ('the Department'), fixing the fees which the nursing home

It is alleged by the nursing home that the Department's method of calculating the fee is open to challenge under the Administrative Decisions (Judicial Review) Act 1977 ('the ADJR

Originally, a number of aspects of several distinct decisions were challenged by the applicant but, as events have developed and issues have been refined, two central issues have

The first is whether the Department can be successfully

challenged under the ADJR Act for allowing the applicant only a

modest amount by way of profit in calculating the fees which the

The second is whether the Department can be similarly

challenged over the way in which it arrives at the staffing levels

upon which it calculates the salary component of permitted fees.

Before dealing with these and other subsidiary issues which have been raised, it is convenient to set out the relevant history of the Department's involvement with nursing homes and the

legislative framework within which it operates and has operated.

Before 1972 the Department's involvement with nursing homes was slight. A moderate subsidy was paid by the Commonwealth to approved nursing homes, and the Department supervised these

In the 1972 Budget, the subsidy to approved homes was

substantially increased and, from 1 January 1973, the Commonwealth assumed powers to approve nursing homes and to control the numbers

of approved homes, the admission of patients to those homes and

the fees which they could charge. It was theoretically open to nursing homes to remain outside the scheme, charging patients what they wished and receiving no Commonwealth subsidies. Given a scheme which provided substantial subsidies (which at present cover about three-quarters of the fees), remaining outside such a scheme can have had little attraction to the great majority of

Section 40AA of the National Health Act 1953 ('the Act') was inserted in 1972 and it provided, among other things, for the approval of nursing homes and the fixing of the fees they would be permitted to charge from 1973 onwards. The observance of such

maximum fees was a condition of the approval of nursing homes.

The Permanent Head of the relevant department (then the Department of Social Security, now the Department of Health) was given the power to f1x a scale of fees for each nursing home and to vary it from time to time (ss.40AA and 40AD of the Act). de could delegate this power (s.6), and sincé the power is normally exercised by a delegate, and was so exercised in the present case, I shall generally refer in this judgment to the delegate rather

It is not contested that the first fixation of nursing home fees, to apply from 1 January 1973, was based upon the fees charged by the particular nursing home at 30 June 1972. The intention was to provide the same gross return as the nursing home

It was then intended that the fees would be adjusted from time to time as costs rose, salaries being adjusted in accordance with movements in award wages and other costs in accordance with rises and anticipated rises in the Consumer Price Index. Adjustments were to be made annually and the inevitable differences between predicted and actual rises would be further adjusted by a system of loadings - temporary variations in fees to apply for a period of some months - - which would recoup the nursing

home for underpayments, or the patients for overpayments.

It will be seen from this description that the original

fees fixed would have contained some element of profit - whatever was being achieved by the nursing home in 1972 - along with the necessary allowance for costs. After 1973, it was Departmental

policy that only the changes in costs would be provided for in fixing fee increases. The element of profit was not adverted to and so, provided costs were fully and accurately adjusted, it would remain the same in money terms, but decline in real value as

For Victorian nursing homes, the wages component in the costs was based upon the minimum staffing requirements laid down by the Health Commission of Victoria ('HCV') under relevant State legislation. However the evidence establishes that these figures

could be, and quite often were, varied upwards by the Department

in particular cases. Because the Department's officers had little or no expertise in the running of nursing homes, they relied upon officers of the HCV to advise them when they thought an increase

This, in broad outline for present purposes, was the

scheme for nursing homes which came into force in 1973.

Previous decisions concerning s.40AA of the National Health Act 1953

The scheme was the subject of challenge and examination in several actions in this Court and the High Court in the years that followed. Most of these cases revolved around sub-section (7) of s.40AA of the Act, which gave the only direct guidance to the Permanent Head or his delegate as to how fees were to be fixed. It provided

scale of fees in relation to a nursing home ..... have regard to costs necessarily incurred in providing nursing home care in the nursing home."

The first case in which these words and their context

were considered was R v Hunt, ex p. Sean Investments Pty. Ltd.

(1979) 53 ALJR 552, 25 ALR 497. There Mason J., speaking for the majority of the High court, held that the costs to be considered included the costs of acquiring premises - which in that case was by payment of rent. The payment of rent was "necessarily incurred" if it was lawfully demanded by a landlord at arm's length from the nursing home proprietor, even if it was higher than the normal rent for similar premises. However the Permanent Head was only required to "have regard to" costs necessarily incurred. As Mason J. said, at ALJR p.554, ALR p.504,

explicitly mentioned as a matter to be taken into account. Secondly, the scheme of the provisions is

that, once the premises of the proprietor are approved as a nursing home, he is bound by the conditions of approval not to exceed the scale of fees fixed by the Permanent Head in relation to the nursing home. In many cases it is to be expected that the scale of fees will be fixed by ascertaining the costs necessarily incurred and adding to them a profit factor. In the very nature of things, the costs necessarily incurred by the proprietor in providing nursing home care in the nursing home are a fundamental matter for consideration.

However, the sub-section does not direct the Permanent Head to fix the scale of fees exclusively by reference to costs necessarily incurred and profit. The sub-section is so generally expressed

' that it is not possible to say that he is confined to these two considerations. The Permanent Head is entitled to have regard to other considerations which show or tend to show that a scale of fees arrived at by reference to costs necessarily incurred, with or without a profit factor, is excessive or unreasonable. It may be that the rent paid by the proprietor of a nursing home, though a cost necessarily incurred, exceeds the prevailing rental which is paid for comparable premises and that the determination of a scale of fees by reference to that rent would result in a scale of fees which is unreasonably high. The Permanent Head would be entitled to take this factor into account in making his determination."

In October 1981, Northrop J. decided the case of Nagrad

Nominees Pty. Ltd. v Howells, 38 ALR 145. His Honour there held,

among other things: (a) The policy of the Act required that private nursing

homes should generally be viable. He said, at p.162,

"In my opinion, the relevant essential policy of the Act is to ensure that the proprietors of private nursing homes do not make excessive profits in providing nursing home care, particularly since the Commonwealth to some extent does subsidize

patients admitted to those homes. The Act presupposes the existence and the continuation of private nursing homes. The number of approved

does not provide all nursing home care, but because

it subsidizes patients in private nursing homes it is concerned to ensure that the proprietors do not

(b) Departmental guidelines, prepared following the High

Court decision in R v Hunt ex p. Sean Investments (above), requiring that increased costs resulting from changes in proprietorship should not be considered when fixing fees, were contrary to the Act.

should normally do) the delegate was required to consider it in

relation to the outlay of capital by the current proprietor, "and

not give consideration to the profit factor applied to another

This decision of Northrop J. was the subject of an appeal to the Full Court. The judgment of that court is to be

found, under the name of Howells v Nagrad Nominees Pty. Ltd., at

In the course of his judgment, Smithers J. described the statutory purpose of the relevant legislation in the following

"The duty of the Permanent Head under s.40AA of the Act in relation to the determination of scale of fees is to be ascertained from the statutory framework set out above. It is manifest that Parliament's intention is that there will be as many nursing homes as are considered reasonably desirable for providing the nursing home needs of the qualified patients needing such care. People have to be encouraged to provide the services. It is an important objective and depends upon people ef the right kind being willing to undertake the work and risk involved in providing that care. It

is a private enterprise approach to the problem. Obviously, from every point of view the success of the scheme is dependent upon there being available

to the proprietors of homes providing nursing care financial returns which will constitute reasonable

use of capital and the exertion involved in running the home as manager and worker. It is manifest

relation to nursing homes Parliament would intend the Act to be implemented so that each home would

proprietor of an authorized nursing home having access to the funds required to meet the costs of

giving the basic care in a nursing home it is only necessary to visualize for a moment the lamentable plight of old, sick and largely helpless inmates should they not receive sufficient food and physical attention. And of course it is not only important to the proprietor of the home but basic

to the whole scheme visualized by Parliament." (pp.290-291).

His Honour went on to say that the costs necessarily

incurred in providing nursing care are not the only consideration

to which regard must be had. His Honour found, following R v Hunt

ex p. Sean Investments (above) that profit, which he specifically said was not a cost, is another matter to which regard should be

The other members of the Court, Fox and Franki JJ., ina

"The ascertainment of "costs necessarily incurred" is an appropriate starting point in a determination. We do not think we can usefully suggest an order in which other relevant matters might be considered. Whether an allowance should be made for profit, and what fees are necessary to make the hospital business economically viable are factors for consideration, but a question can properly arise as to whether, all these elements having been calculated, the result is a scale of fees which is excessive or unreasonable. In the end, necessary and proper considerations being taken into account, the Permanent Head has a wide discretion."

Following this decision the Act was amended, and it will be necessary to consider the inter-relation between the Nagrad case and the Act so amended. Before doing so it will be convenient to conclude this review of authorities in which the

scheme of the Act relating to nursing homes has been considered.

In Sean Investments Pty. Ltd. v Mackellar (1981) 38 ALR

363, Deane J. dealt with the power of the Minister to determine

fees for nursing homes under the Act. There is provision in the

Act (s.40AE) for an appeal to the Minister from a decision of the delegate. The constraints imposed by the Act were at that time

the same in either case, although a later (1983) amendment gives

the Minister more latitude. At p.368, Deane J. adopted a passage

from the judgment of Murphy J., who had dissented in R v Hunt ex

p. Sean Investments Pty. Ltd. (above), saying that he could detect

no conflict between it and the majority judgment delivered by

"The Minister may adopt a general policy in regard to scales of fees, and deal with a review of fees for a nursing home in the light of that policy, but his determination or review must be in order to arrive at an appropriate scale of fees for the particular nursing home. If the costs necessarily incurred are excessive for any reason whether inside or outside the control of the proprietor, 1t may be that the scale of fees the Minister determines is such that if those costs continue, the home can be conducted only at little profit or at a loss. If that result follows it is because the Minister is not engaged in determining a scale of fees according to a cost plus system; he is carrying out a statutory duty to determine what, in his opinion, is an appropriate scale of fees in relation to the approved nursing home."

Applying this approach to the matter before him, Deane J. held that there had been no failure by the Minister to have regard to relevant matters, nor any other defect in his

decision which could be challenged under the ADJR Act.

His Honour's decision was upheld by the Full Court of

this Court in Sean Investments Pty. Ltd. v MacKellar (1982) 42 ALR

Referring to the purpose of the legislature, as determined from the language used in the legislation, Bowen C.J. and Fox J.

almost always easier to decide, negatively, and in relation to concrete cases what is inconsistent

positively. While wise administration would probably suggest that each nursing home be kept viable, we are unable to construct a purpose of the Act to the effect that adequate profit must be allowed in every case. This is evident from what we have already said. Also, we are unable to

conclude that the ability of patients, that is to say, uninsured patients, to pay cannot be a

consideration that in the case of pensioner patients their income is largely, and in some cases

of its funds. A major purpose of the whole scheme must be to provide nursing home care for indigent

patients, and one would expect that fees, and subsidies, will be determined with this in mind."

In his separate judgment, Franki J. said, at pp.683-4,

"In my opinion five fundamental points arise from the judgments of the majority in Re Hunt; Ex parte Sean Investments Pty Ltd (1979) 25 ALR 497; 53 ALJR 552. They are that:-

(1) The maximum fees must be determined in relation to the provision of nursing care in the particular nursing home under consideration.

(2) All costs necessarily incurred by the proprietor in providing nursing home care in the nursing home must be taken into account and weight given to them as a fundamental element in the determination.

(4) Account may be taken of other considerations which tend to show that a scale of fees arrived at by reference to costs necessarily incurred, with or without a profit factor, 1s excessive or unreasonable.

(5) Within the scope of (1) to (4) the Minister has a wide discretion.

A difficulty arises in considering from whose point of view the reasonableness of the fees may be examined. Must the fees be looked at in relation only to the costs of the particular nursing home? Murphy J, in the minority judgment, said at 556 that "The purpose of providing a government subsidy is to lower costs to the public".

I think there is much to be said for the view that, although some account may be taken of factors relating to the position of occupants, the income of pensioners, who were not specifically referred to in the sections of the National Health Act 1953 dealing with nursing homes, should not be the determining factor in fixing maximum fees which, after due regard is paid to costs necessarily incurred in providing nursing care in the nursing home under consideration, are not otherwise thought to be unreasonable."

The final case to be considered at this point is Croft v

Minister for Health (1983) 45 ALR 449. There Smithers J. held

that the Minister had failed to take into account the rent which the proprietor of the nursing home business was required to pay pursuant to an agreement and had therefore not considered an important element of the "costs necessarily incurred" which s.40AA(7) of the Act obliged him to consider, though not

"It is manifest that the success of the scheme depends upon there being available to the proprietors of nursing homes financial returns which will constitute reasonable income taking into account all genuine items of cost. The provisions in s.40AA(7) serve the objective that the essential interest of the old and largely helpless inmates of nursing homes that care is honestly provided and is reasonably adequate. Hence the command in s.40AA(7) requires attention in every case to be the reasonableness and propriety of necessary costs said to be involved in providing nursing care in the particular home concerned. That the level of fees be adequate to encourage honesty and service at an acceptable level is obvious. In these circumstances it is important that costs especially those which are said to be necessarily incurred, should be considered on their merits as possibly reasonably incurred and proper to be taken into account in relation to the proper and reasonable financial circumstances of the home. To exclude such consideration of such costs on the ground that they have been incurred in association with the purchase of the home offends this requirement. Attempts by nursing home proprietors, including purchasers, to exploit the system by increasing costs by contrived legal arrangements or otherwise may be dealt with appropriately by applying the tests of reasonableness, fairness and propriety."

It 1S against this background of legislation, judicially

construed, that I must consider the amendments to s.40AA of the

In doing so I have been invited by the respondents to make use of the Minister's Second Reading Speech to assist me in determining the effect of the amendments on the general scheme and purpose of the Act. It was argued that, whether or not the amendments to the Acts Interpretation Act 1901, concerning the use

of extrinsic material in the interpretation of an Act, are in

force by the time this judgment is delivered (as in fact they

are), there is recent authority entitling me to do so, see TCN Channel Nine v AMP Society (1982) 42 ALR 496 at 507-8, and cases

I prefer to rely on that authority rather than on the

amending legislation, because the new s.15AB of the Acts

Interpretation Act 1901 relates to "the interpretation of a provision of an Act". What I am concerned with here is not exactly a question of interpreting a provision. It is rather the

determination of the policy underlying the part of an Act which

includes particular provisions granting powers, in order to determine what restrictions are to be implied on the exercise of

Although the decisions of this Court could not be categorized as "the mischief to which a statute is directed" (which the TCN case was concerned with) I believe the analogy 1s

close, and when it appears likely or possible that Parliament has

enacted or amended legislation in order to override or reduce the impact of certain judicial decisions, it is convenient and proper to consider Hansard reports (along with any other relevant material) as an aid in determining the true intent of the

The Minister (who is of course the first-named respondent to these proceedings) had this to say in introducing

"The Government intends to develop a Community Care Program to provide support for the elderly who wish to remain in their own homes. Under this program there will be a comprehensive range of domiciliary and community services provided across Australia.

On the residential side our task will be to moderate growth in the nursing home sector, while continuing to pursue more equitable geographic distribution of nursing home beds, and to increase the availability of hostel accommodation. It is our view that neither per capita nursing home benefits funding nor deficit funding are ideal methods for 'securing the proper national development of nursing homes in the context of a total care policy for the aged.

Existing nursing home benefits and deficit funding arrangements will be replaced by program grants paid to nursing homes. These program grants

will be based on standard costs for the services delivered less the income received by the homes

through standard patient contributions. The program grant system will take some time to develop. In the meantime the existing funding

arrangements for nursing homes, will be maintained.

The principal purpose of clause 3 of the Bill is to ensure protection for patients against excessive fee increases and at the same time to ensure appropriate control of expenditure on benefits under the current nursing home benefits arrangements pending the introduction of the Government's Residential Care Program. Expenditure on the Nursing Homes Benefits Program is determined by the number of approved beds and the level of benefit. The benefit level in each State 1s related to the levels of nursing home fees in that State which in turn are determined by my Department having regard to costs necessarily incurred by nursing home proprietors.

The existing legislation on the control of fees simply provides that in determining fees the permanent head shall 'have regard to costs necessarily incurred in providing nursing home care in the nursing home'. Two recent Federal Court Judgments have shown that this legislation is not able to support the policies and practices followed over many years in the administration of fees

control - policies and practices which have been followed by both Labor and Liberal-national Party governments. These judgments have serious

implications for the overall cost of the Nursing Homes Benefits Program.

The practical effect of the judgments is that the continued application of the policies and practices currently used in the determination of fees for nursing homes would result in many determinations being set aside, if challenged, as being made contrary to law. Costs which previously were not allowed for the purpose of setting fees now have to be given consideration possibly resulting in significant fee increases contrary to Government policy. This would lead to higher benefits and therefore increased Government expenditure.

Within the protected environment of the nursing home industry, there is very little incentive to constrain costs given the cost-based nature of fees determination and the high occupancy rates resulting from Government controls on new beds. Limited costs validations undertaken by my Department have revealed cases where costs have been artificially increased as a means of increasing profits. A recent consultancy survey undertaken with the co-operation of the industry revealed considerable variations in costs and profits between like homes.

Legal opinion has been given to the effect that, in the light of the recent Federal Court judgments, the legislation greatly circumscribes the use of policy guidelines. Consequently, very great burdens will be placed upon delegates of the permanent head whose task it is to determine fees. The judgments interpret the legislation as requiring the- permanent head and his delegates to regard all costs necessarily incurred as fundamental matters for consideration, with each fee being determined on the basis of the merits of each individual case. The considerable difficulties involved in maintaining consistent administration Australia-wide will be much exacerbated. Successive governments have acted on the basis that Parliament, in passing the fees control legislation, did not intend to limit significantly central control and accountability, particularly given that the legislation makes detailed provision for appeals against, and reviews of, delegates' determinations.

There are indications that the effect of the Federal Court judgments could be an eventual increase in government expenditure on benefits of the possible order of $50m per annum. In a program which is expected to cost more than $600m for benefits alone in 1983-84, it is imperative that consistent and effective controls be exercised on costs which may have an inflationary effect on approved fees.

The effect of clause 3 will be to allow the effective continuation of established policies and practices pending the introduction of the Government's residential care program. The Bill provides that the Minister for Health may formulate principles in accordance with which the permanent head or his delegate is required to determine a scale of fees. It is intended that the principles will reflect established policy. The Bill provides for scrutiny of the principles by Parliament. In formulating these principles, regard is to be had to the factors set down in the proposed sub-section 40AA(7B). These factors will permit delegates to take account of the lack of normal market constraints on the nursing home industry.

Clause 4 of the Bill is designed to ensure that the Minister 1s not, of necessity, constrained by principles authorised by clause 3 which are intended to limit the discretion of a large number of delegates of the permanent head throughout the country. Thus, on appeal, the Minister may, in considering the merits of a case, decide that rigid application of the principle is inappropriate. This change puts beyond legal doubt a practice which has been followed by successive Ministers of governments of all complexions.

In summary, the proposed changes will ensure that the Government is able to continue the application of policies and practices in nursing homes fees control, established and supported by

successive governments, pending the introduction of the present Government's residential care program."

The amendments to which the Minister was referring took the form, for present purposes, of an addition to sub-section 6(c)(i) of s.40AA - which gives the Permanent Head (and his delegate) the power to determine nursing home fees - and the

substitution of a new sub-section 7 and additional sub-sections

"(6) The approval of premises as an approved nursing home is, except in the case of a Government nursing home, subject to the following conditions:

(i) the fees charged in respect of the nursing home care of a qualified nursing home patient in the nursing home will not exceed such fees as are from time to time applicable in

respect of the nursing home care of the patient in accordance with such

scale of fees as is determined, subject to any principles that have been formulated under sub-section (7) and that are in force, by the Permanent Head in relation to the nursing home; "

The words added by recent amendment are underlined.

The relevant new sub-sections replacing sub-section (7)

"(7) The Minister may, by writing under his hand, formulate principles in accordance with which scales of fees are to be determined for the purposes of sub-paragraph (i) of paragraph (c) of sub-section (6) in relation to nursing homes generally or in relation to nursing homes included in specified classes of nursing homes.

(7A) Without limiting the generality of sub~section (7), principles formulated under that sub-section

(a) specify matters of a kind that are, in the case of each nursing home or of each nursing

home included in a class of nursing homes, to be taken into account in determining a scale

of fees for the purposes of sub-paragraph (1) of paragraph (c) of sub-section (6);

(bo) specify matters of a kind that are, in the case of each nursing home or of each nursing home included in a class of nursing homes, to be disregarded in determining a scale of fees for the purposes of sub-paragraph (i) of paragraph (c) of sub-section 6; and

accordance with principles of a kind referred to in paragraph (a) of this sub-section, to be

taken into account in determining a scale of fees, the amounts that are to be so taken into account in relation to matters of that kind.

(7B) In formulating principles under sub-section (7), the Minister shall have regard to -

(a) the need to ensure that nursing homes are efficiently and economically operated;

(b) the need to ensure that the cost to nursing home patients of nursing home care is not excessive or unreasonable; and

The other new sub-sections give the envisaged principles

the status of regulations or statutory rules for certain purposes.

At the time the hearing in this matter began, no principles had been formulated by the Minister in accordance with sub-section (7), although a set of draft principles had been in existence for some time and were regarded by delegates as representing general departmental policy. Towards the end of the hearing I was informed that these draft principles had now been formulated in accordance with the Act. In accordance with the provisions of sub-section (7C) they must be tabled in the Parliament and are subject to the possibility of disallowance.

Thus, as counsel for the respondents conceded in reply, "...

The principles which are most relevant for present purposes are as follows: "3.(4) The Permanent Head shall, in exercising any

discretion permitted in these principles in determining a scale of fees, have regard to:

the desirability of ensuring the financial viability of nursing homes generally;

the need to ensure that nursing homes are efficiently and economically operated;

home patients of nursing home care is not excessive or unreasonable;

the need to ensure that public moneys are being economically and properly expended; and

the need for consistent and fair administration of Part V of the Act."

The Permanent Head shall, subject to principles 5 to 13 inclusive and to sub-principles (2) to (5) inclusive herein, in determining a scale of fees, take into account the operating expenditure of a proprietor referred to in Part II necessarily incurred in providing nursing home care in the nursing home to the extent and in the circumstances specified in Part It and shall disregard all other expenditure.

The Permanent Head shall, in determining a scale of fees, take into account a return to the proprietor on the investment in the nursing home and the business or undertaking

carried on at the nursing home which the Permanent. Head determines in accordance with principle 10.

The Permanent Head shall, in determining a scale of fees, determine a separate scale of

The Permanent Head may, in determining a scale of fees, take into account the scales of fees determined in respect of and the level of costs incurred in other comparable nursing homes.

Notwithstanding anything contained in these principles, the Permanent Head _ shall determine a scale of fees which is not excessive or unreasonable."

sub-principles (3) to (7) inclusive herein, in determining a scale of fees, take into account a return on the land and buildings

used as the nursing home being the fair market rental when the nursing home was approved as an approved nursing home for the purposes of the Act as determined by the Taxation Valuation Branch of the Australian Taxation Office.

Subject to sub-principles (3) to (7) inclusive herein, the Permanent Head shall, in determining a scale of fees, take into account:

(a) a return on the cost of fittings, furniture, plant, equipment, and other chattels used in providing nursing home care in the nursing home whether owned by the proprietor or not;

(b) a return on the investment in working capital which shall be valued at the equivalent of two weeks salaries and wages expense when the nursing home was approved as an approved nursing home for the purposes of the Act; and

(c) a return on the establishment costs which shall be valued at the operating expenditure which was reasonably incurred prior to the commencement of the provision of nursing home care in the nursing home and the reasonable legal and accounting costs relating to the establishment of the nursing home,

being the rate of return on Australian Savings Bonds when the nursing home was approved as an approved nursing home for the purposes of the Act.

Where a nursing home was approved as an approved nursing home for the purposes of the Act before these principles come into effect, the Permanent Head shall take into account as the return on investment for the purposes of sub-principles 5(2) the return on investment reflected in the scale of fees as at the date these principles come into effect.

The Permanent Head shall, in determining a scale of fees, disregard any increase in the value of any of the items constituting the investment in a nursing home or the business or undertaking carried on at the nursing home as provided in sub-principles (1) and (2) herein and save as set out in

sub-principles (5) and (6) herein shall not increase at any time the return taken into account in determining a scale of fees.

(5) The Permanent Head shall, in determining a scale of fees, take into account further investment expenditure by the proprietor in a nursing home or the business or undertaking carried on at the nursing home provided such expenditure relates to the provision of increased bed capacity in the nursing home.

(6) Notwithstanding anything contained in sub-principles (1) to (5) inclusive herein, where the Minister has made a decision under sub-section 40AE(3) of the Act varying the decision of the Permanent Head with respect to the return on investment to be taken into account in the scale of fees, the Permanent Head shall take into account as the return on investment for the purposes of sub-principle 5(2), the return on investment taken into account by the Minister.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (617 paragraphs)

Cases Cited (11)

Cited By (1)