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Provider governance – Recommendations of the Royal Commission into Aged Care Quality and Safety and changes to aged care laws

By Angela Wood, Tamie Duncan-Bible

• 02 December 2021 • 9 min read
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We outline proposed good governance reforms to the Aged Care Act 1997 and the Aged Care Quality and Safety Act 2018 following the Royal Commission into Aged Care Quality and Safety

In brief

The Royal Commission into Aged Care Quality and Safety (Royal Commission) made several recommendations in its Final Report, Care, Dignity and Respect (Final Report), which focussed on the importance of good governance arrangements and their connection with a providers ability to deliver high-quality care for consumers.[1]

The Aged Care and other Legislation Amendment (Royal Commission Response No.2) Bill 2021 (Bill) was introduced on 1 September 2021. The Bill has been structured into eight separate schedules and proposes changes to legislation which aligns with the Recommendations of the Royal Commission.

In this article we focus on Schedule 5 of the Bill, which is intended to commence on 1 March 2022, and includes proposed amendments to the Aged Care Act 1997 (Cth) and the Aged Care Quality and Safety Act 2018 (Cth) (ACQSC Act) with a view to:

  • improving the governance of approved providers
  • introducing new governance responsibilities
  • introducing prescribed membership for governing bodies
  • establishing new advisory bodies
  • including measures which aim to improve leadership and culture
  • introducing new reporting responsibilities
  • introducing new offences and civil penalty provisions for non-compliance.

Providers should ensure they are aware of and can comply with their obligations come 1 March 2022, as failure by aged care providers or key personnel to comply with governance responsibilities may attract sanctions and or civil penalties for both individuals and corporations.


In its Final Report, the Royal Commission made the following Recommendations which focussed on provider governance:

Recommendation 88Legislative amendments to improve provider governance
Recommendation 89Leadership responsibilities and accountabilities[2]
Recommendation 90New Governance Standard
Recommendation 91Program of assistance to improve governance arrangements

For a detailed discussion on the above Recommendations, take a look at our podcast: The Future of Aged Care - Provider Governance Podcast.

Schedule 5 of the Bill introduces changes to existing and new governance responsibilities for approved providers in relation to:

  • key personnel – suitability matters
  • governing bodies
  • advisory bodies
  • annual statements.

These measures are aimed at improving transparency and accountability and ensuring the focus of approved providers, from the top down, is on the best interests of care recipients.[3]

Suitability matters and key personnel


The Bill introduces new responsibilities for approved providers for the suitability of their key personnel, including:

  • the responsibility to consider the suitability matters for key personnel at least once every 12 months
  • to ensure that it is reasonably satisfied that its key personnel are suitable to be involved in providing aged care at least once every 12 months
  • to keep a record of the suitability matters that have been considered in accordance with the Accountability Principles. This is the evidence that you have been complying with your responsibilities as an approved provider.

The current ‘disqualified individual’ definition and provisions will be replaced with a suitability test for key personnel.

Suitability Matters

The Bill introduces a new section 8C in the ACQSC Act, which outlines the meaning of ‘suitability matter’ for a person and includes consideration of a person’s experience and whether:

  • NDIS banning orders have been in force
  • the person has at any time been convicted of an indictable offence(s)
  • civil penalty orders have been made against the person at any time
  • the person is, or has at any time been, an insolvent under administration
  • the person is or has been at any time disqualified from managing corporations under the Corporations Act 2001 (Cth)
  • the person is or has at any time been subject of adverse findings or enforcement action by a Department of the Commonwealth or of a State or Territory, or specified Commissions or other bodies or authorities established for a public purpose[4]
  • the person is currently party to any proceedings that may or has been subject of any findings or judgment for fraud, misrepresentation or dishonesty in any administrative, civil or criminal proceedings.

Notification obligations

The timeframe to notify the ACQSC of changes to the suitability of key personnel has been reduced from 28 days to 14 days, and:

  • strict liability will apply to an offence where a person who is key personnel does not notify the approved provider of a change of circumstances relating to suitability matters within 14 days
  • this offence carries a maximum penalty of 30 penalty units
  • further, failure to comply can also result in a sanction being issued to the approved provider under Part 7B of the ACQSC Act.

Governing Bodies

Governing body of an approved provider

Schedule 1 of the Bill defines a governing body as:

  • the board of directors of the provider if the provider is a body corporate incorporated, or taken to be incorporated, under the Corporations Act 2001 (Cth), or
  • otherwise, the group of persons responsible for the executive decisions of the provider.


The Bill will also introduce specific responsibilities for an approved provider where:

  • the approved provider is a wholly-owned subsidiary of another body corporate and the holding company is not an approved provider
  • the approved provider has a constitution,

to ensure that the constitution does not authorise a director of the provider to act in good faith in the best interests of the holding company that does not have any responsibilities under the aged care laws.


New responsibilities for approved providers will be introduced for governing bodies, which require approved providers to:

  • ensure that a majority of the members of its governing body are independent non-executive members
  • ensure that at least one member of its governing body has experience in the provision of clinical care.

These responsibilities do not apply if a provider’s governing body has fewer than five members and the provider provides aged care through one or more aged care services to fewer than 40 care recipients.

Similarly, an approved provider may apply for a determination that these obligations do not apply.

If an exemption is granted, the ACQSC may make a decision on its own initiative at any time to vary or revoke the exemption.

Advisory Bodies

The Bill introduces new responsibilities requiring providers to:

  • establish, and continue in existence, a Quality Care Advisory Body
  • make an offer in writing at least once every 12 months to care recipients and their representatives to establish a Consumer Advisory Body.


Under the proposed amendments, the governing body of an approved provider must:

  • ensure that the staff members of the provider have appropriate qualifications, skills or experience to provide the care or other services
  • ensure that staff are given opportunities to develop their capability to provide that care or those other services
  • consider any feedback and reports from the Quality Care Advisory Body, when making decisions on the quality of the aged care provided through the aged care service
  • advise the Quality Care Advisory Body in writing, how the governing body considered such a report or any such feedback
  • establish and maintain reporting and feedback avenues for the advisory bodies, care recipients and their representatives regarding the quality of the aged care provided through an aged care service
  • consider the reports and feedback of the advisory bodies when making decisions in relation to the quality of care provided at the aged care service.

Annual statements

The Bill introduces new reporting requirements for approved providers to:

  • provide an annual statement for a reporting period that complies with the requirements which will be specified in the Accountability Principles, including but not limited to key personnel, attestations by the governing body, information on staffing, financial information and complaints
  • provide a copy of the statement to the Secretary within four months after the end of the reporting period for the provider
  • prepare and provide these statements at no cost to care recipients, and make them publicly available from the MyAgedCare website.

A ‘reporting period’ is the period of 12 months starting on 1 July of a year. This means the first annual statement of an approved provider must be prepared for the reporting period beginning on or after 1 July 2022.

The annual statement obligations have been introduced with a view to help care recipients and their families understand key details of and compare providers.

Key takeaways

Schedule 5 of the Bill highlights for providers that an increased focus will be placed on provider governance and the provision of safe and quality care and that an organisations’ culture and governance is expected to be designed around this purpose.

[1] Including but not limited to: the Australian Securities and Investments Commission; the Australian Charities and Not-for-profits Commission; the Australian Competition and Consumer Commission; the Australian Prudential Regulation Authority; the Australian Crime Commission; AUSTRAC; or an equivalent State or Territory body; another body established for a public purpose by or under a law of the Commonwealth; or a local government authority.

[2] Recommendations 88,90 and 91 were proposed by both Commissioners and Recommendation 89 was proposed by Commissioner Briggs alone.

[3] Explanatory Memorandum, Aged Care and Other Legislation Amendment (Royal Commission Response No. 2) Bill 2021, 84.

[4] Volume 1: Final Report Summary and recommendations at pages 265-268.

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