Labour criticises Govt's rest home subsidies change

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Labour has accused the Government of trying to sneak through a change which will mean fewer elderly people qualify for rest home subsidies which are asset-tested.

The Bill to make the change was introduced as part of the Budget. It will mean the asset threshold below which the elderly qualify for Government subsidies towards their care will increase by the rate of inflation every year, rather than the annual increase of $10,000 which previously applied.

It is likely to mean the asset threshold raises at a lower rate in the future, so fewer people will qualify.

Under the change, the threshold from July 2012 will increase to $213,297 rather than $220,000 for a single person or a married couple both of whom are in care. It will increase to $116,806 - rather than $125,000 - for married couples where one of them is in care.

The Health Ministry has estimated it will mean 260 people next year are no longer eligible for the subsidy, rising to 1040 people in 2015/16.

Social Development Minister Paula Bennett said today the Social Security (Long-term Residential Care - Budget Measures) Amendment Bill was a "priority" for the Government.

"It is an important piece of legislation that will ensure that the residential care subsidy is sustainable into the future, particularly as demand for long-term residential care for older people increases."

Labour has criticised the way the change has been made. MP Kris Faafoi said it would affect a significant number of elderly people but there was no mention of the change in Finance Minister Bill English's Budget speech and it was now being pushed through under urgency without the chance for a Select Committee hearing or public submissions.

"It's so much of a priority, there was no press release and no mention of this in the Budget speech at all ... We think that is extremely bad process."

Green MP Kevin Hague said it was discriminatory for older people. He said he supported Labour's policy in Government, which was to gradually wind down the asset test.

Prime Minister John Key justified the move to switch to an inflation adjustment as the "right long term call" and said it was consistent with how the Government dealt with such entitlements.

"What it means is that someone who is right at the threshold may have to pay for residential care for eight weeks longer than they otherwise would.

"The Government fully pays for someone to be in residential rest home care. They then put in their own superannuation and this is the level of assets they are allowed to keep before they are fully subsidised."

But National has rejected Labour's claims of an "ambush", saying it announced the changes openly as part of the Budget.

It was included in a press statement from Tony Ryall on Budget Day about the changes in the health sector.