Geoff Harper asks whether we are warehousing our elderly for profit.

Many New Zealanders, especially those with loved ones in rest homes, think their elderly relatives are safely and carefully looked after by well meaning and benign organisations.

This may well have been the situation in the past, because it was mainly carried out by the state and church organisations that had a culture of care and concern.

It may come as something of a shock to discover that 75 per cent of the country's 870 rest homes are run by mostly overseas companies and the Overseas Investment Office last year approved sales of aged care facilities valued at more than $1.5 billion.

There are 34,000 residents in rest homes, many provided by chains such as Radius, Ryman, MetLife, Bupa Care Services, even the Kuwait Finance House. All profits naturally are repatriated to their overseas owners.

This profit-driven "industry" attracts around $1 billion in direct subsidies from the Government and input from 18 Ministry of Health and associated agencies.

Subsidies and fees are around $47,000 a year per person - nearly $1000 a week. In addition those residents who do not qualify for subsidies fund their own care.

Unfortunately the caregivers, who actually deliver the services to the residents, receive on average $14.40 an hour, and the minimum is $12.75 an hour. Residents speak of poorly trained staff and high turnover. Who can blame the caregivers as it's hardly an attractive career option.

Residents, vulnerable because of advancing age, complain that services are being reduced and conditions deteriorating. Staffing ratios, which in the past averaged one caregiver to five residents, are now as low as one caregiver to 13 residents. Oversight of these rest homes, to ensure proper care and conditions, has been delegated to certified "auditors" (chosen and paid for by the rest homes,) and to the Health and Disability Commissioner. Rest homes must abide by a set of rules known as the "General Standards".

Obviously there are rest homes that conscientiously provide a caring environment and look after their residents with high levels of service. However, we have found it is the loopholes in these "standards" that has attracted such large investment by overseas multinationals and led to exploitation of the elderly.

They constantly plead under-funding, but our research has uncovered excessive transfer pricing, accounting tax losses and inadequate gearing and surprisingly the Government is aware of this situation.

So how has this situation developed? The industry was deregulated a decade ago and it was left to the rest homes to decide services, including what numbers of staff they would employ. The "General Standards" are now called "aspirational"and "outcomes-focused". (We all know what these mean).

Only four out of the 22 on the committee in 2008, who thought up these standards, represented the elderly - the rest were providers or government agencies. Should you wish to get a copy of these "standards" to see if poor grandma is receiving proper care, you must pay $206 to the Standards Association, a Crown-owned entity.

She is now entitled to only a maximum of two to three showers a week. How dare she expect a shower a day, which is normal within our society. These are people who have built this country, fought wars and brought us up. In our view the standards are so vague you could drive a bus through them.

The Health and Disability Commissioner is also constrained by the "woolliness" of the standards and can play only an intermediary role unless there is gross abuse. The "auditors", who it is thought would be protecting the interests of the residents, even candidly admit the "audit" is not an inspection. Basically they monitor managerial processes. There is little valid protection available to the consumer. We could not find any of the published audits giving a black mark against rest home management in New Zealand.

The Auditor-General, in a response to us last month, commented "the checking systems [audits] have not provided adequate assurance that rest homes have met the criteria in the standards expected of them" - strong stuff for the Government watchdog.

So what are the solutions? Perhaps the Government will come to the rescue.

Health Minister Tony Ryall responded: "I do acknowledge that further improvement is possible."

His solution - throw another $18 million at the industry and audit the auditors. His senior health advisers within the ministry have indicated to us that they are perfectly satisfied with the aspirational woolliness of the General Standards for this group of citizens.

Isn't he on record as saying resources will be concentrated at the delivery end, not the backroom administrators? We say why not pay the caregivers and nurses better rates to encourage retention and a desirable career path? Why not establish specific standards that providers have to abide by, with copies available at no cost to the residents?

Why not amalgamate all the government agencies into one responsible for the oversight care of the elderly and do proper audits?

Maybe we could put the elderly residents in prison and the convicts into rest homes. The residents would get free medical and dental care, seven showers a week, televisions, computers, good food and high staff ratios. They could expect strict standards and free legal aid if they were unhappy. The convicts would then have to pay for their lodgings, be ignored and suffer deteriorating conditions and isolation.

We think it's time for a radical overhaul of this profitable "industry".

Geoff Harper is an accountant and a company director. He has a mother in a rest home and is shocked by the level of care she receives.