A DECISION by the Queensland Aged Care Alliance to refuse to bid for high-care places is being investigated by the nation's competition watchdog amid suggestions of "cartel'' behaviour.

The office of Assistant Federal Treasurer Chris Bowen yesterday confirmed the matter had been referred to the Australian Competition and Consumer Commission.

Two Federal Government departments are believed to have provided legal advice that the decision by the QACA may amount to a form of market manipulation.

"(It) may amount to competitors arriving at an understanding which has the purpose of preventing, restricting or limiting the supply of services to a person in particular circumstances or on particular conditions,'' one advisory says.

The moratorium on new high-care beds, announced in The Courier-Mail last week, is backed by one of Australia's largest providers, Catholic Healthcare, as well as Queensland's largest provider TriCare.

QACA spokesman Jim Toohey said he was disappointed at the apparent attempt to politicise the issue but was confident the group, which includes RSL Care and Queensland Baptist Care, had acted in accordance with the law. Mr Toohey said providers had reached their decisions independently as costs blew out while returns plummeted to as low as 1.1 per cent.

Mr Toohey said providers were clearly suffering financial difficulty across Australia and wanted a new funding approach to stay viable.

"The financial difficulties confronting the sector have now reached the point where aged-care providers simply cannot justify the cost of construction of new high-care homes,'' he said.

One option the industry has floated is the introduction of refundable deposits for high-end aged care.

The model would allow residents to use a portion of their capital to pay for their care while returning the bulk to their estate when they die.

Minister for Ageing Justine Elliott, who has repeatedly ruled out refundable deposits, said the Federal Government was putting a record amount of cash into aged care, amounting to about $41,500 for each aged-care resident each year.

A spokesman for the Minister said applications for the 2008-09 approvals round would go ahead this weekend.

"It is a matter for the ACCC, an independent body, to determine if someone has contravened the Trade Practices Act,'' the spokesman said.

Source: The Courier Mail - Author: Michael Madigan IN CANBERRA