Ageing Australia, along with several dozen CFOs of member organisations, has met with the Aged Care Quality and Safety Commission (ACQSC) to lobby against the proposed inclusion of independent living and retirement village refundable amounts in proposed aged care liquidity standards.
The move comes as Oryx Communities, which operates two aged care homes and a retirement village in Perth, with another aged care home set to open in July, places a "temporary hold" on new aged care and retirement living projects because the liquidity ratios in their proposed form would make the developments uncompetitive.
"Draft standards risk limiting new builds and critical investment"
Tom Symondson, CEO of Ageing Australia, told The Weekly SOURCE, the day financial and prudential standards were announced, members began raising their concerns about the liquidity ratios immediately.
Tom secured a meeting that evening with the Deputy Commissioner, Regulatory Operations from the Aged Care Quality and Safety Commission (ACQSC).
“At the initial, and half a dozen subsequent meetings with the ACQSC, including with the Commissioner herself, we have expressed our concerns regarding the draft standards on behalf of our members and put forward alternative proposals based on evidence," Tom said.
"We also arranged for several dozen of our CFOs to meet face to face with the Commission to give their feedback directly.”
“Our view is that the draft standards as they stand risk limiting new builds and critical investment into both aged care and retirement living, at a time when we need to build thousands of new beds and units per year."
Ageing Australia is recommending the following:
- Refundable independent living and retirement village payment amounts should not be included in the minimum liquidity standard;
- The Exposure Draft should be amended to explicitly state that a registered provider may meet the standard in an alternative way if it cannot meet the 35/10 requirement directly; and
- The scope of the new Financial and Prudential Standards should be refined to ensure that the regulatory burden is proportionate to financial risk, the Standards do not stifle investment and innovation in the aged care sector, and providers are not subjected to onerous and inflexible compliance obligations that could compromise service quality and sustainability.
Projects on "temporary hold"
Toby Browne-Cooper, Founder and Managing Director of Oryx Communities, told The SOURCE the proposed ratios will "materially inhibit" their ability to pursue new projects even though they would be able to meet the proposed liquidity ratios.
"We have placed a temporary hold on pursuing new aged care projects and have withdrawn from a couple of Retirement Village Apartment projects that we were actively pursuing because the liquidity requirements render us unable to compete with RV operators who are not APs, or with traditional apartment developers," he said.
"We do not consider it appropriate for the Aged Care Quality and Safety Commission to attempt to impose unnecessary liquidity restrictions on a select group of Retirement Village Operators."
Retirement villages have different cash requirements
David Reece, CEO of Not For Profit aged care provider AdventCare, which has two residential aged care homes in Victoria and four retirement communities, said their upmarket Whitehorse retirement village in Nunawading, 18km east of the Melbourne CBD, would have to put aside $10 million to $12 million under the proposed ratios.
He said the turnover for retirement villages is "extremely low" so there is a different requirement in terms of refundables, and he can see the proposed changes constraining new developments too.
David said the move to funding in arrears is also going to be putting pressure on liquidity in aged care.
Ratios "challenging" amid other reforms
Stephen Becsi OAM, CEO of specialist regional aged care provider Apollo Care, which has 12 aged care homes, told The SOURCE their organisation is finalising a submission about the liquidity ratios to the ACQSC.
"We're hearing that smaller providers would find the suggested liquidity requirement challenging, especially on top of changes to care, financial and corporate governance requirements," Stephen said.
"There's clearly been a significant, industry-wide response to the proposed change to liquidity rules. We're all keen to learn the Commission's final decision once all the feedback is taken into account."
The deadline for consultation on the proposed new Standards has been extended to 5pm, Friday 14 March (tomorrow) – you can provide feedback here.
