The Aged Care Quality and Safety Commission (ACQSC)'s proposed liquidity ratios should be reduced to 25% for quarterly cash expenses and 5% for quarterly Refundable Accommodation Deposit (RADs) liabilities, and should be removed altogether on refundable amounts for Independent Living Units (ILUs) and retirement villages, Ageing Australia has recommended in a submission published today (Monday 17 March 2025).
The Weekly SOURCE reported the ACQSC had released an Exposure Draft of new Financial and Prudential Standards on 18 February, which proposed liquidity ratios requiring residential aged care operators to hold onto 35% of quarterly cash expenses and 10% of quarterly refundable deposit liabilities for providers with refundable deposits including Independent Living Units and retirement villages.
Ageing Australia's recommendation to lower the liquidity ratios follows aged care accountants StewartBrown's recommendation, published last Friday, that the proposed liquidity ratios be reduced to 25% for quarterly cash expenses, 5% for RAD liabilities, and 2% for ILU liabilities.
The peak body for aged care providers said their recommendation is based on feedback from members, modelling by StewartBrown, and legal advice.
"We have received strong and consistent feedback from our members that the liquidity standard, as currently drafted, will significantly limit their ability to build new bed stock and invest in upgrading existing facilities."
Ageing Australia also recommends that the Standards recognise there are alternate ways aged care providers that do not meet the liquidity ratios can show they are not a liquidity risk, such as showing they have capital works in progress or by providing cash flow projections.
StewartBrown's submission on the Exposure Draft of new Financial and Prudential Standards.
Retirement Living Council's submission on the Exposure Draft of New Financial and Prudential Standards.
Download Ageing Australia's submission here.
