The Retirement Living Council (RLC) has welcomed the Aged Care Quality and Safety Commission's decision to water down liquidity ratios for aged care operators who also own retirement villages.
Following intervention from the RLC and operators over the original draft financial and prudential standards - which were raced through a lightning-fast consultation period - the Commission has dropped the minimum liquidity requirement for refundable retirement deposits from 10 per cent to two.
The consultation summary report on the draft standards - which will be applied to aged care operators from 1 November 2025 under the new Aged Care Act - will be finalised in the coming weeks.
RLC Executive Director Daniel Gannon said the original liquidity ratio would have forced operators to hoard hundreds of millions of dollars to meet the requirement, halting supply at a critical time.
"This is a welcome outcome for industry, but the fact these standards reach through to retirement villages in the first place shows the Commission doesn't understand retirement living," Mr Gannon said.
"While two per cent is better than 10 per cent, it's still not zero per cent. Many operators will be relieved at where the ratio has landed, but public policy-making didn't need to detour into this space - especially given the risk it placed on future investment and supply.
"These new changes won't cripple industry, but the sloppy process has impacted confidence. If these standards weren't watered down, it would have locked up capital for operators trying to inject new age-friendly housing supply into a housing and care market under stress."
At the time the original draft standards were announced by the Commission, dozens of not-for-profit operators across Australia were considering cancelling new developments. Mr Gannon said some banks were reassessing whether they would proceed with lending for certain developments.
"By 2040, the number of Australians over 75 will increase from two million to 3.7 million people, bringing with it critical challenges for age-friendly housing supply, hospital and aged care bed availability.
"Given these significant changes, the Commonwealth must be forward thinking and do everything in its power to streamline supply, not hinder it."
The decision from the Commission follows the delay of the new Aged Care Act - from 1 July to 1 November - following calls from the RLC to push back the commencement date.
Mr Gannon said failure to delay the Aged Care Act could have caused irreversible damage, threatening the short-term viability of the sector.
"We're satisfied with the delay of the new Aged Care Act because clients and operators have more time. There was a collective sigh of relief because a new, modern, and better system cannot be rushed."
