Aged-care reforms tweaked after outcry from the Retirement Living Council

The government has quietly changed controversial liquidity rules for aged-care providers after outcry over reforms that peak bodies warned would risk the financial viability of organisations that would have to put aside millions of dollars in cash reserves.

The government has quietly changed controversial liquidity rules for aged care providers after outcry over reforms.

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The Albanese government has quietly changed controversial liquidity rules for aged-care providers after outcry over reforms that peak bodies warned would risk the financial viability of organisations forced to put aside millions of dollars in cash reserves.

Labor’s Financial and Prudential Standards, proposed earlier this year, were initially planned to enforce a minimum liquidity amount of about 35 per cent of providers’ quarterly cash expenses plus 10 per cent of refundable deposit liabilities.

However, The Australian understands that following further consultation, the 10 per cent threshold for the refundable deposit liabilities has been reduced to just 2 per cent for the retirement living sector.

The change, communicated to some members of the sector, has been made just weeks ahead of Labor’s once-in-a-generation aged-care reform package coming into effect, with alarm raised by organisations still waiting on critical details on how the new rules will be enforced.

Labor’s legislation to create a new system of care for older Australians passed in November and was broadly welcomed by the sector, but has since drawn intense criticism over the lack of information and rushed time frame to implement the changes.

Retirement Living Council of Australia chief executive Daniel Gannon said that given there was less than a month before the Aged Care Act deadline, the Aged Care Quality and Safety Commission must “publicly release its determination” on liquidity standards as soon as possible.

“While 2 per cent is better than 10 per cent, it’s still not zero per cent,” Mr Gannon said.

“Many operators will be relieved at where the ratio has landed, but public policymaking 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.”

While refusing to confirm the change to the liquidity standards, the Aged Care Quality and Safety Commission did not deny the change in the 10 per cent figure for refundable deposit liabilities.

“The Aged Care Quality and Safety Commission undertook public consultation on the draft Financial and Prudential Standards between February 18, 2025 and March 14, 2025,” a spokesman said.
“The objective of the consultation was to seek feedback from stakeholders to inform the Commission’s decision on the final standards. The Commission is finalising a Financial and Prudential Standards Consultation report, which will be published shortly on the Commission’s website.”

The Australian understands the decision will not be publicly released for some weeks.

Uncertainty over aged-care reforms reached crisis point in April, when peak body Ageing Australia declared publicly that the reforms were simply “impossible” to implement in the time frame laid out.

Ageing Australia CEO Tom Symondson said despite that warning over the reform timeline, providers still didn’t have “the final information we need, systems are not ready and too many questions remain”.

“We can’t enter into updated agreements with clients if we don’t have all the rules to write them. We also want to avoid older people being overwhelmed by these changes, as providers have been, due to the incredibly short time frames,” he told The Australian.

“In addition to new agreements, standards and training, entire computer systems are being changed, both in the sector and inside government. We need confidence that these systems will be completely ready – not just at 11.59pm on June 30, but well in advance so that they can be fully tested and rolled out.”

Mr Symondson said Ageing Australia had “held a dozen meetings with the Aged Care Quality and Safety Commission” to reinforce the view that higher proposed liquidity standards threatened to strangle investment in the sector.

“We also advocated for the introduction of an alternative method for providers to demonstrate compliance to avoid large providers tying up hundreds of millions of dollars of cash, which should be used to build more beds,” he said.

“If we’re going to have liquidity standards, as the royal commission recommended, we want to make sure that they don’t undermine investment.”