RLC seeks Aged Care Act delay as uncertainty builds

Amidst the backdrop of the federal budget, the Retirement Living Council (RLC) is calling on the government to play a steady hand and delay the rollout of the new Aged Care Act.

This comes as the countdown to July 1 – the new Act’s implementation date – drops into double-digits with less than 100 days to go.

The RLC believes that too much of the industry still remains in the dark over impending changes with retirement living operators that also offer aged care services among them.

RLC Executive Director Daniel Gannon is cautious that Australia’s ‘silver tsunami’ – which will see the number of Australians aged over 75 increase by 85% within the next 15 years – could be too much for the sector to handle if it’s not ready.

“Australia is ageing, retirement villages and aged care facilities are operating at full capacity, ambulances are ramping at hospitals bursting at the seams, and housing supply is in deficit,” Mr Gannon said.

“Rushing these important reforms at such a critical time is a risk we shouldn’t be prepared to take.”

Referencing a recent radio segment on ABC Radio Perth where Prime Minister Anthony Albanese said, “…certainly none of it should be rushed.” Mr Gannon said the unrealistic timeframe begs the question as to why the Act isn’t being delayed.

“We wholeheartedly agree with the Prime Minister about not rushing these processes, but as things stand there is too much important work still to be done, and not enough time for it to be completed,” Mr Gannon said.

“A lot of the recent pressure clearly relates to an unrealistic July 1, 2025, commencement date for the new aged care system, begging the question about why this timeframe isn’t delayed. As the Prime Minister has stated, none of it should be rushed.

“While complicated, the implementation of the new Aged Care Act should be delayed. It’s a case of measuring twice and cutting once.”

Mr Gannon also shared six key areas of concern operators have flagged with RLC:

• Liquidity standards: Requirement for retirement villages that also offer aged care services to hold sizeable cash reserves. If left unchanged, this reform will halt future housing supply.
• Client anxiety: Almost 300,000 current and soon-to-be elderly clients are anxious due to insufficient information about the changes. It is unclear what contributions they will need to make to fund their care and how much services will cost because of Act changes.
• Unprepared staff: Thousands of care staff need urgent training, but the rushed rollout leaves them unprepared to support clients effectively before July 1, 2025.
• System overhaul: Providers need time to update, test, and train staff in the new systems and technology. The lack of guidance and testing time poses a risk to service delivery.
• Financial strain: Without clear guidance on new charge rates and certainty about how to bill for services, providers face financial strain, risking their ability to pay staff and deliver services to older Australians.
• Unknown policy: Government is yet to provide the new Aged Care Act Policy Manual, as well as important frameworks, forms and guidelines.

Delaying the Act now could cause more harm than good, according to G5 Strategic Principal Consultant Stephen Rooke.

Mr Rooke’s LinkedIn comment in response to the RLC statement emphasised that there’s no benefit in delaying the Act as it will only result in slowing sector progress.

“If we wait we will be in limbo again. Launch what you can on 1 July 2025 and defer what is not ready by no more than three to six months,” Mr Rooke wrote.

“In about 2-3 years the whole sector will need a reset to respond to the wave of older Australians demanding care outside of the constrained residential aged care and support at home systems.

“The new act is not enough of a great leap forward to address the coming issues, but if we don’t lock it in we will have even fewer levers available when we need to adjust the sector goalposts.”

Incoming liquidity standards will be among the most challenging elements for retirement village operators offering aged care services. Under the new regulation, all aged care service providers must maintain 35% of cash expenses.

Residential care providers must also retain 10% of refundable deposit liabilities. This will allow providers to meet their financial obligations and refund any refundable deposit balances if several residents leave without financial stability concerns. 

The relatively sudden announcement of these proposed Financial and Prudential Standards will challenge many providers. It is one reason why Mr Gannon would like to see more time allocated to all service providers so they can digest, understand and embed the changes.

“These operators need time to comply with these changes, including staff training and overhauling technology systems to continue delivering high-quality services for older Australians,” he said.

“New ABS data tells us that, in just one year, the number of Australians aged over 75 has risen by 181,339 people. This demographic silver tsunami should dictate more rigour in policy setting.”