Welcome news for providers passionate to meet bed build needs- Advocates call for WA government’s $100m low-interest loan scheme to be replicated across the country

While the numbers differ between actuaries, economists and government officials, the number of new beds needed to meet the growing number of ageing Australians is substantial. Many of aged care’s leadership, advocates and veteran front-line staff, who have shown up daily for decades to sincerely underpin the excellence of care in the industry, have been vocal for years. The need for investment in the building of beds is great. The announcement by WA’s government, opening up $100 million in low-interest loans to support providers to dramatically expand aged care infrastructure across the State, has been lauded as a much-needed step in meeting the multi-pronged issues at hand. From consistently growing ambulance ramping times, seniors trapped in hospitals with nowhere to be discharged to and an only ageing boomer demographic, the writing has been on the wall for some time, infrastructure must happen now and quickly.

Announcement

The low-interest scheme was announced this week by WA’s Minister for Aged Care and Seniors, Simone McGurk. Within its stipulations is the opportunity of concessional finance at interest rates lower than current commercial lending offerings.

The scheme will be conducted through WA’s Department of Energy and Economic Diversification and the Department of Health, which has stressed the competitive nature of the loans and the significantly lower cost of borrowing compared to the public market.

Department messaging highlights the expectations and intentions of the Scheme within the aged care sector, “[it] will enable aged care providers to build, expand, or refurbish facilities across the State, with a focus on concessional/supported residential aged care beds.”

Eligible providers have been encouraged to apply for the concessional finance immediately, with approved applicants looking to possibly receive upwards of $20 million funding in value, “to address barriers to seeking commercial finance and fast track capital projects.”

Supporting the vulnerable

The announcement of the $100 million Low-Interest Loan Scheme, to facilitate the significant expansion of WA’s aged care infrastructure, has been met with relief, excitement and ‘can-do’ attitude by many of the state’s high-performing providers. For many provider leadership, in earnest to meet bed build rates, being caught between rising operational costs, balancing accepting supplement places as opposed to RAD spots, sky-rocketing land and construction expenses has seen rising frustration. 

While wishing to heavily invest in infrastructure and bed build projects, CEOs of high-performing providers, like RFBI’s Franke Price, have articulated to do so may have heavily compromised current residents and standards.

With WA’s residential aged care places sitting at 65.5 capacity per 1000 people over 70 years-old, many of the State’s providers, seniors, and loved-ones looking after ageing parents, have noted the consequence of potentially hundreds missing out on essential support.

State messaging in the announcement indicates movements to directly address the concern of supplementary as opposed to RAD, concerns clearly vocalised by Uniting ACT.NSW CEO, Tracey Burton. The scheme is framed as an attempt to facilitate for providers to ethically and financially move into positions to support greater numbers of supplementary placements.

The Department states, “by improving access to affordable finance, the Loan Scheme will enable aged care providers to increase concessional/supported bed capacity through improved infrastructure and enhance care for vulnerable groups within the state.”

Provider response

Many providers have publicly responded to the scheme’s announcement showcasing an overall positive and welcoming stance. Provider Juniper in WA sees the Scheme as crafted to speedily increase investment in RAC, underpin industry growth and support efficient service delivery in the critical area of bed building. Moreover providers in other States are calling for similar initiatives across the country.

Juniper’s CEO, Russell Bricknell has commented that the announcement comes as a key step in State government meeting its election commitment to aid the construction, upgrade and refurbishment of aged care facilities in the State.

Particularly within the context of WA’s severe construction obstacles and costs, Juniper noting that providers in State face the steepest costs in the nation, with building expenses sitting around $750,000, the need for funding support is starkly evident.

While commending this move by State leaders, “this is a sign the State Government is prioritising the needs of older people and helping address the shortage of beds in WA”, Bricknell questions Canberra’s current activity, “something the Commonwealth should be doing as well.”

“Juniper has been advocating for measures like this for some time, particularly as demand for aged care continues to increase across metropolitan, regional and remote WA. Concessional loans of this nature will support providers to build new beds, refurbish ageing facilities and deliver purpose-built environments that better meet the needs of older Western Australians.”

Confidence to build

As RFBI’s Price has commented, sincere providers, many of which are not the large players, are navigating at times impossible decisions between covering rising operational costs, federal pressure to heavily invest in mammoth capital projects, wanting to meet and exceed compliance regulation and a labour crunch, to name a few. Within this environment, he notes that for many smaller to medium providers, the only option to undertake sizable capital projects is to borrow at market rates. He highlights this strategy can result in exposing provider operations to significant risk and exposing residents to the potential fallout, as evidenced by recent cases of provider bankruptcy.  

Bricknell highlights the needed strategy of the scheme’s impact, welcoming initiatives that lowered the cost of capital, resulting in providers being able to invest in building more beds with greater confidence. Sharing an assessment commonly felt in the industry, he reminds that accessing affordable finance has long been an obstacle sector-wide. He sees the Low-interest Loan Scheme as a start to directly, practically and timely provide a solution.

“This scheme will help ensure aged care services remain accessible and sustainable into the future, while also easing pressure on the broader health system and supporting local jobs in both construction and care,” he says.

“By focusing on concessional residents, it also ensures people without means will not be left behind.”

Hospital ease

Provider leadership in WA have been consistently calling for measures to meet the growing concern of seniors in hospital. As noted, Bricknell has, for some time, been clear in the support and need for greater investment in aged care for WA’s seniors, in support at home scheme improvements, and ensuring its seniors smoothly transition from home, to hospital and residential aged care as needs arise. For state ministers and experts across the country, the problem is not limited to WA, significant need for investment across the country remains top of mind and required actionability. NSW’s Premier Minns has bluntly taken Canberra to task over the matter.

The WA Department acknowledges the need to facilitate solves to straining ambulance ramping times and hospital bed occupancy strain, not just for seniors in highly undignified and harmful positions stuck in hospital, but for all demographics needing access to timely hospital treatment.

“The Loan Scheme also aims to reduce pressure on hospital services by supporting safe transitions into purpose-built aged care beds, ensuring older Western Australians have timely access to aged care services.”

The national bigger picture

For providers who have repeatedly raised concerns from what they have been seeing in their operations and from conversations with seniors, loved ones and advocates, the need to meet the greater picture has never been more pronounced. While the initiative in WA is set to make a sizable impact, provider leadership has reminded Commonwealth and other State governments that change and funding is needed across the entire country.

Across the board, provider executives, industry heads and advocates have been calling to embed sustainability into the sector. The need to meet ageing population needs requires national balance with current rising operational and expansion costs alongside tax-burdens on current and future generations. The need for funding efficacy is paramount.

WA providers have welcomed the channel of investment through low-interest loans in balancing tax-burdens and opportunity to invest in infrastructure, as a strategy that may be leveraged now and in further iterations. Yet more work is still to be done with provider leadership in other regions looking to see such approaches across all States in the country, particularly backed by federal sources.

The WA Department has indicated its intentions to seek to meet a greater picture result in how it has shaped this scheme strategically, “beyond improving access, the Loan Scheme represents a strategic investment in the sector’s future, strengthening sustainability to meet an ageing population, creating jobs, and delivering broader economic benefits for WA.”

Juniper confirms it already has projects set to be included in, and has the intention of inputting, loan applications under the Scheme.