Retirement village sector pushes back on Federal Liquidity Standards
The Federal Government’s proposed minimum liquidity standards for aged care providers have raised serious concerns among retirement village operators, with the Retirement Living Council (RLC) leading the charge for common sense reform.
Under the Aged Care Quality and Safety Commission’s (ACQSC) proposed Financial and Prudential Standards 2025, residential aged care providers will be required to hold 35% of their cash expenses from the previous quarter, as well as 10% of any refundable deposit liabilities. A closer examination of the legislation has revealed that providers operating both aged care and independent living units (ILUs) or retirement villages must also retain 10% of refundable retirement village payment amounts.
This move, which was not explicitly stated in a recent ACQSC webinar, has left many in the retirement living sector blindsided with industry leaders argue the requirement demonstrates a lack of understanding of the ILU business model.
Industry Concerns and Calls for Change
The Retirement Living Council (RLC) has warned that forcing operators to retain such significant liquid funds could undermine investment in new developments, restrict financial flexibility, and negatively impact smaller community-based operators that rely on village revenue to support their loss-making residential care services. The requirement could also prompt some providers to restructure their businesses, separating their ILU and aged care operations to avoid the liquidity constraints.
Despite claims by the ACQSC that broad consultations were held, including with the Older Persons Advocacy Network (OPAN), Council on the Ageing (COTA), and Ageing Australia, neither the RLC nor village operators were engaged in the process.
Gannon described the policy as a “half-baked thought bubble,” warning that rushed reforms could have unintended consequences for operators and the residents they serve.
“The Australian Government says it has consulted stakeholders, but if that’s true, then those stakeholders clearly don’t understand our sector,” Gannon said. “If the government has failed to consult operators, then this is a damning indictment on the reform process.”
The RLC urgently sought a meeting with the ACQSC, convening an emergency session with industry CFOs to discuss the impact of the proposed changes. The council also pushed for an extension of the consultation deadline, arguing that 15 working days was an insufficient period to respond to such a significant policy shift.
A step toward resolution
In the last 24 hours, RLC representatives, including Gannon, met with the ACQSC and successfully argued for a reconsideration of the financial standards.
The ACQSC acknowledged that its initial liquidity modelling had unintended consequences and agreed to initiate new modelling. As a result, the consultation deadline has been extended by seven days to 14 March 2025.
“We appreciate the Commission’s willingness to listen and reconsider these liquidity requirements,” Gannon said following the meeting. “This acknowledgment is crucial, but we will continue to push for further engagement and practical solutions.”
While the extension is a positive development, industry leaders remain concerned about the broader implications of the proposed standards. The RLC has committed to ongoing discussions with the ACQSC to ensure any new regulations support both financial prudence and the long-term sustainability of retirement village operations.
As the consultation process continues, operators and industry stakeholders are urged to provide feedback to ensure a fair and workable outcome for the sector.
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