CPI: The Tightrope of Village Budgets

When CPI Doesn’t Tell the Full Story

Experience tells us CPI doesn’t always reflect rising costs. Think utilities, compliance, insurance, or the simple reality of running a quality community in today’s economy.

We can’t overlook the importance of CPI as a measure of certainty for residents. It does represent a financial safety net. Assurance their cost of living won’t suddenly spike without good reason.

CPI and the Law: State-by-State Implications

Across most states and territories, the Retirement Villages Acts reference CPI as either a benchmark or threshold for increasing recurrent charges. In Queensland, for example, increases to the general services charge are capped at the CPI percentage unless approved by special resolution or justified under exceptional circumstances such as rising insurance premiums or staff award wages. New South Wales goes so far as to differentiate between fixed-formula and discretionary increases, with CPI acting as the line between a straightforward increase to recurrent charges and a more complex resident approval process.

What happens when the true cost of village operations outpaces the CPI?

That’s when village professionals find themselves walking a delicate line.

Transparency and Consultation: Building Trust

The legislation recognises this tension with mechanisms in place in most jurisdictions for operators to propose increases above CPI.

As we’ve discussed many times, transparency is key. Consultation is a must. These conversations are going to be tough. They are also create the moments where trust is built – especially if you can provide justification, explanation and a clear narrative around value. (Think storytelling.)

At the end of the day, CPI isn’t the whole story. It is a vital component to the shared understanding between operators and residents. It’s up to us, as professionals, to communicate it with respect and clarity.