Financial requirements for aged care providers will be eased under new national standards set to take effect in November 2025, following intense lobbying from industry groups concerned the original rules would threaten investment and housing supply.
The Aged Care Quality and Safety Commission confirmed changes to its draft financial and prudential standards, reducing the proposed liquidity ratio for refundable retirement deposits from 10 per cent to 2 per cent. The standards are part of a major regulatory overhaul under the upcoming Aged Care Act, following recommendations from the Royal Commission into Aged Care Quality and Safety.
The original draft sparked alarm across the sector, with the Retirement Living Council (RLC) and Ageing Australia warning it would tie up capital and halt development projects.
“This is a welcome outcome for industry,” said RLC Executive Director Daniel Gannon. “But the fact these standards reach through to retirement villages in the first place shows the Commission doesn’t understand retirement living.”
Gannon warned the 10 per cent rule would have forced providers to hold “hundreds of millions of dollars” in reserve, potentially delaying or cancelling new aged care and retirement housing developments.
“These new changes won’t cripple industry, but the sloppy process has impacted confidence,” he said. “If these standards weren’t watered down, it would have locked up capital for operators trying to inject new age-friendly housing supply into a housing and care market under stress.”
The Commission said the revised standards aim to strike a balance between financial stewardship and operational flexibility.
“The new financial and prudential standards will ensure that aged care providers are not only meeting their obligations to deliver high-quality care but are also financially viable and effectively managing the funds entrusted to them,” said Commissioner Liz Hefren-Webb.
“These new standards provide a clear and consistent framework for financial stewardship in the aged care sector,” added Deputy Commissioner Gary Rake. “They will help ensure that providers are managing resources responsibly, while giving older people and their families greater confidence in the services they rely on.”
Following public consultation, the Commission also committed to clarifying alternative compliance methods, allowing providers more flexibility in meeting liquidity benchmarks without locking away capital.
Ageing Australia’s General Manager of Policy and Advocacy, Roald Versteeg, said the changes reflect constructive engagement between government and the sector.
“If we’re going to have minimum liquidity standards, as the Royal Commission recommended, we want to make sure they don’t undermine investment,” Versteeg said.
“Clearly the figure of 10 per cent would have strangled investment in the sector.”
The revised standards come after months of sector concern, with reports that some not-for-profit providers were reconsidering developments and that banks were reassessing financing for aged care projects.
The implementation of the new Aged Care Act has also been delayed from July to 1 November 2025. Gannon said the delay was necessary to avoid “irreversible damage” to the sector.
“We’re satisfied with the delay of the new Aged Care Act because clients and operators have more time,” he said. “There was a collective sigh of relief because a new, modern, and better system cannot be rushed.”
The Commission will publish final standards in the coming weeks and plans to support the rollout with guidance materials and educational resources.
Ritchelle is a Content Producer for Healthcare Channel, Australia’s premier resource of information for healthcare.
