Call for submissions on capital financing arrangements
Submissions on capital financing arrangements closed on Friday, 2 October 2020.
Submissions addressed issues raised in the paper Capital financing for residential aged care: Call for submissions and the following key topics:
- Whether the current capital financing arrangements are appropriate for the aged sector as it exists today, and as it is likely to evolve into the future.
- How the capital financing arrangements might need to change to support a progressive shift in the balance of care from residential to home care.
- The current state of capital investment and infrastructure in residential aged care, including whether the sector is undercapitalised and any evidence that the capital stock is not of sufficient quality.
- The appropriate role for the Australian Government in capital financing for the residential aged care sector.
- Whether the current taxpayer and care recipient contributions to the capital financing of the residential aged care sector are equitable, efficient and appropriate.
- Whether the current prices for Refundable Accommodation Deposits are appropriate given that the average per bed construction cost of residential accommodation is approximately $250,000.
- Whether there should be reforms to the existing capital financing arrangements for residential aged care, and if so, the policy rationale for these reforms. Examples of reforms could include:
- Linking the level of Residential Accommodation Deposits more closely with the value of the accommodation received.
- Phasing out Refundable Accommodation Deposits, and if so, whether that would need to be subject to an alternative arrangement and transition period.
- Fixing the amount paid to providers by residents as Daily Accommodation Payments, and by the Australian Government through the Accommodation Supplement, to the weighted average cost of capital for aged care providers. In addressing this area, comments can also be provided on the Required return for aged care service providers report prepared by Frontier Economics.
- Measures to encourage equity investment from a wider range of sources, such as superannuation funds, real estate investment trusts or private equity firms.
- Expanding the Australian Government’s capital grants program. This could include a general capital grants program similar to the arrangements that operated from 1954‑97, or a more targeted program designed to improve access to residential aged care and support the establishment of providers of last resort.
- How capital financing arrangements could be used to support the development of innovative or emerging models of accommodation.
- Whether the current accountability and reporting arrangements around the use of capital grants from government and contributions from care recipients are sufficient.
- Whether investment of capital grants from government and contributions from care recipients should be restricted strictly to aged care activities.
- Whether there should be different capital financing arrangements for specialist facilities such as for people who are homeless or at risk of homelessness, or Aboriginal and Torres Strait Islander people.
- The management of any transition issues if the existing capital financing arrangements were reformed, including the roles that both government and the aged care sector should play.