The Aged Care Royal Commission and -
- The need for the royal commission to examine the negative impact retirement villages have on the capital base of Australian retirees and their subsequent reduced ability to fund or contribute to their own residential aged care costs
- With home care packages enabling a growing number of older Australians to stay longer in retirement villages, the need for the royal commission to examine whether the current jumble of state government laws will be appropriate for retirement villages into the future.
Retirement Villages Quasi Aged Care - With home care
packages retirement villages are becoming quasi aged care. They must
be part of the Aged Care Royal Commission as the negative financial
impact on retirees living in retirement villages means they can
require greater residential aged care funding when the time comes for
that higher level of care.
Retirees can sell their only major
asset the family home and pay an in-going amount to enter a
retirement village often commensurate with a purchase cost, but
granted only a conditional lease / licence to occupy. They then pay
monthly maintenance fees, administration fees, selling costs on
departure, a Deferred Management Fee often 35 % to 45% of the
in-going amount paid, often they have little or no access to any
capital gain, they suffer a devaluation of the refundable amount (the
In-going Amount Paid minus the Deferred Management Fee) by CPI in each
year of occupancy. All this on a property they do not own but simply
have a conditional right to occupy. Vastly more financially punitive
than under a standard residential tenancy agreement.
The table above shows the
financial impact where a retiree stays in the family home or
downsizes but maintains financial independence and some financial
certainty by retaining property ownership. Their greater capacity to
fund or make a contribution to their own residential aged care costs
can be dramatic. The table also shows that other retirees can have a
reduced capacity to fund their own residential aged care costs and
will look to the taxpayer to fund any shortfall. This of course
places an ever increasing strain on the commonwealth budget.
Retirement Villages are acknowledged as
good social environments in which to live but they can come at a huge
capital cost to the retiree, increasing their need for greater
residential aged care funding from the taxpayer.
Federal Laws For Retirement Villages - Another
critical matter is whether retirement villages should continue under
a jumble of state laws or come under federal law.
The retirement industry direction for
residential Aged Care and Retirement Villages is a closer
relationship and where possible a joint facility where the operator
is a registered care provider, providing in home care to the
residents of the retirement village section through home care
packages.
This will lead to an increasing number
of aged Australians spending a longer period in retirement villages
and potentially a shorter period in residential aged care, receiving
commonwealth funding for in home care in retirement villages that
operate under this jumble of various state government legislation.
Professor Tim Kyng from Macquaire
University and Paul Latimer from the Swinburne Law School have both
made persuasive arguments for retirement villages to come under
federal law.
Their material outlines the many
reasons why retirement villages should be under federal laws and well
beyond the simple principals expressed here. It is essential the Aged
Care Royal Commission look into retirement villages and the need for
inclusion under commonwealth laws..
Summary - The record for state
government reforms and better protections for residents of retirement
villages has not been a good one. Simply maintaining the status quo
will confine many older Australians to living in retirement villages
as quasi aged care. Seeing them reside under a jumble of state
government legislation, subject to increasing reductions in their
capital base and generating an ever reducing capacity to contribute
to or fund their own residential aged care costs.
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