Milan Telford Christophorous House R. V

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Milan Telford - Christophorous House R.V


Dear M’s Kerrie Westcott,

I am writing regarding the ‘Implementing the Living Longer, Living Better aged care reform package’ – overview of proposed changes.


CHRV is a retirement village with a 24 bed Hostel facility.


There are two concerns I should like to address, that come out of the reform paper.


Page 24 of 55 ‘... in relation to lump sum accommodation payments, approved providers will no longer be able to deduct retention amounts (as they currently can deduct from accommodation bonds).’

It is not clear whether there will no longer be any retention amounts after 1st July 2014, or whether this is simply a method of recovery no longer available to service providers. If it is the latter, than recovery of the retention would need to be by way of monthly billing on account. This could result in financial hardship for the resident in having to pay the account, as opposed to a contra to the ‘lump sum accommodation payment’

on the same page

The choice of paying by lump sum or non-refundable periodic accommodation payments, has several draw-backs as follows:

  • Small operators such as CHRV do not have all bonds in cash, but much is invested in the land and buildings. To be able to repay older resident bonds, new money in the form of bond payments or ‘lump sum’ payments needs to be obtained for liquidity purposes to repay these. This reform could potentially put smaller operators into liquidation.

  • The operator is at risk that should the incoming resident opt for periodic payment and then not pay anything, that there is no financial security by way of bond to be able to offset what is owing. There is also then the difficulty of exit processes.

  • The incoming resident has, under the reform package, up to 6 months to pay. It is not clear whether they will be paying interest for the period that the ‘lump sum’ is outstanding. However, the operator is still required to repay bonds within 14 days. Again, it is a question of liquidity. This reform could well see many hostels close – if they can, or at worst, liquidity issues will result in insolvency – which one suspects that as a possible consequence is not the intent of the legislation.

Author: M Telford (CEO, Christophorus), Hornsby, NSW

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