At StewartBrown’s 2025 Sydney Finance Forum last week, Senior Partner Grant Corderoy set a clear challenge to residential aged care providers: show courage, reset business models, and force the policy conversation toward investability, not just viability.
“We need a sector that attracts capital and keeps building,” he argued – because stable care is not enough if providers can’t afford to renew or add beds.
Grant’s message rested on three pillars. First, co-contribution must be framed carefully: taxpayers fund direct clinical care, but everyday living and accommodation should be paid by consumers – just as they have across their lives.
Second, performance targets must move beyond occupancy and cash survival to returns that justify reinvestment. With replacement costs at $500,000-$600,000 per bed, he stressed that an EBITDA of $20,000-$22,000 per bed per annum is the minimum to call the sector investable.
Third, the funding mechanics that determine those returns need fixing – now.
Fixing the mechanics: MPIR floor and Accommodation Supplement uplift
On mechanics, StewartBrown will advocate for a floor on the Maximum Permissible Interest Rate (MPIR) to end the cash-flow uncertainty of a floating rate that doesn’t match providers’ accommodation costs.
Grant also backed an at least 8% Daily Accommodation Payment (DAP) benchmark, and a material lift in the Accommodation Supplement – currently set at $70.94 per supported resident per day – of a minimum $30 increase per resident per day.
“That single change would add roughly $18 per bed per day across the mix – enough to shift boardroom decisions from deferral to delivery,” he said.
Without it, the growing gap between supported and non-supported residents risks becoming an entrenched two-tier market.
From RADs to rent
Grant also urged providers to reprice accommodation through a rental lens – and stop “looking out the window” to set Refundable Accommodation Deposits (RADs).
He advised operators to work backwards: start with a target return on the accommodation asset (for example, 4.5% after depreciation), translate that to a daily ‘rent’ requirement (such as $110 per day on a $500,000 room), then back-solve the mix from combining the accommodation supplement, DAP and invested RAD to meet the target.
This would deliver an accommodation price that consumers could compare – and CFOs can manage, he underlined.
Even with reforms bedding in by FY31, StewartBrown’s modelling shows average returns of around $13,855 per bed per annum – well short of investable. While occupancy between 92.5-95% will help, it won’t bridge the capital gap on its own – changes to the MPIR floor, Accommodation Supplement uplift, and a provider-led shift to rental pricing – are still required.
Grant’s final call to action for operators? Be bold – make a submission to the Accommodation Pricing Review and advocate for the levers that will ensure the sector is investable.
“This is a provider-led revolution,” he concluded. “Courage first – policy will follow.”
