Last Thursday, I warned of serious consequences from the Government’s decision to claw back AN-ACC funding. This week, the fallout is plain: investor confidence has been smashed, and the promise of new aged care beds is evaporating before our eyes.
Regis’ shock earnings downgrade on Monday tells the story.
The ASX-listed provider had been banking on a 5-6% increase in AN-ACC from October to cover wage hikes, Fair Work rulings and inflation. Instead, the “headline” 4.7% uplift equates to just 2.6% in real terms once classification reweightings are factored in.
The result? Regis has pushed back development plans, warned of thinner margins – and watched its share price collapse by 27% in a single trading day.
This is not a blip. It’s a warning shot to every operator and every investor. If the biggest players in the sector cannot fund new beds under the Government’s model, who can?
Investor faith shattered
Minister Butler insists more beds are coming, pointing to a rise in development activity. As we report in this edition, Department of Health, Disability and Ageing figures forecast around 1,700 new beds are expected in 2025-26 and 4,000 in 2026-27, off the back of 232 building approvals last year.
But as one adviser put it to me this week: “Do they own the land? Do they have finance? Is it under construction? The number actually built is always a lot less.” There’s a gulf between approvals on paper and beds delivered on the ground.
Investors now see a Government that promised to fund wage uplifts – then backflipped. They see a model that rewards compliance but strips out surplus. And they are voting with their feet.
Hospitals will pay the price
The irony? The Government’s clawback will cost more in the long run. ‘Bed block’ is already crippling hospitals, with more than 2,500 older Australians occupying acute beds. Without new residential care capacity, that figure will only rise.
As I made clear, there is no mission without margin. Right now, there is no margin. And unless Canberra changes course, there will be no beds either.