Patterns of ageing and its implications: Brisbane region.

Transcription

1 Patterns of ageing and its implications: Brisbane region. Ross Elliott Senior Advisor & Consultant Macroplan March 2016

2 Minority

3 Majority & the reality

4 An Australian story Australians aged 65+ the fastest growing age group Currently 14% of population, will rise to one in five by 2033 Currently 3.5 million Aussies aged 65+ Will be 6.3 million aged 65+ in next 20 years Increase of 2.8 million seniors

5 Living longer Life expectancy in 1970 was 70 years of age It is now 82, and climbing If you are already 65, you can expect to live another 20 years

6 Distribution of cohort life expectancy for a 65-year-old female

7 But not richer Roughly one in four seniors (aged 65+) are either renting or still paying off a mortgage Proportion of people aged 65+ with no super at all is around 65% The average superannuation balance of someone aged is just $102,000 The balance for someone aged is $38,000 The proportion of ALL Aussies with super balances over $500,000 is 5%

8 Self funded retirees? For those who own their own home, the average value is $500,000 For people aged 65+, two thirds have a weekly income of less than $400pw One in four retirees receives close to the full pension A further quarter receive a part pension

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11 Life expectancy and work Born c 1900 At school to 14 Dead by 51 No retirement 73% of life in work Born c 1950 At school to 14 Dead by 66 6 yrs retired from age 60 69% of life in work Born c 1975 At school to 17 Dead by 69 9 yrs retired from age 60 62% of life in work Born c 2000 At school to 22 Dead by yrs retired from age 60 50% of life in work

12 The Brisbane story

13 Growth in numbers of people aged 70 plus, from 2011 to 2026 Greatest growth in numbers

14 Total numbers of over 70 year olds by 2026 Proportion of over 70s by 2026

15 Proportion of over 70 residents with incomes below $399pw. Mid pink or darker and above is over half. Deep red is over 75% earning less than $399pw

16 Number aged over 70 and earning less than $399 Proportion earning less than $399

17 Number of 70+ residents earning above $800 Proportion earning $800+ pw

18 Numbers aged 60+ and own home outright Proportion own home outright

19 Numbers aged 60 and over and still renting Proportions 60+ renting

20 What s it all mean? Majority of providers targeting the top 25% by income/wealth Commercial and not-for-profit providers are faced with typical development costs of $250,000 to $300,000 minimum for RACs. More for retirement units. Plus costs of care, facility maintenance etc. This cost structure excludes the vast majority of retirees.

21 Too many and too soon. Brisbane (and other major centres) will soon be faced with fast growing numbers of low income, modest asset seniors who cannot afford commercial retirement living or aged care product The level of demand will overwhelm public housing and charitable providers We are struggling to provide volume even at the upper end of the market how will we create volume housing for seniors at middle to lower income levels?

22 What needs to happen? Develop public/social policy with both eyes firmly on the middle to lower income seniors Land use restrictions must be relaxed and cost structures slashed (including standards?) across the board Examine rental models of retirement living and aged care (in addition to ownership/dmf models) which use pensions + rental assistance + rent on the family home

23 One suggestion? Currently Mrs Smith Receives individual pension $430pw No other income Live in family home valued at $500,000 Cannot afford or reluctant - to buy into a retirement or ILU product What if Mrs Smith Rents out family home say $450pw Pension falls to $330pw (limited means test impact) Income now $780pw Government saves $100pw Can afford to rent an ILU style product

24 Should we use tax and regulations to force Mrs Smith to sell her family home in order to fund her aged care needs?

25 These guys would say yes.

26 Thank you.

27 Grant Thornton and MacroplanDimasi - Seniors in SEQ 2030 Graham McManus Partner, Financial Advisory Darrell Price Associate Director, Financial Advisory

28 Purpose To pose questions about what the aged care and retirement sector might look like in and what can be done about it

29 Aged Care - residential and community care

30 Megatrends industry growth fundamentals While growth was forecast at 5.3%, recent savings targets announced by government indicate that significant funding growth will not be tolerated number of beds grow from 190,000 to 360,000 by 2030 higher baby boomer wealth levels could support higher accommodation standards dementia and other living longer issues mean greater care needs. fragmented industry 63% of operators with a single facility 89% have five or fewer facilities

31 Where the aged live Retirement Villages 4.5% Social Housing 6.1% Residential Aged Care 6.6% Where the aged live, 2011 Mobile Home Communities 2.1% Close to 15% of older Australians are renting Approximately 65% of older Australian do not want to sell their family home they want to age in place Private rental 7.3% Home 73.4% Other reasons for not selling include Our home is the most suitable/affordable We want to leave our home to our children The value of our home is increasing

32 Government Funding Trends There will be more older people in the population Older people are more likely to have disability And longer lives mean even more disability and an increasing lifetime risk of needing care Residential care demand may increase slower that population ageing given delay in entry and constant duration But staying at home may depend on informal care Aged Care in Australia, policy demand and funding

33 Residential Aged Care in 2030 Courier Mail Old RACS now an economic wasteland for providers What was once a thriving business as a result of government funding changes 15 years ago is now a dumping place for the disadvantaged and dying We don't care, we provide accommodation you buy care from someone else Anonymous Style newcare, champagne and music on arrival plush surrounds a new standard in residential care high care ratios combined with a premium seniors lifestyle resort mean this service is aimed at the wealthy QCOSS Concerns over increasing disparity in amenities for older Australians

34 Aged Care - Retirement Living

35 What do retirement villages look like now 93% of villagers indicated that their overall happiness increased or stayed the same after moving into the village 97% of villagers participated in village activities 85% chose their village for the safe environment, access to emergency support and to maintain their independence

36 Current ILU Inventory Australia 13% 71% 16% The average age of Villages is 23 years. In 2030 this stock will be 38 years old, at end of life. 71% of all units are 2 bedroom Queensland 1 bed / Studio 2 bedrooms 3 bedrooms 11% 63% 25% 0% 20% 40% 60% 80% 100% 120% There is an average time of 320 days between vacant possession and resale Several states are reviewing their Retirement Living legislation. This is likely to result in increased consumer protections / rights including maximum settlement times after exit, increased requirements to seek independent advice Source: 2015 PCA Retirement Census 10

37 Resident costs / Provider pricing 63% More than 10% below market value 24% Market value, plus or minus 10% 13% More than 10% above market value 11 Source 2015 PCA Retirement Census / PCA National Overview of the Retirement Living Sector ILU Prices compared to an equivalent apartment in the LGA Regional, rural and remote pricing is more likely to be in the 10% below market value segment, as there are fewer options for retirement living Residents advise that part of the motivation in moving to a Village, is to downsize, and realise some cash for lifestyle and additional services

38 Retirement Living Penetration rates Australia - 5.7% penetration rate totaling 184 k ILUs Unknown 6.4% 6.9% 8.6% 4.9% 5.3% 3.4% Source 2015 PCA Retirement Census / PCA National Overview of the Retirement Living Sector Anecdotally, regional rural and remote penetration rates are lower It is expected that the penetration rate will grow to 7.5% nationally in 2025, requiring a total of 325k ILUs, almost doubling the current stock in 10 years Penetration rates in the US and Europe range between 10% and 14% 67% of residents are female Anecdotally, residents like to say in or near their suburb of origin 12

39 What if penetration rates increase 1,400 1,200 1, No of Sites requried 64% increase in sites required if the pen rate and average size stays the same 600 Ave No of ILUS per site % pen rate 6.4% pen rate 8% pen rate 10% pen rate 12% pen rate 208% increase in sites required if the pen rate grows to 12% and average size stays the same

40 What if density increases Estimates 120 ILUs 180 ILUs % pen rate per site per site per site No of Sites requried Ave No of ILUS per site If density increases by 50% (to 120 ILUs), the number of sites required will increase by 13% If density increases by 400% (to 240 ILUs), the number of sites required will reduce by 45%

41 Retirement Living in 2030 CEO, oldcare "We can't afford to upgrade so we will take who we can with what they can pay it that doesn't work, selling off is an option" Property Advisor, developcom "The design of this integrated site allows us to repurpose it midlife " BCC Announces the DA approval for the fifteenth high rise aged care in the CBD, the artists impression

42 Discussion

43 Graham McManus Partner, Financial Advisory (07) Darrell Price Associate Director, Financial Advisory (07)

44 Strategic directions for the retirement village sector the next three years

45 PRESENT: RetireAustralia

46 Source: Property Council of Australia: National Overview of the Retirement Village Sector (2014), Grant Thornton

47 Source: Retirement Living Council Property Council of Australia: Profile: Retirement Village Residents.

48 Projected average wealth across senior age groups Source: Caring for Older Australians: Productivity Commission Inquiry Report Overview (No 53), Australian Government 2011.

49 Source: RetireAustralia analysis Retirement services: largest operators

50 Government reforms Phase 1 ( ) Initial Aged Care Reform Phase 2 ( ) Financing Reform Phase 3 ( ) Consumer Choice Phase 4 ( ) Further consumer choice, sustainability and review

51 Source:? Future of the industry

52 Senior services industry mix Source:? Source: ACFA 2015 report on the Funding and Financing of the Aged Care Industry, Property Council of Australia: National Overview of the Retirement Village Sector (2014). Grant Thornton.

53 Source: ACFA 2015 report, NCOA Aged Care

54 Industry considerations: Workforce shrinking workforce Legislation buy backs are coming Regulation lack of regulation around care within RV legislation Supply appropriate product Opportunities care delivery Need for accreditation

55 Ageing Workers MEDIAN AGE IN WORKFORCES SECTORS Source: ABS (Australian Bureau of Statistics)

56 Declining Workforce Ratio RATIO OF WORKERS : RETIRED COUPLE Source: ABS (Australian Bureau of Statistics)

57 FUTURE (2021): RetireAustralia