Mutuals can help address the problems of an ageing population

08 January 2016

Australian Unity chief executive Rohan Mead says the mutuals sector must be allowed to play a more central role in the delivery of social infrastructure necessary to help address the problems of an ageing population.

In a interview with The Australian, Mr Mead pointed to Australia’s rapidly growing ageing population and the need for more social infrastructure as a key issue facing the country.

“The nation undeniably needs more social infrastructure — residential aged-care hard infrastructure but also workers who can care for older people at home — so instead of governments blaming and cost shifting with each other, they should be seeking others to deliver,” Mr Mead said.

Mr Mead indicated that there are significant regulatory barriers to the sector in raising capital and playing a broader role in social infrastructure delivery. The need for easier access to capital to help widen the flow of resources to the social infrastructure market was also stressed by the mutual leader.

“This can be achieved if laws were changed to allow them to use deferred equity interests rather than being restricted to bank lending or using capital reserves,” he said.

“Into the future, governments need do very little to receive this support from mutuals other than recognise the benefit of such diversity, provide appropriate regulatory recognition and remove some of the current structural impediments to capital raisings.”

Australian Unity, a BCCM member, last year launched its second corporate bond to raise $200 million, taking advantage of new legislation aimed at cutting red tape associated with corporate debt raisings following its first issue raising $120m five years ago.

The new funds were partly used to help fund the purchase of the NSW government’s home- care business which the mutual won the $114 million tender for in September. It is expected to provide a new income stream and increase the number of entrants into Australian Unity’s retirement and aged-care businesses.

“In order to attend to just the current percentage levels of the forecast needs in aged care, we would need to build 70 100-bed facilities each year for the next 10 years. We are only building half that number at the moment”, stated Mr Mead.

The Senate’s Economics Review Committee has been hearing testimony on the role, importance, and overall performance of the co-operative and mutual sector to the Australian economy.

Mutuals potential role in social services was highlighted in Professor Ian Harper’s competition review emphasising their place in the competitive mix. Patrick McClure’s review of the welfare system also focused on the potential of the mutual sector to reduce the need for government social services, providing an alternative model of social provision.