Information obtained by the federal opposition from the Department of Health and Ageing shows that 786 aged care licences were handed back between November 2007 and March this year.

The largest returns were in Queensland, where providers gave up 283 beds, and Western Australia, where providers handed back 224 beds.

Large providers in both states announced last year that they were cancelling plans to make licences operational.

In October Bethanie Aged Care handed back 110 bed licences for a proposed facility in Mandurah, south of Perth.

The next month, Queensland provider Blue Care confirmed to Australian Ageing Agenda that it had handed back 210 bed licences.

Blue Care is now looking at a $19 million operating loss from its residential aged care operations in the next financial year, according to transcripts from the Senate inquiry into aged care released this week.

The Shadow Minister for Ageing, Margaret May said the sector was on “red alert” at a time when the population is ageing significantly.

“With an average investment return of just 1.1 per cent on a high care bed, the current lack of financial viability is prohibiting providers from increasing bed capacity,” she said.

“The Rudd government must urgently amend the current funding mechanism to allow financial viability to return to the sector.”

However the Minister for Ageing, Justine Elliot rejected the calls for a funding overhaul.

She said that since December 2007, 5595 additional beds have been built.

“The number of aged care beds in existence is at record levels,” Mrs Elliot said. “That is an undisputable fact. There are now 175,000 beds in operation in Australia.”

“Mrs May is using tricky language to distort the facts and twist the truth.

“I am disappointed by her comments as I have known Mrs May for a long time. Mrs May should be ashamed.”