The shortfall of residential bed licenses allocated in the current aged care approvals round (ACAR) is a stark reflection of the capital crisis in aged care, according to both peak industry bodies.

At 5,748, the number of residential places actually handed out is 1,915 less than the 7,663 places available.

As a result the number of community aged care licences has risen from 2,784 to 4,699 to maintain the overall target of 10,447 new places.

Minister for Ageing, Justine Elliot said in a statement that the mix of services was changing to meet demand.

“Older Australians have told the government that they wish to remain independent, in their own homes and in their communities,” the minister said.

“Community care services help many people stay at home instead of moving prematurely into a residential aged care facility.”

But the CEO of Aged and Community Services Australia (ACSA), Greg Mundy said the departure from the planning ratio was a result of unsustainable capital funding for residential aged care.

“Community care is essential and integral to Australians being able to choose how and where they are cared for as they grow older,” he said.

“However, a last-minute switch by the Government in allocating resources from one area of aged care to another, by disguising unresolved financial issues in residential care, is not the way to plan the allocation of these vital services."

The CEO of Aged Care Association Australia (ACAA), Rod Young agreed that building new residential aged care facilities is not sustainable in the current climate.

“In my mind [this latest round] re-emphasises the fact that aged care providers can no longer build the number of places to match the department’s planning ratios,” he said.

“Providers are not prepared to take on the risk anymore, unless they are building low care services or [extra services high care] and have access to bonds, most providers are not prepared to take the risk.”

He said the problems in the round were further evidence of the need for a thorough review of the allocation formula, which the ALP promised in the lead-up to the 2007 federal election.

“We really do need to have a review of the allocation formula with an in-depth analysis of the future ageing population projections so we can plan more effectively,” he said.

Mr Young also warned that the sector could not afford another delay in the ACAR process with the older population set to increase significantly from 2011 onwards.