What was the challenge?

The Aged Care Royal Commission was established by the Australia Commonwealth Government on 8 October 2018. The Royal Commission inquired into the quality of aged care services in Australia, whether those services were meeting the needs of the community, and how they could be improved in the future.

In 2020, Frontier Economics was engaged by the Aged Care Royal Commission to:

  1. Estimate the weighted-average cost of capital (WACC) for the provision of accommodation in the residential aged care sector;
  2. Advise on how the WACC may vary under different reform scenarios; and
  3. Demonstrate how the WACC may be used as a component of a ‘building block’ model to determine an appropriate allowance for the return on capital and return of capital (depreciation) for providers of aged care accommodation services.
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