The Heathcote facility was first proposed in 2014 but plans took a step forward last week when the City of Greater Bendigo listed the project as a priority for federal funding, requesting $300,000 from the government to investigate the project’s viability.

The proposed facility would include accommodation for about 150 residents, as well as shops, cafes and parkland, designed to be both safe and stimulating from people living with dementia.

Heathcote Health chief executive officer Dan Douglass, who is part of a steering committee behind the project, said dementia had reached "epidemic proportions" in Australia, with more than 350,000 people living with the disorder.

That number is expected to double before 2050. 

He said aged cared facilities were often unequipped with dementia-specific facilities and people living with early onset varieties of the disorder were being treated in nursing homes alongside much older patients, both problems a dementia village would address.   

“This is actually letting them live a higher quality of life and letting their families see them living this quality of life,” he said, also explaining the village would reduce the need for sedation and physical restraint of dementia patients.

Early plans for the village have been modeled from Hogewey, a similar facility in the Netherlands visited by members of the Heathcote steering committee in July last year.

Alzheimers Australia Vic chief executive officer Maree McCabe welcomed plans for the dementia village, and hoped the government would get behind the project.

She said the environment in which people living with dementia received care influenced their health, with social engagement capable of reducing the severity of dementia symptoms.  

“Healthy diet and exercise are also really important, and if people can feel free to walk around the community safely, it is a massive benefit,” Ms McCabe said.

“It doesn't work to have people live in environments that don't support them.”

The groundbreaking healthcare facility would not only be a boon for patient health, but also provide Heathcote residents with an opportunity for training and employment, Mr Douglass said.  

"We've got a population of people we can train, put into meaningful work and it really will address unemployment,” he said.

“Almost overnight it would give us a vibrant economy not dependent on wineries, people passing through or the mines.”

“This is a game changer for a small rural township to move into something like this.”

The Heathcote Health CEO said the community would also be a hub for training and research.

"We can start to put in place new models of care around dementia that haven't entered the mainstream yet," he said. 

"You wouldn't have to go to the Netherlands; you'd go to Heathcote and see what's being done in the field."

While a site is yet to be set aside for the village, Mr Douglass said there were as many as six locations in Heathcote that would suit the facility.

He said a four or five-acre block would best fit the purpose-built township.

Mr Douglass also said the proposed construction is another step towards making Heathcote a dementia-friendly postcode, and he was hopeful the community would instigate “green care” programs, providing opportunities for people with the disorder to spend time outdoors.