Eleanor Malbon
The 2024–25 Budget provides foundational funding for a new
Aged Care Act, which has been delayed until July 2025. It also remains
silent on any new information or changes regarding the crucial question of how the
care of Australia’s ageing population will be funded. The Australian Government
is the
main funder and regulator of residential aged care, home care and home
support services. Most services are delivered by non-government providers,
though some state, territory and local governments own residential aged care
facilities. Funding
for aged care services is the Australian Government’s fourth biggest
expense program, estimated at $36.2 billion in 2024–25 – this excludes around
$2.3 billion in funding for other aged-care related programs (pp. 199, 210).
This article discusses the issue of future aged care
funding, upcoming changes to aged care legislation, funding for the aged care
worker pay rise, market stewardship and other significant budget measures.
Future aged care funding
Australia’s ageing
population presents a challenge for governments to sustainably fund future high-quality
aged care services (pp. 46–50). Aged care is one of the fastest growing areas
of Australian Government spending over the medium term, with average annual
growth estimated
at 5.7% from 2024–25 to 2034–35 (p. 91). However, the Budget offered no
indication of the government’s intended direction for aged care funding. Specifically,
stakeholder
groups have criticised the Budget’s lack of response to the Aged Care Taskforce
Report (published March 2024) and delay of the new Aged Care Act.
One proposal to fund increased aged care spending is a new
levy imposed through the tax system, similar to the current Medicare levy. The
Royal Commission into Aged Care Quality and Safety recommended
this approach (recommendations 138 and 144); however, the Aged Care Taskforce argued
against this in its final
report, citing concerns with intergenerational equity (p. 20). Instead, it recommended
an increased resident co-contribution arrangement with a means-tested safety
net but did not expand in detail (p. 27). Accordingly, Emeritus
Professor Hal Swerissen has stated that ‘the taskforce failed to consider the mix of taxation,
personal contributions and social insurance which are commonly used to fund
aged care systems internationally’.
Implementation of the new Aged Care
Act
The Government intends to introduce a new Aged Care Act to implement
various recommendations made by the Royal
Commission into Aged Care Quality and Safety, and replace the existing Aged Care
Act 1997 which the Royal Commission found to be no
longer be fit for purpose. The new Aged Care Act will make significant
changes to funding arrangements for Australia’s aging population. The Act was originally
intended to be in force by July 2024, with an exposure
draft for the Bill published in December 2023. However, key components of
the legislation were not included, such as provisions relating to fees,
payments and subsidies.
In April 2024, Minster for Aged Care Anika Wells announced
a delay in introducing the new Aged Care Bill to Parliament, without
providing a revised date. Shadow Minister for Health and Aged Care Anne Ruston criticised
the delay and the missing details from the exposure draft.
In addition to clarifying the new July 2025 commencement (p.
113), the Budget provides
a series of measures intended to support implementation of the new Aged
Care Act. These include information and communication technology (ICT)
infrastructure and increased capacity for quality and safety.
ICT infrastructure
The Budget provides $1.2 billion over 5 years from 2023–24
for ICT
infrastructure (p. 112) to maintain legislative compliance and ensure the
new reforms are successfully implemented. This investment in ICT may be
intended to prevent critical issues emerging during implementation, such as
occurred during the ICT
crash that characterised the start of the National Disability Insurance
Scheme (NDIS) reforms in 2016, which delayed payments to providers. The Budget
also provides $174.5 million over 2 years from 2024–25 (p. 112) to fund the
ICT infrastructure for the Support
at Home Program and Single
Assessment System, which determines a
person’s care needs and service eligibilities.
Regulatory capacity of aged care quality
and safety commission
The 2024–25
Budget provides $110.9 million over 4 years to enhance the Aged Care
Quality and Safety Commission's regulatory capabilities and prepare for a new
framework under the new
Aged Care Act (p. 112). This responds to recommendations within the Independent
Capability Report into the Aged Care Quality and Safety Commission. The
Independent Capability Report drew attention to the need to improve the capacity
of the Aged Care Quality and Safety Commission, including in areas of
governance, culture, and processes. This funding will support the
implementation of the new aged care regulatory framework commencing on 1 July
2025 as part of the new
Aged Care Act.
General implementation support
The 2024-25 Budget allocates
$11.8 million over 3 years from 2023–24 for general implementation support for
the new Aged Care Act (p. 113), including extension of the Aged
Care Approvals Round (ACAR). ACAR is the process of allocating residential
aged care home places to residential facilities; however, it is due to be
replaced by the ‘Places
to People’ model when the new Aged Care Act is introduced in July 2025. Additionally,
the My Aged Care Contact Centre will
receive $37.0 million over 2 years from 2024–25 to reduce wait times.
Workforce
Jobs and
Skills Australia predicts the health and social care workforce will grow
much faster than any other industry sector in the next decade—with employment
growth of 25.2% projected to May 2033. However, the aged care workforce is
expected to face significant shortages. In 2021, the
Committee for Economic Development of Australia (CEDA) predicted a
shortfall of more than 110,000 aged care workers by 2030 (p. 6). According to
CEDA, finding the required workforce will need better wages and working
conditions; getting more people into training and investing in ongoing
development; creating new migration paths to attract high-quality workers; and
investment in technology that would reduce burdens on staff and improve care
outcomes (p. 7).
Funding the aged care worker pay rise
In 2022, the Fair Work Commission made an interim
decision to raise Aged Care Award minimum wages by 15%, taking effect from
July 2023. In the 2023–24 Budget, the government supported pay increases
for workers through the ‘Funding pay increases for aged care workers’ measure
(Budget
measures: budget paper no. 2: 2023–24, pp. 131–132) and through
program indexation. The $515 million measure (over 5 years) was made up of
several grant programs and targeted indexation boosts to some of the smaller
aged care programs. Around $10.9 billion over 5 years in funding for wage
rises was provided
through indexation this funding was delivered through an increase in the
Australian National Aged Care Classification (AN-ACC) price to reflect higher
provider costs, and was not included as a separate budget measure.
In March 2024, the Fair Work Commission settled
on a further pay rise for some aged care workers, bringing the total
increase to between 18–28% (depending on the specific award and
classification). A month later, the Australian
Government Solicitor made a submission to the Fair Work Commission
proposing a staged worker pay increase over 2025–2026.
Budget
strategy and outlook: budget paper no. 1: 2024–25 (p. 225) states that
the Contingency
Reserve includes a provision for the estimated financial impact of the wage
increase.
Health researcher Stephen
Duckett stated that the wage increase ‘is necessary but alone is not
sufficient to solve workforce shortages’. Duckett recommended increased funding
for places in university and vocational education courses for health and social
care and other measure to attract skilled migrants and workers from other
industries.
Further workforce support
To attract and retain aged care workers, the Government
plans to invest further in existing aged care workforce programs. This includes
$65.6
million over 4 years from 2024–25 to help collect more reliable data and
improve outcomes for those receiving aged care services (p. 112). The Home
Care Workforce Support Program will
receive $21.6 million over three years from 2024–25 (p. 112) to ‘facilitate
the growth of the care and support workforce in thin markets’. A thin
market is where the available aged services do not meet the needs of
participants – for example, in areas where costs make it difficult for
providers to remain viable or where the workforce is not available (p. 36).
Budget paper no. 1 expands on the purpose of these
workforce measures, describing the investment in:
…
workforce initiatives to support, attract and retain aged care staff including
continuing the Aged Care Nursing Clinical Placements Program, Aged Care
Transition to Practice Program and Aged Care Nursing Scholarships. These
programs provide specialist skills and training for nurses and promote aged
care as an attractive career path for nurses’ (p. 31)
A further $10.8
million over 2 years will extend the Palliative
Aged Care Outcomes Program and Program
of Experience in the Palliative Approach workforce training programs (p.
113).
Market stewardship
The Australian
National Aged Care Classification (AN-ACC) funding model (established in
2022) determines funding for aged care providers based on the service types and
individual residents’ care needs. The Budget
includes $7.8 million over 2 years from 2024–25 in transitional funding for
aged care service providers in thin markets to align business operations with
the AN-ACC funding model (p. 113). Transition support is important for
maintaining service continuity and quality during implementation of the AN-ACC.
The transition to the AN-ACC model also received a $4.1 million budget measure over
3 years from 2023–24 to undertake ICT preparation work to configure the new
Basic Care Tariffs (p. 113).
Other significant budget measures
Home care packages
As
at December 2023, there were 269,573 people in a home care package with a
further 51,044 on a waitlist (pp. 6, 10). The
Budget provides $531.4 million in 2024–25 for an extra 24,100 home care packages
(p. 112) which enable more older Australians to remain in their homes, and help
reduce
wait times for receiving aged care services. The
packages fund a mix of services, including help with household tasks, aids
and equipment, some home modifications, personal care and clinical care. Stakeholders
expressed disappointment at the number of extra aged care packages, noting
that the funding would only halve the current waitlist. From July 2025, home
care packages will be brought together with other in-home care programs under
the Support
at Home program as part of the new Aged Care Act changes.
Dementia care
The Budget
contains a range of measures across the Health and Aged Care Portfolio for
dementia care. With the previous National
Framework for Action on Dementia expired, the government has completed
consultations for a new National
Dementia Action Plan, scheduled to be released in 2024. Measures include:
-
$56.8 million over 5 years from 2023–24 to expand the Acute to
Residential Care Transition Service dementia program, which transitions
long-stay patients with dementia from hospital into residential aged care (Budget
paper no. 2, p. 126). This funding is part of a broader package of
measures aimed at supporting older people’s earlier discharge from
hospitals—see ‘Health’ article in the 2024–25 Budget review. Aged care
workforce shortages and the availability of residential care places will impact
the effectiveness of this package.
- $30.4 million over 3 years to states and territories to continue
to deliver the Specialist
Dementia Care Program. This program supports people with very severe behavioural and
psychological symptoms of dementia outside of mainstream residential aged care
facilities. (Budget paper no. 2, p. 113).
- $12.5 million over 2 years to Dementia Australia to support
populations at risk of dementia including increased public awareness of Chronic
Traumatic Encephalopathy (CTE) (Budget paper no. 2, p. 121). CTE
is a neurodegenerative disease of particular concern to athletes at risk of
repeated head trauma. A 2023
Senate committee report recommended the development of awareness and
education initiatives regarding the risks of concussion, head trauma and CTE
(p. xiv).
- $1.7 million in 2024–25 for the Australian Dementia
Network to continue preparing the health system for developments in
biomarkers and disease-modifying therapies (Budget paper no. 2, p.
113).