$2.6 billion Budget boost for aged care nurses, but providers miss out

The 2025-26 Budget is here and the Australian Government has announced two key measures for the aged care sector, headlined by a further $2.6 billion that will help fund pay rises for aged care nurses from March this year.

This means aged care workers are arguably the biggest winners in the sector, with most service providers unlikely to see direct benefits outside of a strengthened workforce. 

Speaking to parliament tonight, Treasurer Jim Chalmers said wage funding is essential, ‘So the workers we trust to care for our parents and grandparents get paid properly for the work they do.”

The government has also made ‘structural improvements’ to the NDIA/NDIS and aged care. This comes as $175.4 million will be spent on enhancing fraud detection systems in the NDIS as part of an overall $423.8 million investment to support people with disability. 

As for aged care, a further $291.6 million will help to ‘continue delivering its historic aged care reforms and implementation of recommendations from the Royal Commission into Aged Care Quality and Safety’. However, most of this funding will go directly to organisations such as the Aged Care Quality and Safety Commission. 

Ageing Australia Chief Executive Officer Tom Symondson called out the government’s limited support for Aged Care Act transition activities.

“Provider systems will need to be upgraded to interface with new systems being built by government departments.  The cost to providers is immense, with some already spending millions of dollars. Individual grants of $10,000 clearly aren’t enough,” he said.

“The administrative and technical challenges of this reform cannot be underestimated. Providers are committed to ambitious reform, but it takes time and requires additional support.”

“We still don’t have all the information we need from government departments, including all of the rules for the new Act, so much of the work can’t be completed.”

Here are the key takeaways from the 2025-26 Budget for aged care. 

Funding pay increases for aged care workers

The government will provide $88.3 million over five years from 2024–25 (and $0.9 million per year ongoing) to fund increased aged care nurse wages in support of the Fair Work Commission’s decision to raise the minimum award wages of registered and enrolled nurses employed in the aged care sector. 

This funding will come through several avenues: 

• $48.7 million over three years from 2024–25 for Commonwealth Home Support Programme providers to cover the cost of the increase in award wages
• $35.5 million over two years from 2025–26 to fund historical leave provisions for Commonwealth‑funded aged care providers
• $3.0 million over five years from 2024–25 (and $0.6 million per year ongoing) for the Independent Health and Aged Care Pricing Authority to develop supplementary Australian National Aged Care Classification funding model (AN‑ACC) pricing advice and provide quality assurance
• $1.1 million over five years from 2024–25 (and $0.3 million per year ongoing) to increase funding for the Multi‑Purpose Services Program and the National Aboriginal and Torres Strait Islander Flexible Aged Care Program

These investments total $2.5 billion (slightly less than what was announced by Minister Chalmers) over five years. From 2029-30 to 2034-25, the government expects to commit an additional $6.1 billion to fund increased wages. 

Implementation of Aged Care Reforms 

The remaining $291.6 million over five years (and an additional $12/7 million in 2029-30) will fund the ongoing delivery of aged care reforms and the implementation of recommendations from the Royal Commission into Aged Care Quality and Safety.

This includes $3.6 million for a review of Aged Care Quality Standards, $116.1 million in additional funding for the Aged Care Quality and Safety Commission to deliver its regulatory functions under the Aged Care Act 2024 and $53.2 million to continue implementation of the Single Assessment System and support the staged digital implementation of the Aged Care Act.

A further $37.8 million will go directly to the Aged Care Quality and Safety Commission to support the staged digital implementation of the Aged Care Act.

There will be some direct funding for aged care service providers. $47.6 million will support First Nations organisations to deliver culturally appropriate aged care assessments for First Nations people.

$700,000 will help Uniting Care continue the operation of the Aged Care Workforce Remote Accord to support the aged care workforce in remote and very remote communities. Organisations looking to develop cooperative and mutual enterprises can also access a total pool of $2.4 million. 

Click here to view the Budget summary and supporting documents

Commonwealth Home Support Programme & Support at Home transition

The Government will also provide $30.1 million over five years from 2024–25 (and $7.8 million per year ongoing) to fund Commonwealth Home Support Programme (CHSP) providers through a revised approach of an uplift in indexation to existing grant agreements to cover the cost of the increase in award wages from the Fair Work Commission Stage 3 decision on the Aged Care Work Value Case. 

The funding will move to the Support at Home program when the Commonwealth Home Support Programme rolls into the Support at Home program from no earlier than 1 July 2027. 

The cost of this measure will be partially met from within the existing resourcing of the Department of Health and Aged Care.

Minimal savings on the horizon

The Government will achieve savings of $21.2 million over three years by not proceeding with part of the 2022–23 March Budget measure titled Ageing and Aged Care to trial new models of multidisciplinary care in residential aged care and inform pricing arrangements through the National Health Reform Agreement. 

The Government will achieve savings of $27.7 million through cost recovery activities under the new charging model of the Aged Care Quality and Safety Commission. 

Banning non-compete clauses

Revealed just hours before the budget was released, the government announced that it will ban non-complete causes for nearly three million workers.

In a move that’s allegedly aimed at winning over low and middle income earners, non-compete clauses will be banned for those earning up to $180,000. It should affect roughly one in five workers.

A non-compete agreement, also known as a restraint of trade clause, is a contractual term that restricts an employee from engaging in competing activities after their employment ends, protecting an employer’s business interests like confidential information and customer relationships. 

These clauses are typically used to prevent employees from starting their own businesses and potentially securing a wage rise using established connections and knowledge. 

By banning non-compete clauses, the government hopes to boost the creation of small businesses and make the economy more competitive. 

This move could impact home and community care businesses the most, or organisations that provide specific home care services such as gardening or cleaning. 

These measures demonstrate the government’s focus on workforce improvements, aged care reform, and increased healthcare support for older Australians. However, it does leave a lot to be desired as aged care providers struggle to implement necessary systems and processes for the incoming Aged Care Act.