Billions of government capital a start – but providers want trust in how it breaks ground

The $3 billion dollars of government capital set to help supercharge residential aged care bed building has been widely received across the sector. But there is another side to this coin. The fact that bed build rates are so on the back foot, with only 578 added out of the projected-need of 10,000 last financial year, shows not only policy failures provider leadership say, but a breakdown in trust to tackle the issues.

Providers have been clear and vocal for years about the demand they have consistently been contending with, and will need to manage in decades to come. Not only has Australia’s ageing population been an obvious and blatant fact seen by any able to review Australia’s census data but the lack of recognising industry leaders as insightful, intelligent and trustworthy sources, to direct how policy lands, has meant wasted opportunity to get on the front foot. For sincere providers used to seeing the sector lambasted in mainstream media, the need to change the narrative, and highlight the truth of the hundreds of compliant and excellent leadership is a matter that could dictate whether the $3 billion is spent well, to great effect for those that need it most.

No quick wins

For providers who have sincerely been working to bring sector strength and resilience across many tumultuous years, the degree of frustration at how on the backfoot government is in supporting the building of beds has grown to new heights.

In his National Press Club Address Butler noted that from 2012-2016, 70,000 Australians turned 80, the figures have since ballooned, from 2026-2030, that figure now sits at 300,000, “four times the growth”. Butler followed this up by stating, “that’s why I’ve said we need to open a new Aged Care home every three days for the next twenty years.”

To which frustrated advocates and provider leadership ask, why have consecutive governments left it till now to manage the needs of an ageing population? A great fault-line emerges, one that Australia’s very democratic system will need to contend with.

What political analysts have been murmuring, now to greater decibel, is that meeting the numbers, that of 10,000 per year, not the 5,000 Minister Butler has noted, will not be a quick political win.

The figures have been clear for decades, and so this makes the failure of government to be across party lines and decades especially fraught for veteran aged care professionals. Everyone had the opportunity to see this coming and act on it, industry leaders say.

$3 billion is a start but it is not the end. With meeting bed build rates out of the quick win political prize bucket, the question now is how will government, across party lines, commit to meeting the common good in RAC to meet bed targets, across the election cycle?

Partnership attitude – listening and leveraging

The problem with occupancy and bed building rates has not come out of nowhere.

For years, reports have yielded figures cementing all too known trends, residential aged care occupancy is on track to hit the absolute ceiling of 100% soon.

2025 saw both Colliers and StewartBrown reports highlight that the occupancy levels across the nation, for those requiring residential aged care beds, was around 95%.

In seeing their occupancy rates inch higher and higher, the sector has not been quiet. And so hearing government speak over its head has resulted in many leadership telling Hello Leaders they have felt disrespected and infantilised.

In addition to extrapolating bed build strategy out of the three year election cycle churn of quick wins, sector leadership has reminded government, that in order to land the $3 billion capital injection to build beds, attitudes on approach and trust have considerable work to be done between government and sector. 

Insight offered

Last year, when Minister Butler and state health ministers intensified the barbs between who was at fault for ‘bed-blocking’ and the lack of spots available in residential aged care, frustration hit new levels. Providers had it confirmed repeatedly, their submissions and explanations of what was impeding bed building ignored once again.

Speaking on anonymity, a CEO of a large aged care provider told Hello Leaders they had thought government actively wanted to hear from sector leadership, in submissions, and offer of assistance in navigating how to land reform. To their flummoxed shock, government personnel responded that, “‘Oh, this is legislation, so, it’s actually really complicated’”.

“I was gobsmacked”, the CEO shares, “that I was treated like a over-ambitious child out of their depth when I and my team have poured myself into providing excellence in care, particularly through a pandemic. To have our acute insight rebuffed was devastating, we know the cracks, we have specific insight in how funding can go further but we’re not respected or taken seriously.”

Frank Price of RFBI has shared with Hello Leaders, the reality providers find themselves in when trying to build needs to be acknowledged, “unless a provider receives a government grant, the cost of building aged care facilities is primarily borne by residents.”

While providers were profoundly keen to engage in capital builds the monumental challenges facing them were reasonable and comprehensive deterrents, not just from a business risk perspective but in discerning who would be most impacted if the debt held to build could not be serviced.

Echoing hundreds of sincere provider leaders around the country, Price notes, “the cost of building aged care facilities is primarily borne by residents.”

“Construction costs began to spike in late 2020. Previously, the average cost per bed was around $350,000. Today, it’s closer to $640,000—driven by increased labour and material costs, builder availability, and delays in DA approvals.”

Price notes, “rural and remote locations face even higher costs, often exceeding the RAD that can reasonably be charged, leaving providers to fund the shortfall.”

Borrowing within the current inflationary market, Price also notes, means risk keeps rising, and the fallout is not a risk many provider heads are willing to expose their residents to. 

Partnership and trust

In hearing that $3 billion would be incoming to help with supercharging bed building, providers are cautiously optimistic. Yet they say that the money will need to be handled well, with close and trusted partnerships at the provider level, to be instrumental in landing effective bed building increases.

Provider leadership are keen to see trust in how the scheme hits the road, collaborating with providers in breaking ground.

Providers are frank, a top-down approach from government has not worked so far, coming alongside is finally their only option.

Budget efficacy

The Inspector-General of Aged Care, Natalie Siegel Brown has, in her response to Minister Butler’s National Press Club Address also highlighted sector and senior sentiment in meeting the sector needs well. It is not about cap-in-hand asking for more money, but having that money spent better.

In addition to meeting the need of rising RAC demand through capital investment, she notes that it is worthwhile for the government to consider alternative pre-emptive funding strategies, such as re-assessing the Support at Home plan, and how it can be leveraged to ease strain on hospital admissions and RAC as well.

She says, “Australia already spends around $40 billion a year on aged care, and Minister Butler has announced an additional $3 billion to strengthen the sector, which we welcome.”

“I consider there is scope to do more within this expanded budget to incentivise and fully fund other supports that maintain independence at home, and to keep analysing how co-payments for other types of home support may unintentionally push people into more expensive residential aged care.”

She noted, “I encourage the government to seize this opportunity to keep reviewing which supports are treated as ‘essential’ under Support at Home, and how the co-payment settings may affect people’s ability to stay well and remain at home.”

“This is not about asking for even more money; but we can use this existing budget better.”

“A system that supports independence rather than dependency, intervenes early rather than late, and invests in connection rather than crisis would serve more people, with shorter wait times, and fewer emergency escalations”, she says.

Alongside analysts inside and out of aged care, she outlines the funding efficacy of this approach to mitigate RAC demand, “fewer people would need beds, sooner, and the budget would work harder, for longer, for more people. That would be a true rights-based aged care system, and one that would deliver the biggest bang for the aged care buck.” 

From breaking out of the election cycle churn, building up bi-partisan support, meeting current RAC bed build needs, and focusing policy efforts to mitigate that demand in the years to come, advocates and industry leaders have a keen and immensely attentive eye on how Wednesday’s announcements will be rolled out.