Gov aims to close the aged care nurse gap with $2.6 billion commitment

The Australian Government’s heavy investment into the aged care sector continues with a $2.6 billion announcement to fund the second pay rise for 60,000 nurses, taking its total wage increase commitment to almost $18 billion. 

The funding was budgeted for in the government’s December Mid-Year Economic and Fiscal Outlook (MYEFO). 

Additionally, a slim increase to the AN-ACC price has been passed on by the government to fund the increase with the Minister for Finance and Women Katy Gallagher stating it will help the sector compete in a fierce nursing market. 

Key points

• Wages for enrolled nurses (ENs) and registered nurses (RNs) increased on March 1 as per the Fair Work Commission’s (FWC) final decision on the Aged Care Work Value Case 
• Information confirming the pay rise was only published 10 days before it was to come into effect, however, meaning providers had no certainty about funding 
• The late announcement regarding the AN-ACC price increase, alongside increases to the 24/7 RN supplement and hotelling supplement, provide some certainty
• There are concerns the increases still do not go far enough to fund other workforce expenses such as leave entitlements 

The government’s latest AN-ACC price increase came into effect on March 1 alongside the nurse wage increase. The AN-ACC price is now $282.44, a slight bump on the previous AN-ACC price of $280.01. 

Overall, this means the average AN-ACC funding has increased from an estimated $303 per resident per day to $306 per resident per day. 

Additional funding to support the decisions on the FWC Aged Care Work Value Case will be delivered through the AN-ACC funding model from 1 October 2025 and 1 August 2026.

Speaking to ABC’s Radio National Breakfast on Tuesday morning, the Minister for Finance and Women, Katy Gallagher, said the pay rise for clinical staff will help aged care attract more qualified workers. 

“Nurses in aged care were paid less than nurses in hospitals and that had an impact on the clinical care being provided in aged care facilities,” Minister Gallagher said.

“This is a big reason why wages are so important. We saw from the minute that aged care workers’ pay increased significantly the retention rates responded quickly.

“When you’re competing for nurses, and we know there’s no shortage of competition for nurses, you have to have attractive conditions and wages that compare with what nurses can earn in other settings like hospitals.”

Elsewhere, the Minister for Aged Care, Anika Wells, told 4BC’s Peter Fagan the government is significantly closing the gap on workforce shortages. 

“This is now the third year of us delivering the Fair Work awarded pay rises to aged care workers,” Minister Wells explained.

“We are in a global race for nurses. It was probably the biggest problem when I came to the role as Aged Care Minister, the shortages in workforce. About three years ago the registered nurse workforce gap was about 13,000 nurses. 

“Now it’s just under 1500 nurses and that’s directly attributable to these pay rises. To people coming back to the workforce when maybe they couldn’t afford to stay on or being enticed back because they genuinely believe aged care is getting better.”

Significant wage rises over the last three years have resulted in a Level 2, pay point 3 RN gaining an extra $22,000 per year by 2026, while a pay point 2 EN is set to receive a total $19,000 pay boost compared to 2022. 

“The more nurses we can encourage back into aged care the better care everybody will be able to rely upon when they need it,” Minister Wells added. 

“It’s $17.7 billion all-up across our time in government and that is $17.7 billion worth of value, effort and work that Australians were putting into their jobs in aged care that they weren’t getting paid for.”

While the funding will help support aged care providers to meet the FWC’s decision to increase award wages, Minister Gallagher emphasised that the government still has more work to do in the care economy to ensure the workforce can support more demand.

Despite this, she said the government is pleased to have delivered on essential funding in the upcoming budget. 

“We are a big funder of aged care and we recognise that in order to address some of these inequalities the government needed to find room in the budget to support those wage increases,” she added. 

Higher wages are also viewed as a positive step towards gender wage equity. Minister Gallagher praised overall workforce performance that has seen employers reduce their gender pay gap.

She said it’s an ongoing mission for employers to understand and address gender pay gaps and leadership is an important facet. 

“This is all positive but there is more to do to make sure women are getting a fair crack at opportunities in the workplace” she said.

“Part of that is understanding what’s happening at the most senior levels, which is where we see the biggest gaps are in male-dominated industries. A lot of that can be put down to a lack of women in senior leadership.”

Residential aged care providers have also received a 2.8% 24/7 RN supplement increase from March 1. Meanwhile, the hotelling supplement will be $13.46 per resident per day from March 20 before a further $2.14 increase is passed on from July 1, 2025. More information on those increases can be found here.