Government sees $3.7 billion as ‘enough’ for aged care budget – aged care leaders say small positives do not deliver full solutions

$53 billion was found for defence, and possibly more submarines, but advocates and leaders in aged care wonder what the government’s thinking is with keeping the budget commitment for aged care at around $3 billion. It’s been exactly three weeks since Australia’s federal Minister for health and ageing set down the ‘hot potato’ budget measures for aged care and the NDIS. It may well be that in the timing, to rip off the band aid for aged care and NDIS reform earlier, government was laying the path clear to fight what they see as the bigger battle of negative gearing and CGT changes. Last night’s budget confirmed there were no new surprises for aged care, and the $3 billion injection, still to be phased in over years, should be seen as ‘enough’ to turn the tide on the multiple fault lines facing aged care. In Butler’s own words, “those turning 80, the critical age for measuring demand for aged care…they’re doing it in unprecedented numbers”, for a budget that does some but not enough, aged care leaders ask, is building capacity to serve, say, half, a policy plan to be proud of?

Mismatch of funding and need continues

Very little of material importance has changed since Butler’s address. This has sharpened his comments, retrospectively, for those seeking clarity on how the government is seeking to meet aged care’s mounting needs.

Tracey Burton, Uniting NSW.ACT CEO highlights the multi-faceted space that aged care leaders have had to hold in their stamina to navigate aged care’s continued change, “the aged care sector is in the midst of an enormous transformation that began with the Royal Commission…a transition that is still underway.”

And yet, it is vital to call a spade a space. Burton echoes the feelings of many of Australia’s aged care heads towards the budget last night, “the funding does not yet match to our aspirations for the care older Australians deserve.”

Southern Cross WA CEO, Clare Grieveson, stands alongside this response, noting, “the $3.7 billion investment in aged care in the budget is welcome but given $3 billion was foreshadowed in Minister Butler’s April National Press Club speech, there are no real surprises. This funding is a welcome start but more is needed to meet the total investment required.”

For sincere and hard-working provider heads, who have, over years, poured themselves into a sector that is not for the faint of heart, the fight continues to communicate with government about what is needed on the ground.

Juniper’s CEO Russell Bricknell says frankly, with this budget, “we’ve seen government spend the least cost they could on aged care, put the least on the table and hope that everything else will take care of itself as they go along.”

“It’s utterly bizarre, Support at Home waitlists are growing, this budget is not clear on how they are going to bring that number down, and do it without interim funding either. Preventative measures (of which home care is one) have not been invested in, 5,000 beds does not meet the real need, and so where does that leave us? It means the problem will shift from Support at Home to already strained hospitals”.

He shares, “not investing in access to robust Support at Home, with enough timely packages, reducing wait-times and full funding must be seen for what it is, cost shifting to the much higher cost brackets of daily hospital care”.

“Australia has 5000 seniors in hospital when they don’t need to be, this is costing the nation, on a daily basis, a stupid amount of money”.

Bricknell echoes multi-sector sentiment “and at the same time the government is putting the minimum into home care packages, there are consequences for the whole system to this approach.”

“Seniors and providers are not getting the services and funding they need, what happens when seniors fall over? Residential care is full, home care packages too slow or interimly funded, the only choice left is hospital, expensive hospital”.

“It is smart policy to care for seniors at home, to keep them at home longer and healthier, budgets need to reflect this in detail and clarity.”

Budget offering – aiming for half

In April Minister Butler shared, “this Budget will invest $3 billion in delivering more beds, more packages, and better care for Older Australians. He detailed that after receiving an independent review of aged care accommodation funding, the government was committed to “getting construction moving.”

That construction he detailed is to be “focused on delivering more aged care beds for supported residents – those with limited financial means”. The issue of supplementary bed places has been a considerable one. As the sector grapples with 59% of providers making a loss, a calamitous figure likely not suffered by government in any other sector, the need for more beds, particularly for seniors of lesser means, has reached a fever pitch.

And yet, as the rubber hits the road, it is the ‘enough’ approach that rears its head. Multiple analysts, economists and actuaries have looked at the same demographic numbers government has had for decades.

Butler himself noted, “in the four years from 2012, the net increase in Australians aged 80 and older was just 70,000. Over the coming four years, that growth will be more than 300,000 – four times the growth.”

It is with continued shock that leaders, analysts and statisticians, who have projected the bed build need for Australia to be at 10,000 new residential aged care beds per year, see that the budget confirms meeting half.

“The investments I announce today will support the construction of an additional 5,000 beds each year.” This too is reflected in the budget figures.

Leaders, advocates and seniors bewilderingly ask, where are the remaining 5,000 seniors meant to live when they can no longer stay at home?

What will this do to strained hospital capacity and budgets, what will this do for already stretched high-performing providers and front-line staff?

Accommodation supplement

Burton has commented on the awful choices that current accommodation supplements have placed hard-working and sincerely compassionate providers.

Here is the reality: the supplement numbers have just not been set at rates that cover costs. This means there is a profound incentive to not accept supplementary placements at all. This has boded poorly for Australia’s most vulnerable.

In the budget the government has confirmed new accommodation supplement increases for supported residents, but as in past years, leaders hedge that the increase does not go far enough.

The budget stipulates that it “provisions $1.1 billion for future spending to increase and restructure the Accommodation Supplement and introduce an additional payment for homes with more than 60 per cent supported residents.”

Whiddon’s CEO, Chris Mamarelis, voices a response that has been largely felt across the sector in the wake of the budget, where plenty of small positive steps abound but they do not amount to a whole, “the increase in accommodation supplements are a positive first step, recognising that funding has not kept pace with the true costs we experience day to day.”

“With this said, there is still a significant gap that needs to be filled when it comes to the cost of accommodation, and this has not been addressed.”

As hundreds of thousands of Australians age into the system, particularly in the decades to come, leaders warn that the need for robust and rising supplementary rates will be needed to keep up with inflation, and the growing cohort of Australians that will likely not have owned a primary residence, and so unable to contribute a RAD.

Burton agrees, there is still much to be done, in clarity, in meeting figures that providers, on the ground are grappling with, “we’re still really concerned about supported accommodation places, Uniting NSW.ACT has called on the government to increase the Accomodation Supplement to $150 a day.”

“We will continue to ask for this increase because it’s the actual cost of care.”

Juniper’s Bricknell even hedges that the $150 a day has now fallen behind actual operational costs. Keeping up remains a significant challenge for providers seeking to provide excellence in an ever shrinking funding pool distanced from real-world pressures, inflationary and otherwise.

BaptistCare’s Charles Moore too also shares his concerns. While acknowledging the accommodation supplement increases are positive measures, he calls out the lack of details in the budget, and the stark reality that the increases remain below required levels.

The budget does highlight areas where the vulnerable have been pointedly considered. Burton acknowledges a measure for the vulnerable they have warmly welcomed, “the Remote Accord funding of $700,000 is welcome. The Accord is a great way to support care providers in the most remote areas to ensure all older Australians receive the care they need.”

Yet the problem of supplementary rates is not going away, leaders attest, it is likely to worsen. This issue, leaders say, needs real and meaningful acknowledgement of the challenge at hand, and to come. Funding must respond to real and established costs in the market, not in theoretical legislation.

Capital subsidies

The budget has outlined funding to go towards capital subsidies for new builds. However that money will be split with other initiatives.

“This Budget invests $606.5 million over four years from 2026–27 to introduce new capital subsidies for aged care providers who build or expand residential accommodation, deliver up to 20 additional Specialist Dementia Care Program units and expand the Hospital to Aged Care Dementia Support program from 11 to 20 locations nationally.”

With rising costs of land, materials, labour costs and overall construction costs, provider leaders see what is committed as a start, that while seen as ‘enough’ by government, doesn’t go far enough to get to the threshold needed, that of 5,000 new beds per year.

If we aren’t reaching targets now, industry heads say, it is not a matter of catching up, it is falling into a position where that is not even possible.

“Without more capital support, the sector is not sustainable. We will not get close to building the more than 9,000 new beds needed each year, and the demand is only going up”, Moore shares.

Mamarelis goes one step further in his insight into how policy must tackle the reality on the ground. While new builds are important, the consideration of old builds falling into disrepair, and becoming not fit for purpose is a startling real-world consideration that has seemingly received no air-time with the government in this budget.

“While the focus on new builds is important, there are still thousands of ageing Homes across the country. Many require significant refurbishment or redevelopment, and this remains a gap that needs attention”, he shares.

Juniper’s CEO, Russell Bricknell shares the same concern, “you’ve had progressive governments cut funding into aged care, so we couldn’t afford to build. For ten years we haven’t as an industry been able to build, and it’s not just the problem of building new builds, it’s that we’ve got current building stock that’s going to start falling over.”

He agrees, the 10,000 figure to keep up with RAC demand is predicated on the belief that old stock endures. And yet, that is decidedly not the case in reality.

Bricknell shares that Juniper faces closing one building that’s 60 years old, “and that would be taking out 40 beds in an already at-capacity and strained sector”.

Support at home

From consistent pushing from the aged care sector, an about turn was announced for the new Support at Home program.

Butler cracked open the door to acknowledgement, “we’ve heard community concerns on some aspects of the program, particularly around showering.”

The government and budget now confirms a response, “we’ll invest around $1 billion to change the treatment of showering, continence management and dressing through the Support at Home program, making them free of charge alongside clinical care.”

This is a welcome move for those that have applied, navigated and started to receive their Support at Home packages. But that’s the trick, getting your package and services at all.

Burton highlights there is provider understanding on the juggling of money, “we are cognizant this is a tough Budget but there are always competing demands and the situation in aged care cannot be ignored.”

However she speaks directly into the situation of wait-times, “there are 200,000 people waiting for Support at Home, older Australians want to age in place and yet the government is not coming to the party to fund it”. She voices the consequences of a  multi-sector fallout, “as a result, hospitals and residential aged care are under incredible pressure.”

The government too has committed $390 million to “refining” the Support at Home program, with “assessments, hardship applications and the end‑of‑life pathway, and to bring forward the release of Support at Home program places in 2026–27”, are all in sights. But that is as much detail on the refining as was provided.

Grieveson shares the hope that was held for further clarity and reform when it came to the efficacy of the program’s functioning, particularly in pricing models and affordability, “the changes to Support at Home pricing structures to fully subsidise some personal care services is a good start, but it would have been helpful to see further rebalancing for Support at Home in last night’s budget, beyond accelerating package release.” 

Lack of clarity

It is here that the budget has taken an opaque turn in, well, not mentioning much of anything at all when it comes to the other glaring fault-line, Support at Home package wait times and its cost for those of very low means, other treasured home care schemes and how providers are meant to provide services at interim funding.

BaptistCare shares of the budget, “details are lacking, BaptistCare looks forward to learning the additional package numbers.”

They continue, “it was also disappointing to see no funding increases or clarity about the future of the Commonwealth Home Support Program, which is an effective, low-cost model of entry-level care.”

Burton is straight-forward, “We need more packages funded.”

It is stark and unavoidable, and so the budget’s silence on these is increasingly bizarre, and for some aged care leaders, unethical.

The wait times, according to the government’s own data, have ballooned. The national average for an older person who has applied to My Aged Care and the commencement of aged care services is 360 days, that is, one full year.

Burton notes, “the pledge of $390 million over four years for Support at Home refinements including making it easier to get hardship relief and to bring forward the release of packages is welcome but we want to see full pensioners who rent given automatic exemption from copayments.”

It is the lack of detail of this budget that continues to frustrate provider leaders who must manage its consequences on the ground. BaptistCare’s Moore names a growing frustration with the Support at Home program, and a very real need for “refinement”. He says, “home care works best when it is simple, flexible and focused on people. Right now, the system is becoming more complex and costly to run, while care on the ground is getting harder to deliver.”

Mamarelis concurs, “the reality is that we still need more when it comes to meeting the growing demand of senior Australians, and this means the release of more Home Care packages.”

“The Budget provided limited detail on operational issues such as capped pricing and implementation readiness.”

In order to guide refinements, government must bring insightful providers, where perspectives have been earned on the ground, to desperately simplify a program and its myriad of fault-lines.

For many in the sector, even the promise of bringing forward the release of packages is tinged with distrust. How many? When? The devil is in the details, and many are seeing the damage play out in the void of appropriate funding, and timely package commencement for thousands of Australians.

Insurance cut

In light of these figures Minister Butler’s comments come under a different light. What seniors were told was the government wants to underpin, “dignity in older age – through a world class aged care system – [this] is the least our parents and grandparents deserve. we want to deliver that, with our Aged Care Package, but it will require serious investment – and honesty about where taxpayer dollars are best spent.”

And so the budget measure to “return the rebate for older Australians back to the level paid for everyone else and divert the money back into Aged Care”, was delivered in a cocoon of egalitarian good. And yet, industry leaders say, this is taking away an avenue to remain at home longer and healthier, what definitively has been returned in its place in preventative medicine?

It is not quite possible to tell, with the current budget, just how wait times are going to be reduced, how a new influx of hundreds of thousands of packages are going to be funded and delivered to clear the backlog, and how the government will be ready to serve the rising number of those applying for them in the years to come.

This, alarmingly, remains to be seen.

BaptistCare’s Moore balances the welcome with the ‘very much work still to be done’, “at the heart of every budget decision are people. We see each day how the right settings can support dignity, independence and connection. While this budget has delivered some welcome reforms, the future we face together will require a long-term vision and investment.”

Sustainability and future demand

Whiddon’s Mamarelis is clear in his view, a view shared by hundreds of heads across the country, “while we welcome the measures in this Budget, it does not yet deliver the sustainable funding model envisioned by the Royal Commission.”

“The system remains reactive, rather than strategic and forward looking, reliant on layered supplements rather than a stable base model with longer term commitments to provide certainty for communities and providers alike.”

He shines light on a current policy blind-spot, short-sightedness, “most importantly, it is not yet forward-looking enough to meet the rapidly growing demand from an ageing population.”

In a nutshell, for aged care, this lackluster budget does not come close to ‘enough’. Mamarelis, alongside countless peers, shares the gratitude for positive steps, and in the same breath, appropriately challenges reform to hit the real targets needed, “we welcome this Budget as another step in the right direction, but it does not offer the transformation the sector requires.”

“More will be needed to ensure Australia has a sustainable, high-quality aged care system that can meet the needs of older Australians now and into the future.”

Much, much more is yet to be done.