Why the delay of Australia’s Aged Care Act matters: Balancing regulation and resilience

For older Australians waiting over a year for a home care package, or small aged care providers struggling with thin profit margins, the stakes of Australia’s aged care reforms are deeply personal. A key reform, the Aged Care Act, originally set to reshape the sector in 2024, was postponed to 1 November 2025, a decision addressed in the UTS Ageing Research Collaborative’s (UARC) webinar regarding Australia’s Aged Care Sector Report (Mid-Year 2024-25).

“Perhaps the most prominent [development] is the postponement of the Start of the Aged Care Act to the 1st of November 2025,” said Nicole, a UARC presenter, during a webinar on 27 June 2025.

“This postponement will allow the government as well as the various government agencies to work with the sector to ensure an effective transition to the new Act to support at home and the new regulatory regime.”

But what does this delay mean for care recipients, providers, and the sector’s future? While it offers a chance to refine critical reforms, it also risks prolonging uncertainty and stifling investment, raising questions about how to balance regulation with resilience.

Why the delay happened

The Aged Care Act, a cornerstone of reforms stemming from the Royal Commission into Aged Care Quality and Safety, aims to enhance quality, transparency, and sustainability in Australia’s aged care system.

It underpins the new Support at Home programme, designed to reduce wait times for home care packages (currently affecting 83,000 Australians) and introduce transparent pricing models. It also introduces stricter financial and prudential standards to ensure providers remain viable. However, finalising these standards has proven complex.

“A specific issue is the finalisation of the financial and prudential standards which the Aged Care Quality and Safety Commission released in draft earlier this year,” Nicole explained.

The delay grants the government and stakeholders (providers, advocacy groups, and care recipients) more time to refine these standards, ensuring they are practical and effective across diverse providers, from small rural homes to large urban chains.

UARC’s report, informed by “continuous engagement with sector stakeholders,” underscores the collaborative effort behind this decision.

The postponement reflects a commitment to getting the reforms right, particularly for the Support at Home programme, which aims to cut wait times to three months by July 2027. This extra time allows for consultation to address stakeholder concerns, ensuring the Act aligns with the sector’s needs and the government’s goal of a sustainable, high-quality aged care system.

Opportunities created by the delay

The delay offers several opportunities to strengthen the Act’s impact. First, it supports a smoother transition to the Support at Home programme, which will replace the current home care package system.

With 83,000 people on the waitlist as of December 2024 (nearly triple the number from mid-2023), the programme’s success depends on robust planning. The delay allows the government to refine pricing models, ensuring transparency without compromising provider viability. It also provides time to address workforce shortages, particularly in rural and remote areas, which UARC notes is critical: “Expanding service access is only going to be effective in reducing wait times so long as there is a skilled and adequately distributed workforce” (Nicole).

Second, the delay enables refinement of the financial and prudential standards. UARC’s submission to the Aged Care Quality and Safety Commission, available on their website, highlights inconsistencies in the draft standards. “The standards are intended to strengthen the financial accountability [but] they omit explicit reference to the need for the Aged Care System to be managed in a way to ensure sustainability and resilience which is specified as objects of the new Aged Care Act,” Nicole stated.

The extra time allows policymakers to align standards with the Act’s objectives, ensuring they promote long-term resilience rather than just short-term compliance.

Finally, the delay offers a chance to adopt a “risk-proportionate” regulatory approach, as UARC advocates: “There is perhaps a missed opportunity to ensure the standards align with the regulatory approach that is risk proportionate” (Nicole). This means tailoring regulations to the risk profiles of different providers (small, rural homes face different challenges than large chains), ensuring fairness and flexibility.

For older Australians, this could translate to a more equitable system that delivers quality care without overburdening providers.

Challenges and risks of the delay

Despite these opportunities, the delay introduces significant challenges. Prolonged uncertainty weighs heavily on providers, many of whom are already financially strained. The UARC report notes that home care providers’ profit margins have plummeted to 3.3% in 2024, with 40% reporting negative operating results.

Residential care homes, while nearing breakeven, see 48% operating at a loss. The delay extends this precarious state, as providers await clarity on pricing, funding, and compliance requirements.

One critical concern is the reduced observation period for pricing behaviour under the Support at Home programme. Originally set for 12 months, it is now just eight months before potential price caps in July 2026. UARC warns that premature price caps could lead to “price distortion” and “reduced service availability,” particularly in thin markets like rural areas. This could exacerbate access issues for older Australians already facing 12 to 15-month wait times for level four home care packages.

Another challenge lies in the proposed minimum liquidity standards, requiring providers to hold 35% of quarterly cash expenses and 10% of Refundable Accommodation Deposit (RAD) balances. While aimed at preventing financial collapse, these standards could increase borrowing costs, particularly for large providers who drive new residential home development.

“The proposed minimum liquidity amounts and the impact on capital investment” (Nicole) are a key concern, as occupancy rates hit 94%, signalling supply constraints. UARC’s modelling shows 36% of large chain providers may fall below the liquidity threshold, compared to 3.6% of standalone homes, potentially deterring investment in new facilities at a time when demand is outpacing supply.

Balancing regulation and resilience

The delay underscores a broader tension: how to strengthen financial accountability without stifling the sector’s resilience. UARC’s analysis suggests that current standards risk prioritising compliance over sustainability, particularly for smaller or rural providers.

For example, the liquidity standards could disproportionately affect large providers, who have opened 103 new homes since 2017 compared to 49 by standalone providers, per UARC’s data. Without investment in new facilities, supply shortages could worsen, leaving older Australians without access to care.

For care recipients, the delay means prolonged uncertainty about future costs and access. The growing waitlist (83,000 and counting) and long wait times (12 to 15 months for level four packages) highlight the human cost, with risks of health deterioration, early residential care entry, or increased caregiver burden, disproportionately affecting women. UARC’s call for a skilled workforce and risk-proportionate regulation offers a path forward, ensuring reforms support both providers and those they serve.

Looking ahead

The postponement of the Aged Care Act is a critical juncture for Australia’s aged care sector. It offers a chance to refine reforms, ensuring they promote sustainability, equity, and quality care.

However, it also risks prolonging uncertainty and constraining investment, particularly in a sector where demand is outstripping supply. As Nicole noted, “Expanding service access is only going to be effective in reducing wait times so long as there is a skilled and adequately distributed workforce.” Stakeholders must use this time to address these challenges collaboratively.

Readers can download the full UARC report from their website to explore these issues further and engage in public consultations to shape the future of aged care. By balancing regulation with resilience, Australia can build a system that delivers for older Australians, providers, and communities alike.