Dignity or Dinner? The High Stakes of Australia’s Aged Care Funding Reforms
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Aged Care at a Crossroads
Australia’s aged care system is at a tipping point. As the population ages and demand for services soars, big changes to funding and policy are underway – and not everyone is confident they’ll work out for the best. In fact, a group of aged care providers recently issued a stark warning: “No older person should be made to choose between dignity and dinner,” they declared, urging the government to rethink its new Support at Home funding model. It’s a vivid image – older Australians potentially having to choose between paying for basic care or a basic meal – and it has struck a nerve with seniors, carers and providers alike.This editorial takes a closer look at what’s happening with aged care funding across the country. We’ll start with that Support at Home program causing a stir, then zoom out to the broader national issues: rising costs, policy reforms born from a royal commission, and why so many aged care providers say they’re struggling to survive. We’ll hear from insiders – providers, advocates, even the government – in their own words. And we’ll do it in plain English, because if your eyes tend to glaze over at terms like “co-contribution model” or “AN-ACC funding,” you’re not alone. Aged care policy can sound like alphabet soup, but the stakes are very real. The goal is to inform without lecturing, and maybe even raise a smile or two along the way.
So, brew a cuppa, get comfortable, and let’s unpack what these aged care changes mean. Are they a long overdue fix for a broken system, or could they leave some seniors worse off? Let’s find out.
Paying More for Care at Home
For years, older Australians have been told that “ageing in place” – staying in your own home with some help – is the ideal. It’s what most people want for themselves and their loved ones. The good news is the government agrees. “We’ve heard the message from older Australians: they want support to stay in the homes and communities they love,” says Aged Care Minister Anika Wells. That message, amplified by the Aged Care Royal Commission’s findings, has spurred a major overhaul of in-home care programs.From 1 July 2025, the Support at Home program will replace the existing Home Care Packages and other home support services. This new scheme promises to simplify a fragmented system and help hundreds of thousands more seniors live independently at home.
But here’s the catch: along with expanded services and shorter wait times, Support at Home introduces means-tested fees for care that used to be free for many. In plain terms, if you’re an older Aussie getting help with showering, cleaning, grocery shopping or gardening, you may soon have to pay a slice of the cost out-of-pocket, depending on your income and assets.
Even full pensioners – who up to now often paid nothing for low-level home support – will likely contribute 5% of the cost of personal care services and 17.5% of domestic support services under the new model. Self-funded retirees would shoulder much more (up to 50% of personal care and 80% of domestic costs). The only exception is clinical care – nursing, allied health and the like – which remains fully funded by taxpayers.
If you’re thinking “Ouch, that sounds expensive,” you’re not alone. The federal government has been quick to insist that no current recipient will be worse off immediately – a “no worse off” guarantee means anyone already in the system won’t have to pay more. The changes target new entrants from July 2025 onward. And officials stress there will be hardship provisions to protect those who genuinely can’t afford to contribute.
In fact, the reforms were crafted with bipartisan support, aiming to ask “wealthier older Australians” to kick in a bit more for their own care, rather than slugging all taxpayers with a big new levy. Over the next decade, these means-testing changes are projected to save the budget $12.6 billion – money the government can redirect into expanding services and improving quality.
Image source: Seniors Discount Club
Seniors and Carers Worried About Costs
Savings to government, however, can translate to higher bills for older people and their families. The mere prospect has many worried. “There’s growing anxiety among older Australians about what it will mean for them financially,” reports ABC News.Christina Tsobanis, a Sydney woman who cares for her mum with Alzheimer’s, voiced what a lot of families are feeling. “They’re already struggling. They’re already at their financial limitations and they’ve worked their whole lives, they’ve paid their taxes,” Ms Tsobanis said of her mum and other full pensioners now facing new fees. She fears even a modest hike could force people to cut back on essential care – like fewer hours of help at home – to save money.
Financial advisors echo that concern. Jim Moraitis, who runs an aged care advice service, says many seniors on the pension live week-to-week. “For someone living on the full pension of about $1,100 per fortnight, even a modest co-payment could impact affordability, especially for those also managing rent, utilities and other living costs,” he explains. Moraitis estimates a full pensioner needing only 5–6 hours of support a week might pay an extra $10–$30 out of pocket under Support at Home.
That doesn’t sound like much to some, but consider that more than half of age pensioners rely on the pension as their main income, which isn’t exactly generous. As one community advocate bluntly put it, “They may as well have just announced a pension cut ... the outcome is the same for many.”
Perhaps the bigger worry is the psychological effect. Moraitis says the “overwhelming sentiment” in the senior community he works with is “deep concern, anxiety and frustration” about the unknowns ahead. Some are skeptical of government assurances. They hear “no one will be worse off” and roll their eyes – not out of cynicism, but because they’ve seen promises and reality diverge before.
There’s also confusion: aged care fees are notoriously complex, and the new formulas involve sliding scales and case-by-case assessments. It’s hard for anyone to calculate exactly what they’ll owe until the day comes.
“Showering Is Not a Luxury” – Advocates Weigh In
Amid the worry, advocacy groups for older Australians have adopted a balanced view – cautiously welcoming some parts of the reform while pushing back on others. The Older Persons Advocacy Network (OPAN), a national consumer voice, says Support at Home has plenty of positives. “It brings more timely services, more services in people’s homes … and access to allied health,” notes OPAN’s chief executive, Craig Gear.Importantly, the new program comes with an infusion of 83,000 extra home care packages in its first year alone – the largest ever single-year expansion. That is very good news for the 76,000 Australians currently stuck on a waiting list for care. Many have been waiting over a year for high-level packages, a delay which National Seniors Australia says has caused real suffering. OPAN’s Samantha Edmonds applauded the extra packages, saying “they will help address the long wait times older people are currently experiencing”.
The government is aiming to reduce home care wait times to an average of 3 months by 2027 – an ambitious target, but one broadly supported by consumer advocates.
On the other hand, advocates are not thrilled about how some services are categorized under the new funding model. Under the draft rules, help with daily personal tasks – like taking a shower – is classified as an “independence support” rather than clinical care. Why does that matter? Because it means a co-payment is expected. OPAN’s Craig Gear has publicly questioned that logic: “We think showers should be considered as part of clinical care that is not a luxury,” he says.
In other words, basic hygiene for an elder who needs assistance shouldn’t come with a price tag, even if it’s a small one. Showering, dressing, using the toilet – these are fundamental human dignities, not optional extras, and advocacy groups are urging the government to ensure cost isn’t a barrier in these areas.
OPAN and others have also noted the clock is ticking. At time of writing, the new program’s launch is just weeks away, yet many details (like the exact fee schedules and provider pricing) were still being finalised.
“Some of the pricing information people are looking for, we know providers are looking for that as well,” Mr Gear said in April. That uncertainty only fuels the anxiety in the community. The government has since released fee schedules and factsheets, but it’s fair to say everyone will be holding their breath on July 1. Will the transition be smooth? Will older Aussies take the changes in stride, or will we see backlash if bills start arriving higher than expected? Minister Wells insists a “safety net” will be in place for those who genuinely can’t afford their co-contributions.
Advocacy groups plan to keep a watchful eye and hold the government to that promise. After all, the whole point of these reforms – as Minister Wells often reminds us – is to support older people, not discourage them from seeking help.
A representational image of an older Australian at home. Many seniors hope to live independently for as long as possible, but doing so often requires affordable support services.
Providers Cry Foul: “Cost Over Care” Concerns
It’s not just care recipients feeling uneasy – aged care providers (the organizations that deliver home care and run nursing homes) have been raising red flags about the new funding model too. In South Australia, seven home care CEOs teamed up to demand action, saying the current plan “prioritises cost over care” and could leave vulnerable seniors without the help they need. These aren’t the big corporate operators, but small-to-medium community providers and innovators – groups like Your Side Australia and MWP Care – who claim their voices have been drowned out in policy talks.They banded together out of fear that “transactional” funding will reduce care to units of service, turning compassionate support into a series of billable tasks. It’s a concern many frontline workers share: Will the human element – sitting and chatting with a client, noticing subtle changes in their mood or health – be lost if every minute must be justified under a tight budget? One provider CEO, Kaz Dawson of Proveda, put it this way: “[The new model] has reduced care to fleeting moments of impersonal care,” focusing only on tasks done and dollars spent.
In their joint plea, this coalition of providers urged the government to make two key changes:
- Remove financial barriers for consumers. Specifically, they want a review of the co-contribution model to ensure no senior is “priced out of essential care”, and they argue that personal care (like help with showering, dressing, toileting) should be reclassified as clinical care – meaning it would be fully funded and free to clients. This aligns with what OPAN has been saying about showers not being a luxury. The idea here is to protect the most essential, intimate care services from being subject to user-pays.
- Boost funding for care management. Under current plans, providers can only use 10% of a home care package for care management (the behind-the-scenes coordination and case management). Providers say this is too low and that it “overlooks the critical role care managers play in delivering safe, tailored and compassionate support.” They are calling for the cap to be lifted to at least 17% of funding. In practical terms, that would give agencies more resources to, for example, arrange specialist appointments for clients, train and supervise care workers, and check in regularly to adjust care plans – all those coordination tasks that ensure quality care but don’t show up as hours of cleaning or cooking.
So far, the government’s response to these calls has been cautious. There’s acknowledgement that fine-tuning may be needed – after all, the Support at Home model is a big reform being rolled out at pace. In fact, the start date was delayed once (it was initially slated for mid-2024, then pushed to 2025) precisely because stakeholders warned it wasn’t ready. Minister Wells has indicated the government will monitor the rollout closely and make adjustments if unintended consequences emerge.
But for providers on the ground, the stakes feel high. “Without government action, irreversible but preventable harm may be done,” the provider group warned, listing risks like more falls, untreated health issues, even elder abuse going undetected if people opt out of services due to cost or if providers collapse. That’s strong language, but it underscores their genuine fear that a funding misstep could have real human costs.
The Other Side of the Coin: Residential Aged Care
Thus far we’ve focused on care in the home. But what about aged care homes – the nursing homes, residential facilities and villages where about 190,000 Australians live? This sector, too, is going through seismic change, and it has its own funding woes. In fact, some of the new funding measures in the reform package are aimed squarely at propping up residential care providers, many of whom have been bleeding red ink for years.Start with a sobering statistic: more than half of Australia’s aged care homes are operating at a loss. By one recent count, 54% of facilities were in deficit – and that was before the latest wage hikes and staffing requirements fully hit. Running a nursing home has simply become a money-losing proposition for too many operators, especially smaller and regional ones.
Why? Costs are surging: new regulations now mandate higher staffing levels (at least 200 care minutes per resident per day, with a registered nurse on site 24/7). These changes were absolutely recommended by the Royal Commission to improve quality – more carers and nurses mean more attention for each resident, fewer medication errors, better infection control, and so on. But hiring those extra staff (if you can find them – more on the workforce crisis shortly) is expensive. The government did introduce a new funding tool in 2022, the Australian National Aged Care Classification (AN-ACC), which pays homes based on each resident’s care needs. AN-ACC was meant to be more generous and fairer than the old system, and for some homes it has been.
Yet industry leaders say it’s still not keeping up with the real cost of care, especially given the recent inflation in wages, food, and energy.
“It’s not working at all,” says Stephen Becsi, CEO of Apollo Care, about the AN-ACC funding model in practice. Becsi’s organization has been snapping up struggling regional facilities to keep them open, so he knows the balance sheets intimately. In outback areas, he warns that the funding just doesn’t cover expenses. “Look at everyday living: providers are losing money. Laundry, cleaning and food – we’re losing $5.62 a day [per resident]. Accommodation, we’re losing $10.16 a day. You put that together ... and providers across Australia are losing 64 cents a day for every single resident in residential aged care. Companies go out of business,” he said bluntly.
Losing 64 cents per resident per day may not sound dire, but multiply that across 80 or 100 residents over a year and you see why some facilities are deep in the red. Essentially, many homes are barely breaking even on care, and outright losing money on room and board.
Becsi also notes that for rural homes, the reliance on costly agency staff (due to local worker shortages) can add another $20–$30 per resident per day in costs – a burden city facilities don’t face. “The moment you go out to regional [areas] ... People don’t want to live in the bush [to work as carers]. ... With these losses the nursing home is going to close down and that’s what’s happening in Australia right now,” he warned.
Sadly, he’s right – Australia has seen a string of aged care home closures, especially in rural towns, over the past two years. In 2023 alone, at least 18 facilities shut their doors, many explicitly blaming staff shortages and financial strain. Each closure displaces vulnerable residents (often forcing them to move far from their community or into hospital beds) and leaves families in the lurch.
Funding Fixes (and Whether They’re Enough)
The recent reforms acknowledge these issues and attempt to throw residential providers a lifeline. As part of the bipartisan deal struck in late 2024, the government will allow higher accommodation prices and bring back a version of the “retention fee.” Concretely, the maximum refundable accommodation deposit (RAD – basically the price of a room in a nursing home) that providers can charge without special approval was raised from $550,000 to $750,000. This recognizes that building and maintaining modern care facilities is costly, and in some areas $550k per bed wasn’t covering capital costs. Wealthier residents or their families may now pay a higher lump sum for a room, which the provider can invest.Additionally, homes will be allowed to retain 2% of a resident’s deposit per year for up to 5 years. Older readers might recall that years ago, nursing homes could deduct a set amount from deposits each month (a practice scrapped in 2014). This new retention is a more modest version: if you pay a $400,000 deposit when entering care, the home could keep $8,000 of it per year for five years (total $40k) as revenue, with the rest refunded when you leave or pass away.
The idea is to give providers a revenue stream to invest in improving facilities. Nearly half of providers currently lose money on accommodation services, so these changes were welcomed by the industry as a much-needed boost to financial sustainability.
Still, the core government subsidy for care (the AN-ACC funding) remains a sticking point. Some innovative providers argue it even discourages reablement and preventative care – because funding is tied to how frail residents are, there’s a perverse incentive to not improve someone’s independence too much, lest the funding drop.
Greg Aleckson of NewDirection Care, which runs a novel “micro-town” model for dementia care, has criticized AN-ACC for “rewarding disablement” and making it hard to fund more home-like, social models of care. And Mary Patetsos, a highly respected industry leader who sat on the government’s Aged Care Taskforce, has been blunt about the bigger picture: “We were very aware that most providers were reporting deficits not because of poor performance but because the funding model wasn’t able to deliver for them in a way that created enough surplus for them to reinvest in the very things that older people need,” she said.
In other words, even well-run, efficient aged care homes can’t make ends meet under current settings – which makes it impossible to upgrade facilities, invest in staff development, or innovate. Patetsos and the Taskforce have called for “new, innovative models of funding” to put aged care on a sustainable footing.
It’s worth noting the government is indeed exploring bigger funding reforms for the long term. The Aged Care Taskforce referenced above was convened in 2023 to examine options like an aged care levy (a special tax) or deeper means-testing of wealthier seniors, among other ideas. Its recommendations have begun filtering into policy – in fact, the very changes we discussed (higher co-contributions for the well-off, higher accommodation payments) came from that process.
For now, the immediate relief for providers is limited. The 2025 federal budget delivered some targeted support – notably $2.6 billion over five years to fund a 15% wage increase for aged care nurses and care workers. This was huge for the workforce and widely praised (we’ll talk more about workers in a moment). The budget also set aside $290 million for reform implementation (things like new IT systems, the new regulatory requirements, etc.). But outside of those measures, stakeholders say there’s little new money to directly shore up struggling providers or build new facilities.
Industry groups had hoped for grants to upgrade ageing nursing homes or one-off subsidies to help meet the new staffing standards. Instead, they got a clear message: improve efficiency, embrace the coming changes, and use the tools being provided (like the modest new accommodation fees) to balance the books. Not surprisingly, many providers remain worried that without further help, they’ll be unable to comply with all the reforms and stay financially afloat.
Image source: Seniors Discount Club
The Human Face: Workers and Residents
Policy and dollars aside, let’s remember that aged care is ultimately about people – the seniors who rely on care, and the staff who provide it. No discussion of aged care funding is complete without mentioning the workforce crisis. Carers and nurses are the backbone of the system, and there simply aren’t enough of them. Low pay and demanding conditions have made recruitment tough for years. As of mid-2023, job vacancies in aged care were at record highs and many homes couldn’t fill rosters, forcing them to leave beds empty despite demand. The federal government’s decision to fund a 15% award wage increase for aged care staff (effective 1 July 2023 for direct care roles, with further boosts in 2024-25) was a game changer.It has started to make a difference – Minister Wells noted a 30% jump in applications for aged care nursing jobs on one employment site after the pay rise kicked in. That’s encouraging. Yet, as the Committee for Economic Development of Australia (CEDA) observed, wages are still lower than in comparable sectors like disability support or hospitals. Frontline workers often burn out due to understaffing, and they have limited career progression opportunities. In short, it will take more than one pay bump to solve this.
Providers are calling for funded traineeships, visa changes to bring in overseas carers, and public campaigns to elevate aged care as a valued profession. These efforts need funding too, which again circles back to the dollars and cents.
From the perspective of residents and families, quality of care is the number one concern. All the funding reform in the world means little if it doesn’t translate to better care on the ground. That was the entire thrust of the Royal Commission: Australia needed to spend more and spend smarter to ensure older citizens are looked after with dignity. Some reforms directly address quality – like the new Aged Care Quality Standards and a star-rating system for facilities that was introduced to improve transparency.
The new Aged Care Act 2024 (just passed in Parliament in late 2024) is rights-based, meaning it explicitly centers the rights of older people to safe, quality care. It also establishes an independent Inspector-General of Aged Care and stronger powers for the regulator to police bad providers. These are positive steps that don’t get as much public attention as fees and budgets, but they matter a great deal.
For example, if a nursing home is chronically understaffed or neglecting residents, the beefed-up Aged Care Quality and Safety Commission (which got an extra $116 million funding boost in the budget) is expected to step in faster and more forcefully.
On the home care side, the introduction of a government-set price cap for services under Support at Home is a noteworthy protection. In the past, some home care package providers charged hefty admin fees or high hourly rates that ate into people’s package funds. With the new model, an independent pricing authority will set maximum prices for common services to prevent price-gouging.
The government claims this will ensure better value and consistency. That, combined with the promise to contribute $7.80 for every $1 an older person pays in co-contributions for home care, is meant to reassure consumers that the system remains mostly publicly funded, with modest inputs from those who can manage it.
A Balancing Act – And Where To From Here?
Reading through all this, one thing becomes clear: aged care reform is a massive balancing act. It’s about balancing financial sustainability with compassion, balancing the roles of government funding and personal responsibility, balancing immediate needs with long-term demographic realities.Australia’s older population is growing rapidly – the number of people over 85 will triple in the next 40 years, according to government projections. We simply cannot provide quality aged care to all those people on the old settings; reform is not optional, it’s essential. The consensus across providers, advocates, and policymakers is that “current funding arrangements are not sufficient to keep the sector afloat.” That’s a direct quote from the government’s own rationale for these changes, and it’s hard to dispute.
Yet, knowing that something must change doesn’t make the trade-offs easier. It’s telling that, even with billions in new funding on the table, the reforms will save the government $12.6 billion over a decade by asking some to pay more. The subtext is clear: the public purse alone can’t cover everything, especially as the cohort needing care swells. Many in the sector agree philosophically that those who have the means could contribute a bit more, if it helps improve care for everyone.
Peak bodies like Catholic Health Australia have long advocated for higher user contributions from wealthy retirees – for instance, tapping into the value of assets like investment properties to fund one’s care. This is somewhat reflected in the new means test settings. At the same time, there’s a moral line Australians aren’t keen to cross: a fair go for all. If higher fees end up discouraging people from accessing care or push middle-income seniors into hardship, then we’ve gone too far.
It’s early days, and there are positive signs as well as cause for caution. On the positive side, more funding is flowing into aged care than ever before (the government cites a $17.7 billion commitment to wages and improvements over coming years). The legislative reforms have bipartisan support, which is a rarity in politics and bodes well for stability – no one is promising to repeal these changes after the next election, at least not currently.
And importantly, the voices of older Australians and frontline workers are being heard more clearly in this reform process than in past eras. That’s one benefit of the intense spotlight from the Royal Commission: everyone from prime ministers to local mayors is aware that aged care failings carry a hefty political and social price. There’s real will to “do better” by our elders.
On the cautionary side, the transition needs to be carefully managed. Both providers and seniors have what you might call “reform fatigue”, having weathered wave after wave of new rules, funding formulas, quality standards and pilot programs in recent years. “We’re bracing for a period of significant transition,” said one industry leader, warning that the latest budget “stops short of fully equipping providers for the scale of reform ahead.” Providers are seeking clearer timelines and possibly a more gradual phase-in of some requirements, especially if unexpected costs or glitches arise.
Remember, these organizations are caring for real people day-to-day; they can’t pause operations to retool everything overnight. If a small community care provider finds the new billing and IT systems overwhelming, they might fold or withdraw from government programs – which could leave clients stranded. Smoothing out these bumps is an ongoing challenge for the Health Department and Aged Care Quality Commission.
Finally, we cannot ignore the cultural change needed alongside the dollars. One provider comment that struck me was about innovation: “While we want to build innovation, we’re becoming more regulated and compliance-driven,” said Greg Aleckson, lamenting that risk-aversion in the system can stifle new approaches. How do we encourage creative solutions – like small household living models, dementia villages, or better integration of volunteers – while still holding providers to high standards?
That question hovers in the background. Funding models can inadvertently reward the status quo. The new Act and taskforce have signaled openness to new ideas (there’s talk of trialling different funding approaches, perhaps some form of aged care insurance or social impact investment down the track). But those are conversations just beginning.
As an older Australian reader, you might be wondering at this point: Alright, but what does all this mean for me and my loved ones, in practical terms? In practical terms, if you or your family engage with aged care in the next few years, expect a system in flux. Expect to have more options for care at home, and hopefully shorter waits to get that care – but also expect to have detailed financial conversations about contributions, caps, and hardship provisions.
If you’re considering residential care, be aware that some homes may start charging those higher accommodation bonds (though many will still be well below $750k except in plush facilities). Also know that a lot of homes are investing in staff recruitment to meet the new standards, so with luck you’ll see more nurses and carers on duty than a few years ago. It’s okay to ask providers about these things – What are your staffing ratios? How will you handle the new requirements? The star ratings on My Aged Care can help compare quality.
Most of all, keep informed and speak up. One heartening development is the emergence of older people as advocates in their own right – whether through National Seniors, OPAN, COTA, or local seniors’ forums. The government is actively consulting these groups, as seen with tweaks like the additional 83,000 packages which were added after feedback and an inquiry. So if something isn’t working – say, the co-payment system causing unintended harm – there are channels to raise it and push for fixes. Change in aged care tends to be iterative; rarely is anything set in stone.
In wrapping up, let’s return to that evocative phrase: “dignity or dinner.” It encapsulates the fear that no one – absolutely no one – wants to see realized: an older person having to sacrifice their dignity, like skipping needed care, in order to afford a basic meal, or vice versa. The coming reforms aim to prevent that very scenario by injecting more funds and overhauling a struggling system. But they also shift some costs around, and if we’re not careful, could inadvertently create new dilemmas.
Will these changes truly deliver the dignity in care that’s been promised, without asking too much from those least able to pay? It’s the question at the heart of all this.
Australia owes a duty of care to its seniors – a duty grounded not just in economics or politics, but in simple decency. We are one of the wealthiest countries in the world; how we care for our elders is a reflection of our national character. The reforms underway are a bold attempt to get it right, or at least significantly better, after a period of well-documented failures. Some pieces are in place (more packages, higher wages, stronger laws), other pieces are still being worked out. As a nation, we’ll need to stay vigilant that the rhetoric matches reality.
In a wealthy, ageing country like ours, what’s the right balance between shared public support and individual contribution to aged care – and how do we ensure that no older Australian is left choosing between their dignity and their dinner?
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