Aged care

Budget Review 2018–19 Index

Alex Grove

In the 2018–19 Budget the Government has responded to two key reviews of aged care, as well as growing demand for home care packages. The response takes the form of an omnibus budget measure for ‘healthy ageing and high quality care’. This measure comprises 23 initiatives across aged care provision, consumer access to aged care, quality and regulation of aged care and healthy ageing.[1] The most significant initiatives in terms of funding or policy change are briefly outlined in this article.

The Department of Health notes an additional $5.0 billion over five years for ageing and aged care.[2] Overall spending on aged care services is forecast to grow from $18.0 billion in 2018–19 to $22.1 billion in 2021–22, largely reflecting demographic factors.[3] However, the overall impact of the omnibus measure on the Budget appears broadly neutral, with a small net reduction in expenditure of $19.5 million over the forward estimates offset by a small net reduction in revenue of $18.4 million and a small increase in capital expenditure of $4.2 million. The net changes to underlying cash balance detailed in the tables are small, suggesting that the initiatives are to be funded by repurposing existing funds, but there is no information on how this is envisaged.[4] It may relate to future targets for the number of home and residential care places, which are discussed further below.

Residential and home care places

The Government releases residential aged care places, short-term restorative care (STRC) places (which provide up to eight weeks of care and services designed to delay or avoid admission to residential care) and capital grants to aged care providers in an annual competitive process called the Aged Care Approvals Round (ACAR).[5] Home care packages (HCPs), which are coordinated packages of care to help eligible older people remain at home rather than entering residential care, are assigned directly to consumers on a regular basis through a national prioritisation system.[6] As at 31 December 2017, there were 104,602 consumers waiting for an HCP, although 46 per cent of those had an interim lower level package while they were waiting for a package at their approved level.[7]

The Budget includes 14,000 new high-level home care packages over four years from 2018–19, as well as 13,500 residential aged care places, 775 STRC places and $60 million in capital grants to be released through the 2018–19 ACAR. This is expected to cost $1.6 billion over four years.[8]

The total number of aged care places grows in line with the size of the older population over 70. The Government was aiming for 45 home care places, 78 residential places and 2 STRC places per 1,000 people aged 70 and over by 2021–22.[9] It appears that the mix of places in this target may have changed, although this is not explicitly stated in the budget measure.

One of the initiatives in the budget measure is to ‘combine the Residential Care and Home Care programs from 1 July 2018 to provide greater flexibility to respond to changes in demand for home care packages and residential aged care places.’[10] The Government has reportedly confirmed it is allocating funding not required for residential places to home care, where demand is higher.[11] The 2017–18 Budget had a target of 232,300 residential places and 134,545 HCPs by 2020–21.[12] The 2018–19 Budget has a revised target of 225,000 residential places (7,300 fewer places) and 144,500 HCPs (9,955 more places) by 2020–21.[13]

It appears the increase in HCPs has been offset by a decrease in the more expensive residential places, which may explain the budget neutrality of the overall measure. However, the Government has rejected Labor’s assertion that there is no new funding for aged care in the Budget.[14]

Response to the Legislated Review of Aged Care 2017

The Legislated Review of Aged Care 2017 (the Tune review) made 38 recommendations for a more consumer centred and sustainable aged care system.[15] The Government rejected recommendations to include the full value of the owner’s home in the means test for residential care and to remove the annual and lifetime caps on means-tested care fees.[16] This Budget responds to a number of the remaining Tune review recommendations through initiatives including:

  • $105.7 million over four years (including $32.0 million from existing resources) to provide more aged care in remote Indigenous communities (recommendation 31)
  • $61.7 million over two years to make the Government’s My Aged Care website easier for consumers to use (recommendation 25)
  • $14.8 million over two years to prepare for a streamlined national assessment framework which could potentially allow people to access all types of aged care via a single assessment (recommendation 27)
  • $7.4 million over two years to trial a range of services to help people navigate the aged care system (recommendation 23)
  • $0.3 million for a study to assess the impact of allocating residential places to consumers rather than providers (recommendation 3) and
  • $8.6 million over four years to improve the management of prudential risk by aged care providers, including through a compulsory levy on providers to recoup the cost of providers defaulting on the repayment of accommodation bonds to consumers (recommendations 20 and 21).[17]

This last initiative would involve changes to the Accommodation Payment Guarantee Scheme, which would require legislation.[18]

Response to the Review of National Aged Care Regulatory Processes

The Review of National Aged Care Regulatory Processes (the Carnell-Paterson review) recommended combining the Aged Care Complaints Commissioner (who handles complaints about aged care services), the Australian Aged Care Quality Agency (which accredits aged care providers and monitors compliance with standards) and the sanctioning powers of the Department of Health into a single independent Aged Care Quality and Safety Commission.[19] The Budget provides $253.8 million over four years to support the functions of this new Commission, which is to be established by January 2019. The initiative is budget neutral, presumably because these activities are already funded.[20] Establishing the Commission would require legislation.

The Budget addresses other recommendations of the Carnell-Paterson review through funding to make information about the quality of residential care providers more accessible to consumers (including publishing performance ratings on the My Aged Care website) and to improve the proposed Commission’s ability to identify risks to consumers and respond to care failures.[21]

Other aged care and healthy ageing measures

The Budget also funds initiatives to help providers adapt to proposed new aged care standards, improve palliative care in residential aged care (subject to matched funding from the states and territories), support aged care capital works in rural and regional Australia, develop technological solutions for people living with dementia, encourage healthy ageing and improve the mental health of older people.[22] The latter initiative is described in the ‘Mental health’ Budget Review article.

Stakeholder response

The response to the aged care initiatives in the Budget has been relatively positive. Consumer peak bodies COTA Australia and National Seniors Australia (NSA) welcomed the 14,000 new high-level home care packages, although NSA Chief Advocate Ian Henschke noted this will still leave many people on the waiting list for packages. COTA Australia also praised the Government’s decision to explore options for allocating residential places to consumers rather than providers.[23]

Some stakeholders praised the initiatives while noting other issues they felt were not addressed in the Budget. Australian Nursing and Midwifery Federation Acting Federal Secretary Annie Butler welcomed funding for additional home care packages and palliative care services, but called on the Government to introduce mandated minimum staffing ratios in residential care.[24] Dementia Australia welcomed many of the budget initiatives, including the establishment of the new Aged Care Quality and Safety Commission and funding for dementia innovation, but CEO Maree McCabe stated the Budget did not recognise dementia as core business.[25] Aged care provider peak bodies generally responded positively to the initiatives contained in the Budget, but would like to see a longer term plan to sustainably fund aged care in the face of rising costs and increasing need.[26]

[1].          Australian Government, Budget measures: budget paper no. 2: 2018–19, pp. 117–19.

[2].          Department of Health (DoH), Health 2018-19 Budget at a glance – key initiatives, Budget 2018–19 fact sheet, DoH, 8 May 2018.

[3].          Australian Government, Budget strategy and outlook: budget paper no. 1: 2018–19, pp. 6-23, 6-24.

[4].          Budget measures: budget paper no. 2: 2018–19, op. cit., p. 117.

[5].          DoH, ‘Aged Care Approvals Round (ACAR)’, Ageing and Aged Care website, last updated 9 May 2018.

[6].          Aged Care Financing Authority (ACFA), Fifth report on the funding and financing of the aged care sector, ACFA, July 2017, p. 45.

[7].          DoH, Home Care Packages Program: data report 2nd quarter 2017 –18: 1 October –31 December 2017, DoH, Canberra, March 2018, p. 9. Home care packages range from level 1 (basic care needs) to level 4 (high care needs), with higher level packages attracting larger Australian Government subsidies.

[8].          DoH, Better access to care—more high level home care packages and residential care places, Budget 2018–19 fact sheet, DoH, 8 May 2018.

[9].          ACFA, Fifth report on the funding and financing of the aged care sector, op. cit., p. xiii.

[10].       Budget measures: budget paper no. 2: 2018–19, op. cit., p. 118.

[11].       R Morton, ‘Bond levy sparks collapse fears’, The Australian, 10 May 2018, p. 10.

[12].       Australian Government, Portfolio budget statements 2017–18: budget related paper no. 1.10: Health Portfolio, pp. 132, 135.

[13].       Australian Government, Portfolio budget statements 2018–19: budget related paper no. 1.9: Health Portfolio, pp. 138–39.

[14].       R Morton, op. cit.

[15].       D Tune, Legislated review of aged care 2017, DoH, 2017, pp. 12–17.

[16].       K Wyatt (Minister for Aged Care), 6,000 extra high need home care packages and $20 million My Aged Care revamp, media release, 14 September 2017.

[17].       Budget measures: budget paper no. 2: 2018–19, op cit., pp. 117–19; Tune, Legislated Review of Aged Care 2017, op. cit., pp. 13–16.

[18].       DoH, Better quality of care —managing prudential risk in residential care, Budget 2018–19 fact sheet, DoH, 8 May 2018.

[19].       K Carnell and R Paterson, Review of National Aged Care Regulatory Processes, October 2017, p. xi.

[20].       Budget measures: budget paper no. 2: 2018–19, op cit., p. 118; DoH, Better quality of care – establishing an Aged Care Quality and Safety Commission, Budget 2018–19 fact sheet, DoH, 8 May 2018.

[21].       DoH, Better quality of care—greater transparency of quality in aged care and Better quality of care—improving aged care quality protection, Budget 2018–19 fact sheets, DoH, 8 May 2018.

[22].       Budget measures: budget paper no. 2: 2018–19, op. cit., pp. 118–19.

[23].       COTA Australia (formerly Council on the Ageing), Extra home care packages and other welcome aged care measures will provide relief for older Australians, media release, 9 May 2018; National Seniors Australia, Federal Budget a mixed bag for seniors, media release, 8 May 2018.

[24].       Australian Nursing and Midwifery Federation, Budget fails to deliver improved staffing in aged care, media release, 8 May 2018.

[25].       Dementia Australia, Dementia Australia welcomes $5 billion Federal Government funding for aged care, media release, 8 May 2018.

[26].       S Cheu, ‘Budget: new measures welcome but long-term fix needed, say stakeholders’, Australian Ageing Agenda website, 9 May 2018.


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