Aged care

Budget Review 2022–23 Index

Rebecca Storen


The 2021–22 Budget saw the release of the Australian Government’s generational plan for aged care in Australia (aged care plan) and its response to the Royal Commission into Aged Care Quality and Safety (Royal Commission), alongside a commitment of $17.7 billion over 5 years (from 2020–21). The aged care plan sets out 5 overarching pillars for the reform agenda: home care; residential aged care services and sustainability; residential aged care quality and safety; workforce; and governance. In December 2021, the Mid-Year Economic Fiscal Outlook built on the Government’s response from the last Budget, committing an additional $632.6 million to the continued implementation of the Royal Commission’s recommendations.

Now, more than 12 months since the release the Royal Commission’s final report, the Government has committed another $468.3 million to its aged care reform agenda through the 2022–23 Budget (Budget measures: budget paper no. 2: 2022–23, pp. 86–87). However, in light of the continued pressures facing the sector, with recent and particular emphasis on workforce, most of the sector, whilst having recognised that the Budget has some ‘useful things’, overall have found the Budget wanting.

In addition to the aged care reforms measures, the Budget also provides funding for the aged care sector under the COVID-19 response package, which is discussed elsewhere in the Budget review 2022–23 (see the Public Health article).

Aged care reforms measures

According to Budget paper no. 2, the Government has committed $468.3 million over 5 years from 2021–22 with partial funding having already been provided. Total payments for the Ageing and aged care measure will be $122.6 million across the forward estimates, with the majority of payments scheduled for 2022–23 at $76.3 million (pp. 86–87).

There are several elements in the Budget’s aged care package that will require the passage of legislation, in particular the introduction of the new funding tool into residential aged care, which is briefly discussed below.

Home care

The Budget provides an additional $5.4 million for the home care pillar over 3 years (from 2022–23) to enable continued work for consultation on the design of the aged care reforms, including a regulatory package for the new Support at Home Program (p. 86). This program is set to be introduced from July 2023, and will require changes to existing aged care legislation. The legislative changes are anticipated to be achieved through the proposed new Aged Care Act, expected to commence from 1 July 2023 (Australian Government response, pp. 1 and 22). An overview of the proposed design for this new program was released earlier in the year, providing a draft consultation timeline that identifies consultation activities taking place from February to August 2022 (p. 14).

Residential aged care services and sustainability

The Budget provides $20.1 million over 3 years (from 2022–23) to complete the implementation of the new residential care funding tool, the Australian National Aged Care Classification (AN-ACC), and support services to transition to the AN-ACC model over a 2-year period (p. 86). This is in addition to the $53.3 million for the transition activities provided in the 2021–22 Budget. However, whilst the AN-ACC is due for implementation from October 2022, it is unable to commence without changes to the existing legislation (discussed below).

The 2021–22 Budget confirmed that the AN-ACC would replace the Aged Care Funding Instrument (ACFI), following several years of work to develop a new funding model for residential aged care. This funding model has several similarities to public hospital funding, including the use of a national weighted activity unit (NWAU), which is a common unit allowing for comparison and value for each service for a resident’s care classification and the facility description category. A price is then paid per activity unit (for further details see The resource utilisation and classification study: report 6 from the Australian Health Services Research Institute, pp. 11–12). The Budget has provided the sector with the NWAU starting price for the AN-ACC at $216.80, with the average resident funding anticipated to be approximately $225 per day (Health portfolio 2022–23 budget stakeholder pack, p. 147). This information has been welcomed by stakeholders, but they have renewed their calls for the release of the shadow assessment results for people in their services, which would allow them to estimate their budgets and plan their resourcing.

Shadow assessment background

The 2020–21 Budget provided funding for a 12-month shadow assessment period. During this time, providers would continue to use, and be funded through, the ACFI; however, independent assessors would assess the care needs of most people already living in residential aged care using the AN-ACC model and assign each person to one of 13 classes of care. This shadow assessment process was made possible with the passage of the Aged Care Amendment (Aged Care Recipients Classification) Bill 2020. It was due to start in April 2021 and is expected to take 12 months to complete.

Residential aged care quality and safety

The Budget provides $398.4 million for improving access and linkages with health professionals and providing surge capacity for the Aged Care Quality and Safety Commission (ACQSC), which is responsible for the regulation of quality and safety in aged care (p. 86).

The largest financial commitment under this measure is the announcement of $345.7 million to enhance medication management through better access to pharmacists either on-site or through community pharmacies for people living in residential aged care. This announcement responds, at least in part, to the Royal Commission’s recommendations for increased access to medication management reviews (Recommendation 64, p. 251) and for residential aged care to include allied health care (Recommendation 38, p. 235). The program is due to commence from 1 January 2023. The announcement has been welcomed by the Pharmaceutical Society of Australia, which stated that ‘The evidence is clear – pharmacists need to be an embedded part of the aged care equation if medication misadventure is to be minimised and rectified’. The Pharmaceutical Society of Australia was further of the opinion that the program would need flexibility, as every residential aged care service is different.

The Royal Commission recommended improved access to specialists and other health practitioners through the introduction of multidisciplinary outreach services, which would be led by Local Hospital Networks, with services funded through an amendment to the National Health Reform Agreement (Recommendation 58, p. 248). The Budget provides $22.1 million to trial multidisciplinary outreach services, which will be evaluated to inform the pricing and delivery of these services for a national rollout, with cost sharing with the states and territories (Health portfolio budget stakeholder pack, p. 149). Each state and territory will receive $2.6 million over 2 years as part of this trial (Federal financial relations: budget paper no. 3: 2022–23, p. 25).

An additional $21.6 million will be made available to the ACQSC to engage a third-party quality assessment workforce for aged care quality and safety assessments and audits (Health portfolio budget stakeholder pack, p. 150).

Aged care, disability and veterans’ care sectors workforce

The Ageing and aged care measure provides approximately $50.5 million for workforce, with most activities for the care and support sector (aged care, disability and veterans’ care sectors) and featuring in the new National Care and Support Workforce Strategy:

  • $10.8 million for Government to create a Cross-Agency Taskforce on Regulatory Alignment to better align regulation across 3 sectors
    • Legislative changes are likely be required for these activities in order to facilitate information sharing between agencies
  • $32.8 million across the forward estimates and $2.8 million per year thereafter for the care and support sectors including:
    • $14.9m for addressing barriers to clinical placements in care and support sectors
    • $14.3m to expand the Rural Health Multidisciplinary Training program, designed for health students to train in rural and remote locations, to 5 new locations – the program evaluation (2020) found that whilst there are opportunities for improvement, the program has had a number of positive outcomes including strengthening clinical service delivery across Australia (p. 15)
  • $6.9 million over 3 years to support the staged rollout of the national co-operative and mutual enterprises (CME) support program, starting with 6 to 7 CMEs to deliver services in areas of need –the Business Council of Co-operatives and Mutuals will receive funding to support the start-up and development of cooperative and mutual enterprises and deliver business resources and professional support (Budget paper no. 2, p. 87; Health portfolio budget stakeholders pack, pp. 152–154).
    • CMEs are member-owned businesses that seek to provide value and meet financial and social goals of their members. There are different membership structures for co-operatives and mutuals, for example businesses formed by employees or small enterprises (p. 4).

In addition, as discussed elsewhere in this Budget review (see the skills and training article), an additional 15,000 low-fee and free training places in aged care courses will be made available through the education, skills and employment portfolio (Budget paper no. 2, p. 74).

The workforce measures in particular have been criticised by most aged care stakeholders, especially given the notable exclusion of any commitments to increasing wages for aged care workers. In its press release, the Australian Aged Care Collaboration (AACC) stated that the Budget does ‘nothing… to improve aged care wages’ and ‘It will leave our dedicated workers on the edge of poverty and many older Australians without the services they need’. This position was echoed by United Workers Union, which stated that ‘…the Budget has no announcements that address low pay rates that leave workers with barely enough to live on, working multiple jobs to feed themselves and their families’ [emphasis in the original]. The press release goes on to state that the Budget ‘…fails to address the widespread understaffing that leaves aged care workers rushing to provide even the most basic levels of care to older Australians who deserve much better’.

Fair Work Commission

In 2020 and 2021, the United Workers Union and the Australian Nursing and Midwifery Federation lodged applications to the Fair Work Commission to vary 3 awards: Aged Care Award 2010; Nurses Award 2010 and the Social, Community, Home Care and Disability Services Industry Award 2010. The Work value case – Aged care industry applications seek to increase the wage rates for aged care employees in all 3 awards by 25%. In a joint submission from 17 December 2021, several key stakeholders submitted a consensus statement noting that the wages need to be significantly increase because the work has historically been undervalued and stating that if the Fair Work Commission recommend an increase in wages that this must be fully funded by the Australian Government.

In the budget reply, the leader of the opposition committed that ‘a Labor government would fund the outcome of this case’. The Prime Minister has stated that ‘[the Government will] have to ensure, working with industry, that Fair Work Commission decisions are honoured’ (p. 4).     


The Budget provides an additional $6.1 million over 6 months to further support the regional offices trial announced in the 2021–22 Budget (p. 87).

Necessary legislative changes

In September 2021, the Government introduced the Aged Care and Other Legislation Amendment (Royal Commission Response No. 2) Bill 2021, which would make changes required to introduce a number of the Government’s aged care reforms. As discussed in some detail in the Bills Digest, the Bill would, among other things:

  •   enable the introduction of a new funding model for residential aged care (the AN-ACC) from 1 October 2022
  •   enhance the ability of several Commonwealth agencies responsible for the aged care, disability and veterans’ affairs portfolios, and relevant regulators from the health sector, to share information on non-compliant providers and their workers
  •   expand the scope of the Independent Hospital Pricing Authority so it could provide advice on aged care pricing and costing matters (pp. 5–6).

On 30 March 2022, the Senate agreed to several amendments to the Bill, including the requirement, in most cases, for residential aged care services to have a registered nurse on-site at all times. On this particular issue, the Government had previously indicated it accepted the Royal Commission’s recommendation on minimum staff time standards for residential aged care, which would introduce the requirement for residential aged care services to have a registered nurse on site at all times from July 2024 (Australian Government response, pp. 56–57). The AACC, made up of aged care provider peak bodies, welcomed the amendments introduced in the Senate requiring registered nurses on-site at all times, but asked where the funding and the staff would come from if this requirement does pass into legislation.

At the time of writing, the amended Bill had not yet returned to the House of Representatives.


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