Rebecca Storen, Social Policy
The issues surrounding aged care and the challenges of providing care and services to an ageing population have been well documented over the last 20 years, with the Royal Commission into Aged Care Quality and Safety (Royal Commission) being the latest in a long line of reviews calling for change.
More than one year on, much work remains to implement the rights-based aged care system envisioned by the commissioners and, as aged care costs grow, the need to ensure safe, high quality care by a well-supported and fit-for-purpose workforce continues.
Source: Aged Care Financing Authority, Ninth
Report on the Funding and Financing of the Aged Care Sector, (Canberra: Aged Care Financing Authority, 2021), 21.
The aged care system faces many challenges and
issues, some of which have been around for some time, such as costs, while
others are emerging. The system design has competing priorities, seeking to control
costs while also emphasising the need for safe, high-quality care and support that
meets people’s needs. These issues are exacerbated with changing population
demographics, increasing care needs and expectations, alongside ongoing
workforce challenges. This has resulted in gaps and shortfalls in the provision
of appropriate care. In response to significant and ongoing concerns about aged
care, the Royal Commission was established, which concluded that profound
change is needed to provide a system that not only provides safe, high-quality care
and support, but also empowers and respects people’s rights. Aged
care, as discussed in this article, refers to the system primarily
regulated and funded by the Australian Government to provide care and support
to older people who are no longer able to live without assistance in their
homes and who are assessed as being eligible for services.
The Aged Care Act 1997
(the Act) is the principal piece of legislation setting out the obligations and
responsibilities of aged care providers who receive Australian Government
funding. The objects of the Act include provision of funding for aged care and
promoting high-quality care and accommodation that meets people’s needs. To
support these objects, the Act provides for:
- responsibilities of approved providers (providers that meet the Aged Care Quality
- subsidies and supplements (from the Government)
- fees and payments (from the care recipient)
- responsibilities of approved providers
- how a person is approved for aged care services.
The Aged Care Quality
and Safety Commission Act 2018 and its associated Rules set out the
function of the Aged Care Quality and Safety Commission, the quality regulator for
People accessing aged care
2020–21, approximately 1.5 million people accessed aged care services
across Australia, mostly through community-based programs (p. 13). Figure 1
provides a breakdown of aged care clients by jurisdiction.
Figure 1 Aged care clients and
Australian Government expenditure on aged care by jurisdiction (2020–21)
Source: Department of Health (DoH),
Aged care data snapshot–2021, 3rd release,
client summary and expenditure summary tabs, 2022
While aged care services are generally accessed by
people aged 65 years and over, there is no
specific age requirement to access aged care services delivered under the
Act (p. 8). People
under 65 years who require care and support due to a disability may be
eligible for the National Disability
Insurance Scheme (NDIS). NDIS participants can continue in the scheme once
they reach 65, and may also be eligible for some aged care services.
There is no single measure to quantify people’s
unmet care and support needs. In its most recent survey of disability, ageing and carers, the
Australian Bureau of Statistics found that most people over 65 years receive
some form of help for at least one activity, either formally or informally. Of
the 1.3 million older people needing assistance, 31% said their need was
partially met and 3.1% their need was not met at all.
One of the indicators in the Productivity
on government services measures hospital patient days used by those
eligible and waiting for residential aged care. In 2019–20, ten per 1,000
patient days were used by patients waiting to enter residential aged care nationally
Figure 2 Hospital patient days used by those eligible
and waiting for residential aged care, by jurisdiction and year
Note: Victoria has developed alternative
pathways for people waiting for residential aged care.
Source: Productivity Commission, ‘Aged
Care Services: Indicator Results: Unmet Needs’, Report on Government
Services 2022, (Canberra: Productivity Commission, 2022).
Reports have also shown that despite existing programs, informal carers
of older people still have high unmet needs (see for example the Royal
report (from p. 204) and The
value of informal care in 2020 from Carers Australia).
Rights-based aged care
The Royal Commission’s Final
report stated that achieving the fundamental reforms it envisaged will
require a new Act- one focused on people’s needs and wellbeing rather than one
defined by Government funded programs (p. 13). Recommendation 1 proposed that
the objects of the new Act include providing ‘… a system of aged care based on
a universal right to high quality, safe and timely support and care to […] assist
older people to live an active, self-determined and meaningful life’ (p. 15).
Government accepted this recommendation, with the new Act intended to
commence from 1 July 2023. However, the Government’s response was silent on the
issue of a rights-based Act, stating work would begin on a new ‘consumer-focused’
Act (p. 1).
The Australian Government is the primary funder of aged
care, with contributions from care recipients and funding from state and
territory governments for particular programs. Government
expenditure on aged care services in 2020–21 was approximately:
- Australian Government: $23.2 billion
- state and territory governments: $348 million (Table 14A.3).
The 2021 Intergenerational
report (IGR) estimated that the Australian Government funded approximately
80% of aged care in 2018–19, with care recipients funding most of the remaining
20% (p. 103). However, the contribution from care recipients is no
longer routinely reported as the Aged Care Financing Authority was abolished
following passage of the Aged
Care and Other Legislation Amendment (Royal Commission Response No. 1) Act 2021.
Note however the explanatory memorandum to the Bill stated a new aged care financing advisory
body would be established (p. 20).
The IGR estimated that aged care spending as a proportion
of the economy will increase substantially from 1.2% of gross domestic product
in 2020–21 to 2.1% in 2060–61 (approximately $113 billion in 2020–21 dollars)
Financial health of the sector
StewartBrown, an accountancy firm, undertakes a quarterly
benchmarking survey with approximately a third of all aged care providers. Its
most recent publicly available report
The Survey for the 3 month period ending
September 2021 continues to highlight the declining financial sustainability of
the sector, with residential aged care becoming a major focal point of
The average operating results for residential
aged care homes in all geographic sectors was an operating loss of $7.30 per
bed per day despite the additional Basic Daily Fee supplement of $10 per bed
A report from the
University of Technology Sydney, analysing mid-year results for the first
half of 2021–22 for aged care providers, makes similar findings, estimating
that over 60% of residential care homes are operating at a loss (p. 9).
Care recipient fees
Care recipients may be required to financially
contribute towards the cost of their care and services. For some fees,
people generally need to complete an income or means
assessment (undertaken by Services Australia) to determine their means
tested care fee and accommodation costs. In residential aged care and home
care, most people will be asked to pay a basic daily fee, calculated as a
proportion of the single basic age pension.
Care funding in residential care
Care Funding Instrument (ACFI) is the resource allocation tool used to assess
people’s main care needs as a basis for funding allocation in residential aged
care. An ACFI assessment is undertaken by the aged care provider. Concerns relating
to the growth of ACFI subsidies and its ability
to cover the cost of care are longstanding.
In 2019, the Government announced a trial of a
new funding tool, the Australian National Aged Care Classification (AN-ACC), to
replace ACFI. The 2020–21 Budget provided $91.6 million to fund a 12-month
shadow assessment in which most residents would receive an independent
assessment using the AN-ACC model.
announced the AN-ACC model would replace ACFI from 1 October 2022 (p.108)
and introduced the Aged Care and Other Legislation Amendment (Royal Commission Response
No. 2) Bill 2021 to enable this change. However, the Bill lapsed at the
dissolution of the 46th Parliament.
Before a person enters permanent residential aged
care, they must agree an accommodation price with the provider; however, the
outcome of their means assessment will determine if they need to financially
contribute towards their accommodation cost or if the cost is partially or
by the Australian Government. People required to make accommodation payments
can nominate to pay it as a lump sum, a daily payment or a combination of both.
In 2019–20, the average
refundable accommodation deposit was estimated at approximately $334,000 (p.
Accommodation bonds, the predecessor to accommodation
deposits, were introduced in the Act to encourage capital
investment in residential stock to assist providers to meet building
standards and improve building stock (pp. 11–12). As
at 30 June 2020, the total value of accommodation deposits held by
providers was estimated to be $32.2 billion, comprising 57% of providers’ total
assets and 79% of liabilities (p. 109). Under the Accommodation
Payment Guarantee Scheme, the Australian Government guarantees the
repayment of accommodation deposits if a provider defaults on its refund
is estimated that approximately 80,000 new aged care beds will be needed
over the next decade to meet projected demand, and that providing these, in
conjunction with refurbishing and rebuilding existing stock, will require capital
funding of approximately $51 billion (p. 8).
In the Royal Commission’s Final
report, Commissioner Briggs recommended refundable accommodation
deposits be phased out from 2025 (p. 884). The Government stated
that this would be considered further as part of the development of a reformed accommodation
framework (p. 94).
Governance, safety and quality
In its Final
report, the Royal Commission emphasised the requirement for robust
system governance, identifying the need for a number of institutions, including:
- a system governor
- an independent standard setting body
- an independent pricing authority (p. 40).
The commissioners differed on the form some of
these institutions should take, with Commissioner Pagone proposing an
Independent Commission model and Commissioner Briggs a Government Leadership
response, the Government broadly supported the Government Leadership model,
including the establishment of an independent Inspector-General of Aged Care
and the expansion of the Independent Hospital Pricing Authority (IHPA) (pp. 4–13).
Among other things, the Morrison Government sought to expand the functions and
governance of the IHPA through the Aged
Care and Other Legislation Amendment (Royal Commission Response No. 2) Bill
Safety and quality
The Royal Commission was established, among other
things, to inquire into the quality and safety of aged care services and they are
discussed throughout the Final
report. Chapter 3 in particular focuses on elements of quality and safety,
such as how to define high quality aged care and tools to improve it with the
commissioners making 12 specific recommendations (numbers 13–24), including:
- amending the National Health Reform Act 2011 to expand the
function of the Australian Commission on Safety and Quality in Health Care
(ACSQHC) (the health regulator) to create standards, guidelines and indicators
for aged care quality and safety (p. 122)
- developing a star rating system, which includes performance against
clinical and quality indicators and staffing levels (p. 131).
accepted in principle the recommendation to expand the ACSQHC, stating it
would transfer the responsibility for formulating the clinical care standards
to the ACSQHC while the Department of Health would retain responsibility for
the non-clinical care standards (p. 17). The star
rating system is anticipated to commence in residential aged care from the
end of 2022.
Source: DoH, 2020
Aged Care Workforce Census Report, (Canberra: DoH, 2021): 8, 24, 38.
As outlined in the Royal Commission’s Final
Getting the aged care workforce right is vital
to the success of any future aged care system
While many excellent people work in aged care,
there are systemic workforce problems that must be addressed. Of the public
submissions we received, approximately 70% identified staffing as a concern …
The aged care workforce is poorly paid for
difficult and important work. There are often not enough staff members to
provide the care that is necessary … (pp. 371–2).
The commissioners identified several key elements
needed to achieve their vision for the workforce, including:
- strategic leadership and workforce planning
- greater proportion of health practitioners
- minimum qualifications for personal care workers
- improved pay and conditions
- registered personal care workers (p. 372).
In addition, several of their other recommendations
would have an impact on staffing numbers, such as recommendation 39, which
includes clearing the existing home care package waiting list (pp. 183–184).
Vacancies and attrition
report for Catholic Health Australia estimated a total of 59,067 full time equivalent
(FTE) aged care vacancies across the sector, the majority being for qualified
personal care workers (p. 6).
In the 2020
aged care workforce census, organisations were asked about the attrition of
the direct care workforce between November 2019 and November 2020. Findings
showed that in the 12-month period, the proportions of employed direct care
workers leaving their employment were:
- 29% from residential care (p. 21)
- 34% from home care (p. 35)
- 26% from CHSP (p. 48).
The report does not provide details on whether
people who left their jobs moved elsewhere in the sector or left the sector
The Royal Commission engaged
Deloitte to project the number of direct care workers required to implement
its recommendations at different ranges of minimum staffing levels for
residential aged care (see Figure 4). The star rating system used in this model
is from the US, with a 4-star rating for minimum staff time per resident per day
best aligning with Recommendation 86 on minimum staffing levels. The baseline projection
suggested that 316,500 FTE would be required by 2050 (Figure 3). Compared with
2020 levels, the 4-star rating in 2050 would require an additional:
- 35,900 nurse practitioner and registered nurse roles
- 6,000 enrolled nurse roles
- 113,600 personal care workers (p. 375).
Figure 3 Projected number of direct care FTE in aged
Source: Royal Commission into Aged Care
Quality and Safety (Royal Commission), Final
Report: Care Dignity and Respect, Volume 3A:
The New System, (Adelaide: Royal Commission, 2021), 375.
prepared by Korn Ferry HayGroup for the Aged
Care Workforce Strategy Taskforce included a section on remuneration
benchmarking, which found:
- personal care workers are paid significantly lower than similar
roles in the general Australian market and are generally paid between the
(bottom) 10th percentile to 25th percentile of all organisations assessed
- nurses are generally paid lower than the median fixed annual reward
of similar-sized roles and often paid between the 25th to 50th percentile of
all organisations assessed (pp. 97–98).
Undertaking research with its 218,000 members
working in aged care, HESTA, a superannuation fund, released an aged care workforce report
in 2021, finding:
- the estimated median gross salary for its aged care members was
- almost 40% of aged care members earn less than $50,000 per year
- aged care members have the lowest median super balance for all
health and community services
- 43% of aged care members are aged 50 and over
- 25.6% of aged care members made a claim to access
their super early under the COVID-19 arrangements. Of this group, the
median super balance after the claim was less than $15,000 (pp. 8; 9 ;22; 23).
In March 2022, the Australian Aged Care
a report looking at the average wage for aged care workers and costs of
living. Using the income of a personal care worker at $900 for an ordinary
full-time week ($773 after tax) the authors found:
- a single household, after covering basic expenses, would have
approximately $112 left for the week
- a single-parent household would be unable to cover their basic
expenses at -$148
- a 2-parent household would have $17 left.
The Royal Commission identified issues with
that aged care employee organisations collaborate with the Australian
Government and employers to apply to the Fair Work Commission to vary wage
rates for 3 awards: the Aged Care Award 2010, the Nurses Award 2010 and the
Social, Community, Home Care and Disability Services Industry Award 2010 (p.
The Health Services Union and the Australian
Nursing and Midwifery Federation have lodged
an application to the Fair Work Commission to vary the 3 awards. If
successful, this application would increase the wage rates for aged care
employees under the awards by 25%. As part of its election policy, the Australian
Greens stated it would increase pay by 25% for aged care workers. The Australian
Labor Party has committed to implementing the outcome of this case.
What next for aged care?
Aged care is a heavily regulated sector, with
legislation and policy development and implementation tightly linked. The
reasons behind this, partially at least, are a combination of system
governance, especially as the Australian Government is the primary funder, and the
need to ensure people receive safe and quality care and services. Alongside the
funding and workforce challenges, there is a need to acknowledge sector
fatigue, not only with an ongoing pandemic but also in the face of another
possible set of reforms to which organisations and the workforce will need
to adapt, while still providing day-to-day care and support. While this is
certainly not without its challenges, the work of the Royal Commission identifies
opportunities for developing and implementing a fit-for-purpose aged care system
that enables people to age well in Australia now and into the future.
Royal Commission into Aged Care Quality and Safety (Royal Commission), Final Report: Care, Dignity and Respect, (Adelaide: Royal Commission, 2021).
Department of Health (DoH), Australian Government Response to the Final Report of the Royal Commission into Aged Care Quality and Safety, (Canberra: DoH, 2021).
DoH, Respect, Care, Dignity: a Generational Plan for Aged Care in Australia, (Canberra: DoH, 2021).
Rebecca Storen, Aged Care: a Quick Guide, Research paper series, 2020–21, (Canberra: Parliamentary Library, 2021).
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