Aged care: residential aged care and workforce

Budget Review 2021–22 Index

Rebecca Storen


The 2021–22 Budget implements the Australian Government’s response to the Royal Commission into Aged Care Quality and Safety (the Royal Commission) and a generational plan for aged care in Australia. This $17.7 billion package  comprises five ‘pillars’:

  • $7.5 billion for home care over five years from 2020–21 (p. 100)
  • $7.8 billion for residential aged care services and sustainability over five years from 2021–22 (p. 102)
  • $942.0 million for residential aged care quality and safety over four years from 2021–22 (p. 101)
  • $652.1 million for workforce skills, training and registration over four years from 2021–22 (p. 103) and
  • $698.3 million for governance and regional access over five years from 2020–21 (p. 99).

Stakeholders have broadly welcomed the Australian Government’s response to the Royal Commission and the associated $17.7 billion reform package. The Australian Aged Care Collaborative (AACC) said the reforms provided a pathway to ‘a transformed aged care system’, with resourcing to meet the needs of older Australians. Council on the Ageing (COTA) Australia identified the aged care reform package as a ‘serious and meaningful response’ to the Royal Commission.

There are several significant announcements in the Budget and the accompanying Government plan for aged care. This is one of three articles which provide an overview of the aged care budget measures with reference to the relevant elements of the response to the Royal Commission. The articles should be read in conjunction with one another. Information on stakeholder views has also been split across the three briefs but, except where specified, their commentary should be viewed in relation to the whole package.

This article focuses on residential aged care and workforce. The other two articles cover:

  • access to aged care, and care and support in the home, and
  • quality and governance.

For background information and context, this Parliamentary Library quick guide provides an overview of the Royal Commission’s Final Report.

Residential care

The Royal Commission identified systemic problems which have led to ‘unacceptable outcomes’ in residential aged care (vol. 1, p. 7). It identified a wide range of issues in Section 1.2 of vol. 1, including:

  • insufficient and uncertain funding for the provision of the care and services required
  • uncertainty of the cost of high quality care in the aged care setting
  • poor integration with the health care system
  • additional challenges experienced by special needs groups, including people living in regional, rural and remote areas, and people from the LGBTIQ+ communities
  • use of chemical and physical restraints
  • quality of food and high estimates of malnutrition
  • quality of care for people with dementia and
  • quality of end-of-life and palliative care.

Measures in this Budget seek to address a number of these issues.

New funding model

A new funding model, the Australian National Aged Care Classification (AN-ACC) model, will be introduced from 1 October 2022, replacing the Aged Care Funding Instrument (Health Portfolio 2021–22 Budget Stakeholder Pack (DoH Budget Pack), p. [112]). This announcement follows several years of work to build an evidence base for a new funding model. The Budget provides $189.2 million for the implementation of the new model, including $53.3 million for a two-year transition fund to support providers to make this change (DoH Budget Pack, p. [112]).

Independent Hospital and Aged Care Pricing Authority

The Royal Commission identified the need for an independent pricing authority, similar to the one in the public hospital system. The Commissioners provided separate recommendations on some of the particulars of the pricing authority, with Commissioner Briggs recommending the expansion of the existing Independent Hospital Pricing Authority (IHPA), under Recommendation 11 (vol. 3A, p. 78). The Budget provides $49.1 million over five years from 2020–21 to expand the IHPA to provide independent advice on aged care pricing (DoH Budget Pack, p. [145]).

Minimum staff time standard

The introduction of the AN-ACC funding model includes a $3.9 billion funding increase to support providers to meet the minimum staff time standard (DoH Budget Pack, p. [116]) proposed by the Royal Commission in Recommendation 86, points 2 and 3 (p. 419). This would mean a resident would receive a set minimum amount of care time from nurses and personal care workers each day. The timeline and the continued increase in staff times recommended by the Commissioners, with an increase to 215 minutes of care staff time and a registered nurse on site at all times by July 2024, have not been incorporated into the Government’s response but perhaps will be identified as part of the new Aged Care Act (refer to the article on aged care quality and governance).

Implementation of the standard will be staged as follows:

  • July 2021—providers will be required to report their care staffing minutes at a facility level with their annual financial return in October 2021.
  • July 2022—providers will be required to provide a quarterly report on the care staffing minutes. In addition, they will be required to provide monthly care statements to the resident and their family that outlines the care the person has received and any changes of significance.
  • December 2022—the data on the care staffing minutes will be used as part of the staffing star rating system.
  • October 2023—a mandatory minimum care staff time standard will be introduced. This standard will require an average of 200 minutes of care time per resident per day, with a minimum of 40 minutes with a registered nurse. In addition, a registered nurse will be required to be on site for a minimum of 16 hours per day (DoH Budget Pack, p. [116]).

Structural reforms in residential aged care

From 1 July 2024, residential aged care places will be allocated to the person needing care and support rather than the aged care provider. In 2017, the Home Care Packages program shifted to the package being allocated to the person, allowing the person to identify the provider they would like to receive services from and make it easier for people to change provider and take any unspent funding with them. This $3.1 million change will result in the cessation of the Aged Care Approval Round and the shift away from bed licences. This measure aims to ‘create a more innovative and competitive residential care market’ (DoH Budget Pack, p. [118]).

The new financial and prudential framework for aged care providers has been allocated $55.3 million and will be from 1 July 2021 (DoH Budget Pack, pp. [118–9]). New requirements will be phased in from 1 July 2021, with the prudential standards becoming the ongoing responsibility of the Prudential Regulator, once established (Australian Government Response to the Final Report of the Royal Commission into Aged Care Quality and Safety (Australian Government Response), pp. 87–8).

The Budget includes $43.5 million for three measures to support the sustainability of residential providers, extending two programs and establishing another (DoH Budget Pack, p. [119]). One of the measures provides $32.6 million for the establishment of a Structural Adjustment Program, which will build on the Business Improvement Fund to assist with the provision of care continuity for residents.

Fee supplements

The Royal Commission recommended an immediate $10 increase in the basic daily fee per resident per day, for daily living needs. Recommendation 112 (vol. 3B, p. 645) stated that this funding should require an annual review and report on the adequacy of all the goods and services provided to meet people’s basic living needs, with a particular focus on nutritional needs. This $10 increase will be introduced from 1 July 2021 until 30 September 2022 (p. 76). Service providers will be required to report on the adequacy of daily living services, with this reporting supporting the new star rating system. From October 2022, this supplement will be absorbed into the new AN-ACC funding model on an ongoing basis (DoH Budget Pack, p. [114]).

In its initial response to the Royal Commission, the Government announced a 30% increase in the homeless and viability supplements until 30 June 2021. The Budget extends this temporary increase until the end of September 2022, at which point it will also be incorporated into the AN-ACC funding base. The Budget provides an additional $3.2 billion for these increases (DoH Budget Pack, p. [114]).

New accommodation framework

The Budget provides $5.5 million over four years to develop a new Residential Aged Care Accommodation Framework, which will commence from July 2024. This measure will include consultation with the sector on the use of Refundable Accommodation Deposits and ways to support residential providers to raise capital (DoH Budget Pack, pp. [121–2]).


In chapter 12 (pp. 371–437) of the Royal Commission’s Final Report, 13 recommendations are made regarding the aged care workforce (Recommendations 75–87), with seven key areas identified in its consideration of:

  • strategic leadership and workforce planning
  • building an aged care profession
  • education and training
  • improving pay for the aged care workforce
  • getting staffing right—residential care
  • getting staffing right—home and community care and
  • leadership and culture.

As recognised by the Royal Commission, the Department of Health has funded the Aged Care Workforce Industry Council (ACWIC) to lead the implementation of Australia’s Aged Care Workforce Strategy (June 2018).

The Australian Government’s response to the Royal Commission notes the recommendation of a minimum mandatory Certificate III qualification for personal care workers as being subject to further consideration (pp. 52–3), instead encouraging aged care workers to access the training opportunities identified below.

Expanding the workforce

The Budget provides $9.8 million over two years from 2021–22 to extend the ACWIC’s care and support workforce campaign to attract people into the workforce (Budget Measures: Budget Paper No. 2: 2021–22, p. 103). This measure responds to the Royal Commission’s Recommendation 76.5 to raise awareness of the career opportunities and pathways within the sector. In addition, the Government notes that the ACWIC will collaborate with the Human Services Skills Organisation, which is leading work focused on the skills needs of the care sector and carer pathways (Australian Government Response, pp. 50–1).

Personal care workers

The Budget provides $91.8 million over two years from 2021–22 to expand the personal care workforce for home care (Budget Paper No. 2, p. 103). This funding is intended to grow the workforce by 18,000 through:

  • establishing a Home Care Workforce Support Program, which is expected to attract 13,000 new workers, with grants available to organisations to deliver supports to attract, train and retain personal care workers and
  • using existing programs, such as JobTrainer, to attract an additional 5,000 workers, and to provide support to connect and guide people through training (DoH Budget Pack, p. [134]).

As discussed elsewhere in this Budget Review, an additional 33,800 training places for Certificate III in Individual Support (Ageing) will be made available for new and existing personal care workers under the JobTrainer Fund.

Health professionals

The Budget provides $27.3 million funding to encourage nurses and allied health professionals to work in aged care through:

Current workforce

The Budget provides $135.6 million of financial support for registered nurses who:

  • work for the same aged care provider for a 12-month period, with up to $3,700 for full-time and $2,700 for part-time employees, with an annual bonus after 2 years
  • work in rural and remote areas
  • hold a post-graduate qualification in palliative care, dementia leadership or infection prevention and control or
  • ake on additional training responsibilities (DoH Budget Pack, p. [134]).

The Budget provides that $49.4 million will be made available to support training in the delivery of dementia and palliative care. The dementia training will be available to general practitioners (GPs) and GP registrars, as well as being made available in regional and rural areas (p. 135).

Worker screening

The Budget provides $105.6 million over four years to introduce nationally consistent employment regulations across the aged care, disability and veterans’ care sectors (DoH Budget Pack, p. [139]). This will include a code of conduct, pre-employment screening processes and a worker register. These changes will come into effect from 1 July 2022. This initiative aims to better enable people to work across sectors and reduce red tape, as well as improving the identification of unsuitable workers. The existing Aged Care Act 1997 will be amended to reflect these changes (Australian Government Response, p. 52).

Regional, rural and remote locum support

The Budget provides an additional $25.1 million to expand the Rural Locum Assistance Program, so aged care providers in rural and regional areas will have increased access to a surge workforce (a temporary workforce who are already trained and qualified in the positions needed) (DoH Budget Pack, p. [135]).

Workforce data

The Royal Commission recommended improvements to workforce planning, which included more regular collection of aged care workforce data (Recommendation 75, vol. 3A, p. 373). The Budget provides $6.3 million to improve data reporting and enhancing linkages with other aged care data sets (DoH Budget Pack, p. [135]). 

Stakeholder reactions

The Australian Aged Care Collaboration, representing aged care providers, has broadly welcomed the Australian Government’s response to the Royal Commission, including the workforce support with more care minutes per day and more training and career development as being a significant step forward. Council on the Ageing (COTA) Australia encouraged the Australian Government to become a party to the upcoming Fair Work Case to establish an increase in hourly rates for aged care workers, calling on the Australian Government to make provision for additional wage support in the Mid-Year Economic and Fiscal Outlook 2021–22.

The unions representing nurses and aged care workers have expressed their frustration and disappointment with the aged care package. The United Workers Union stated that the Budget ‘gives the illusion of action on aged care but fails to address fundamental issues facing the sector’, and asked ‘where is the commitment to secure, well-paid, safe jobs necessary for quality care of older Australians, with the Royal Commission forecasting there will be an extra 80,000 aged care workers needed by 2030?’

The Australian Nursing and Midwifery Federation (ANMF) claimed that the Budget fell well short of the promised reforms and would be nowhere near enough to provide safe, quality care for people living in residential aged care. The ANMF stated that the introduction of regulated staffing hours was recognition from the Australian Government that staffing is at the ‘heart of best practice care’, but that it should have gone further and immediately introduced the minimum staffing levels and the requirement to have an registered nurse on site 24 hours a day.