Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 409

$17.7 billion aged care plan welcome but many will miss out

On Tuesday, 11 May while all eyes were on the Federal Budget, the Government released its response to the Final Report of the Royal Commission into Aged Care Quality and Safety.

The report details the response to the 148 recommendations of the commissioners in the form of a three-phase, five-year, five-pillar plan. The government has accepted (or accepted in principle) 126 of the recommendations, with the remaining recommendations subject to further consideration and six not accepted at all.

Importantly the plan also details how the investment of the $17.7 billion announced in the budget will be spent.

Among the six recommendations rejected is an aged care levy to fund the system and changes to the means testing arrangements that would have seen pensioners have their accommodation and cost of living met by the government. The recommendation to phase out lump sum Refundable Accommodation Deposits (RADs) is subject to further consideration and will form part of the reformed Residential Aged Care Accommodation framework which will also look at changes to accommodation design standards.

The big tickets in aged care

The big ticket items in the five-year plan include $6.5 billion for an additional 80,000 home care packages over the coming two years, almost $800 million to support 1.6 million informal carers through respite and payments, $3.9 billion to increase the care residents of aged care homes receive to 200 minutes per day including 40 minutes with a registered nurse.

In a move that will likely shake up the industry, $102 million will be spent on placing residential aged care places in the hands of senior Australians instead of residential aged care homes. There is also $200 million for a star rating system to better inform senior Australians and their families.

The need to attract and train aged care workers has seen the Government commit $652 million into the aged care workforce and tougher governance of the industry has seen the government provide $698 million.

Sadly, Recommendation 25 from the Final Report, which was set to revolutionise aged care through a single assessment and funding programme incorporating all home care and residential aged care services, providing funding based on the individual’s needs with flexibility and choice across providers was accepted in principle only.

In their response, the Government said that a new home care programme “will be designed to better target services to eligible senior Australians” and that “Senior Australians will also have more control and flexibility to select a residential aged care provider of their choice”.

Not available to all

This indicates there will be improvements to how the system operates, the level of choice and transparency and the amount of services that will be available for senior Australians. But unlike Medicare or the NDIS, aged care will still be a rationed system.

It’s hard not to be excited about a $17.7 billion plan for aged care but my excitement is tempered by the knowledge that the system that will provide greater choice, transparency and care for many will still see some senior Australians miss out. In his opening remarks Treasurer Josh Frydenberg referred to “Team Australia”, it would be great if “Team Australia” adopted the motto to “leave no senior Australian behind”.

 

Rachel Lane is the Principal of Aged Care Gurus where she oversees a national network of adviser dedicated to providing quality advice on retirement living and aged care. She is also the co-author of a number of books with Noel Whittaker including the best-seller “Aged Care, Who Cares?” and their most recent book “Downsizing Made Simple”. To find an adviser or buy a book visit www.agedcaregurus.com.au.

 

  •   25 May 2021
  • 4
  •      
  •   
4 Comments
Peter Bayley
May 26, 2021

A close reading of the government's announcements and response to the Royal Commission will reveal some 'smoke & mirrors'. A substantial slice of the $17B will go into bureaucracy (three new bureaucratic structures) and compliance. With 60% of residential aged care operators presently losing money the additional money will help but the extent of additional micromanagement complaince is mind boggling. Talented managers are leaving the industry as they are fed up with bureaucratic rules and rigid and aggressive accreditation assessments. Aged care is now regulated more than hospitals.

asdf
May 28, 2021

Agree, I work in the industry. The micromanagement and compliance is costing at least 30% of any funding put in to Home care packages. eg. Fund holding 15% ; care planning 15% ; mark up on service provision 50%

Name withheld
May 26, 2021

I am 68 years old. I am in remission from pancreatic cancer and Hodgkin lymphoma. I have an investment property. I get $550 per week from that property. I am not eligible for disability pension or pension card. My medical bills are high. My wife is force to keep on working because there is not enough money to pay the household bills and maintain a reasonable lifestyle. She gets $75k gross per annum. She applied for carer's allowance. It was rejected. She is 62 years of age. I have to care for myself. It is tough at times. Please advise.

Graham Hand
May 27, 2021

Hi, if you would like Rachel to refer you to an aged care specialist adviser, please drop us a line and we will forward your request to her. Firstlinks is not licensed for personal advice.

 

Leave a Comment:

RELATED ARTICLES

No one holds the government to account on spending

What the Federal Budget means for you

We need hard conversations about frailty planning

banner

Most viewed in recent weeks

Want your loved ones to inherit your super? You can’t afford to skip this one step

One in five Australians die before retirement and most have not set up their super properly so their loved ones can benefit from all their hard work and savings. 

Indexation implications – key changes to 2026/27 super thresholds

Stay on top of the latest changes to superannuation rates and thresholds for 2026, including increases to transfer balance cap, concessional contributions cap, and non-concessional contributions cap.

Super is catching up, but ageing is a triple-threat

An ageing Australia is shifting the superannuation system’s focus from accumulation to the lifecycle of retirement. While these pressures have been anticipated for decades, they are now converging at scale and driving widespread industry change.

Has Australia wasted the last 30 years?

The 20 years after Peter Costello left Treasury have been deemed wasted...by Peter Costello. The missed opportunities for Australia began long before.  

The refinery problem: A different kind of energy crisis in 2026

The Strait of Hormuz closure due to US-Iran conflict severely disrupted global energy supply chains. While various emergency measures mitigated the crude impact, the refined product market faces unprecedented stress.

3 ways to defuse intergenerational anger

With the upcoming budget increasingly likely to include bold proposals to alter the tax code I’ve outlined three incremental steps with fewer unintended consequences.

Latest Updates

Investment strategies

War can’t be good, can it?

War brings immense human suffering and geopolitical chaos, but historically, equity markets have shown a certain detachment and resilience amid conflict, leading to increased profitability despite initial panic.

Property

Origins of the mislabeled capital gains tax ‘discount’

Debate over the CGT discount is intensifying amid concerns about intergenerational equity and housing affordability. This analysis shows that the 'discount' does not necessarily favor property investors.

Superannuation

Div 296 may mean your estate pays tax on assets your beneficiaries never receive

The new super tax, applying from 1 July, introduces more than just a higher rate on large balances. It brings into focus a misalignment between where wealth sits and where the tax on that wealth ultimately falls.

Investment strategies

There’s more to software than just code

AI-driven fears of collapsing software moats has triggered indiscriminate sell-offs. This has created mispricing opportunities as markets overreact to uncertainty and rising discount rates.

Economics

Europe: A new growth trajectory powered by reform and investment

Europe is undergoing a major transformation driven by security threats, US pressure, and a shift from austerity to growth. EU member states are taking proactive measures to enhance competitiveness and resilience.

Investment strategies

Orbital AI data centers prepare for launch

The new space race is driven by AI as data centers in space offer continuous solar power and reduced environmental impact. Orbital AI aims to speed data processing and ease Earth's resource strains.

Retirement

Little‑known government scheme can help retirees tap into $3 trillion of housing wealth

The Home Equity Access Scheme in Australia allows older homeowners to tap into their home equity for retirement income, yet remains underused due to lack of awareness and its perceived complexity.

Sponsors

Alliances

© 2026 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.