Australia’s aged care sector is undergoing transformative reforms to address the growing needs of an aging population. Key changes include a new Aged Care Act, funding updates, workforce improvements, and expanded home care services, aiming to create a sustainable and equitable system.

Australia is preparing for a significant transformation in its aged care sector. With the population of Australians over 65 expected to more than double in the next 40 years, and those over 85 projected to triple, the government is introducing sweeping reforms to address the growing demand for quality aged care services[i]. Central to these changes is the introduction of the new Aged Care Act on 1 July 2025, alongside a range of updates focusing on funding, workforce conditions, and innovative care models[ii].

Here’s what’s ahead for aged care in Australia:

The new Aged Care Act and funding overhaul

The Aged Care Act will play a pivotal role in reshaping the sector, aiming to improve the financial sustainability of residential aged care services while ensuring quality care for residents. Residential facilities face ongoing financial challenges, though improvements have been noted, with 65.9% of providers reporting profitability as of 30 June 2024, a significant increase of 17 percentage points compared to the previous year[iii]. To address the challenges still faced, the government is implementing several key measures:

  • Federal grants totalling $250 million will be allocated through Round 2 of the Aged Care Capital Assistance Program to improve access to quality aged care homes in regional, rural, and remote communities, focusing on upgrading facilities and modernising infrastructure to ensure safer and more comfortable living conditions for residents[iv].
  • Means-tested contributions for new residents will increase, along with a higher indexed cap on room prices, striking a balance between private funding and public contributions[v]. Aged Care Minister Anika Wells has emphasised that government contributions will remain substantial, contributing $3.30 for every $1 from older Australians entering aged care.
  • A lifetime contribution cap of $130,000 will ease financial concerns for families, ensuring no resident pays beyond this amount, whether they receive care in a facility or at home[vi].

These shifts aim to secure $56 billion in funding by 2050, a necessary investment to accommodate a growing elderly population[vii].

The Support at Home program

For many Australians, remaining at home as they age is a preferred option, a trend the government is keen to support. Replacing existing programs like Home Care Packages and Short-Term Restorative Care, the new Support at Home program will launch with a $4.3 billion investment[viii]. Designed to simplify and streamline care delivery, this initiative promises shorter waiting times, better access to services, and holistic support tailored to evolving needs.

Under the Support at Home program, an additional 300,000 places will become available over the next decade. This expansion will include a wide array of services, such as:

  • Health-related care, like nursing, occupational therapy, and medication management.
  • Assistance with daily living, including help with showering, dressing, and cooking.
  • Practical support for everyday tasks, such as cleaning, gardening, and grocery shopping.

The government will fully cover clinical care costs, while recipients will make contributions toward routine living and independence costs. These contributions will be determined using a means test tied to the Age Pension and asset levels, with packages covering up to $78,000 annually for high-needs classifications[ix]. Additional funding will be allocated for assistive technologies, home modifications, and end-of-life care, ensuring older Australians can access critical resources within their own homes.

Workforce and wage improvements

The aged care workforce will benefit significantly from the government’s $2.6 billion investment to deliver further wage increases for 60,000 aged care nurses[x]. These pay rises, a key part of the sector’s reforms, highlight the critical role nurses play in providing quality care. With registered nurses seeing an average award wage increase of $430 per week and enrolled nurses $370 per week, the improved pay structures not only ensure fairer compensation but also strengthen efforts to attract and retain staff in a sector facing growing workforce demands in the years ahead.

Preparing for a growing demand

The 2025 aged care reforms address the growing challenges posed by Australia’s aging population. With a focus on infrastructure upgrades, innovative care models, and enhanced transparency, these changes aim to meet future demands while resolving current issues. Expanded home care services, sustainable funding, and stronger consumer protections ensure families can make informed decisions during critical times.

Marking a pivotal shift, the reforms introduce the Aged Care Act, increased funding, and improved support for at-home care, creating a more sustainable and equitable system. While implementation challenges remain, collaboration between government, providers, and communities will be key to achieving these goals. These reforms lay the groundwork for delivering the quality care every older Australian deserves.

If you would like more information on the new Aged Care Act 2024, or if you would like to discuss your retirement planning, contact our office today.

DISCLAIMER: All information on Focus Wealth Advisers is general in nature and does not take into account your personal objectives, financial situation, or needs. You should consider your personal circumstances and seek professional advice before making any decisions based on this information.

[i] AIHW (2024) Older Australians

[ii] Health.gov (n.d.) About the new Aged Care Act

[iii] Health.gov (2024) Quarterly Financial Snapshot Aged Care Sector Quarter 4 2023-24

[iv] Health.gov (2024) $250 million to improve regional, rural and remote aged care

[v] Health.gov (2024) Once in a generation aged care reforms

[vi] Health.gov (2024) Once in a generation aged care reforms

[vii] Health.gov (2024) Once in a generation aged care reforms

[viii] Health.gov (2024) Once in a generation aged care reforms

[ix] Health.gov (2024) Support at Home

[x] Health.gov (2025) Extra $2.6 billion to deliver another pay rise for aged care nurses