Key Facts

• The new Aged Care Act is focused on empowering older people and upholding their rights, needs and personal choices. It is intended to “build a stronger, more responsive aged care system that puts the rights, dignity and needs of older people first”.
• The Act was due to come into effect on 1 July 2025. However, on 4 June 2025, Minister for Health and Ageing, the Hon. Mark Butler MP, announced it would be delayed until 1 November 2025, in response to concerns from providers.

‍“This will allow more time for aged care providers to prepare their clients, support their workers and get their systems ready for the changes. It will also give us more time to finalise key operational and digital processes, and for Parliament to consider supporting legislation that will enable the new Act to operate effectively.” – Minister for Health and Ageing, the Hon. Mark Butler MP

• The Australian Government currently funds three main aged care programs: the Commonwealth Home Support Programme, Home Care Packages, and residential care.
• In 2023–24, around 835,000 people were assisted under the Commonwealth Home Support Programme (CHSP). Additionally, 275,000 people were using homecare, 198,000 people were using permanent or respite residential care, and4,900 people were using transition care or short-term restorative care.
• There are currently around 370,000 workers in the aged care sector. The workforce shortage is expected to be 110,000 by 2030.
• In March 2024, 50 per cent of residential care homes were operating at a loss, and home care providers' margins dropped from $3.20 to $1.80 per client per day.

The Policy Landscape

Royal Commission

The Royal Commission into Aged Care Quality and Safety was established in 2018. It handed down its final report in March 2021, which included 148 recommendations.

The findings presented a concerning view of Australia's aged care sector, revealing that the then Aged Care Act was no longer fit for purpose. The structure of the then Act focused on providers and their funding, rather than on the individuals who access these services.

One of the primary conclusions of the Commission was the need for a rights-based approach that placed older people at the centre of care.

‍Reforms and the new Aged Care Act

The new Aged Care Act is intended to change the way aged care services are structured and funded, delivering on the key recommendations of the Royal Commission.

The Act will introduce a rights-based approach, ensuring that older Australians are central to the design and delivery of services.

Key features include:

• The Support at Home program: This will streamline and replace the Home Care Packages (HCP) Program and Short-Term Restorative Care (STRC) Programme.
• Registered supporter role: Where older Australians can designate someone to support them in decision-making if needed. This will help preserve their autonomy while ensuring appropriate assistance when required.
• Whistleblower Protection: The Act will provide strong protection for whistleblowers, ensuring that aged care workers, recipients, and their families can report concerns about care quality without fear of reprisal.
• The Statement of Rights: Acknowledges the fundamental rights of individuals seeking and receiving funded aged care, ensuring their dignity, privacy and autonomy.
• Funding Model: Under the new Act, older adults will need to make means-tested contributions toward their non-clinical care.
• Staff Qualifications: The Act requires aged care workers to possess relevant qualifications, skills and experience and ensures that aged care workers are given opportunities to develop their capabilities to deliver care.

Ministerial responsibilities

Prime Minister Albanese said that aged care should be considered a part of health, which structurally has a Cabinet Minister for the overarching portfolio, and a separate Minister for Aged Care in the outer ministry.

Following the 2025 Federal Election, South Australian MP Mark Butler was re-appointed as the Minister for Health and Ageing (adding Disability and NDIS to his title), and will have overarching responsibility foraged care.

The day-to-day management of the aged care portfolio will be led by Victorian MP, Sam Rae, who was appointed Minister for Aged Care and Seniors.

Supporting Minister Butler and Minister Rae is the former Tasmanian ALP Leader and the new Member for Lyons, Rebecca White, who has been appointed the Assistant Minister for Health and Aged Care.

Challenges

1. Operational adjustments

The reforms, while broadly considered improvements to the sector, come with increased complexity. Providers will face stringent compliance requirements, including care minutes responsibilities and the introduction of Star Ratings, which will increase administrative burden.

There are industry concerns that the costs of introducing these reforms and ongoing regulatory burden will disproportionately impact smaller organisations.

2. Workforce challenges

The Act requires aged care workers to possess relevant qualifications, skills and experience. Providers must ensure they meet these new staffing requirements, potentially requiring increased hiring, recruitment and retention efforts. There will likely be additional costs for training programs to ensure workers meet the new qualification standards, especially for new hires or current staff upgrading their skills.

In addition to concerns about the increased costs to providers, the aged care sector has continually faced critical workforce shortages. A report by CEDA found Australia is facing a shortage of at least 110,000 direct aged-care workers within the next decade unless urgent action is taken, and 64 per cent of providers have been unable to access the workers required under the current migration arrangements.

When asked about their confidence in meeting proposed reforms with available workforce, almost two thirds of respondents in inner regional (64 per cent) and outer regional/remote (61 per cent) areas indicated that they were not confident or not at all confident.

The Australian Government has announced a range of initiatives to try to address pipeline, including funding 480,000 fee-free TAFE places over 4 years, including in care and support sectors, and wage increases for workers.

3. Funding concerns

With the introduction of new funding models and means-tested contributions for care, aged care providers will need to manage new funding arrangements and increase their reporting on how government funds are being used for services.

Providers are extremely worried about this:

• 92% of providers express concern over government funding and are unsure whether existing policy settings will sufficiently support their financial needs
• 84% believe the new requirements will put a greater strain on the aged care sector
• Only 28% of providers were confident they could attract capital for building refurbishments or new builds

Additionally, seven out of ten providers are concerned about the nation’s readiness to support a growing ageing population.

York Park Group’s Thoughts

Significant regulatory changes are inherently challenging and require time to implement.

The Government’s decision to delay the implementation of the new Act by four months demonstrates it has listened to sector concerns.

In the coming months, it will be important for providers and those in the sector to consider how they manage their reputation as they implement the requirements of the new Act and deal with any issues that may arise.

The Act focuses on the individual within the aged care system, which should remain front and centre to any changes and related communications, both internally and externally.