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Aged care initiatives

In 2022-2023, spending on aged care is estimated to be $29.8 billion. This is in response to the Royal Commission into Aged Care Quality and Safety which handed down its final recommendations in March 2021 – just over a year ago.

The Government’s aims are for this funding are to contribute to a more accessible and sustainable needs-based system, to support older Australians to stay in their homes for longer, reform the residential aged care sector, and to grow the size and skills of the aged care workforce.

Based on the five pillars from the recommendations from the Royal Commission, the Budget covers each of the following areas.

  • Pillar 1: Home Care:
    • $5.4 million for home care to continue consultation on the design of the wider aged care reforms. The aim is to implement a new support at home program that rolls up Commonwealth Home Support, Home Care Packages and restorative care and respite. This is due to commence 1 July 2023.
    • Plan includes 40,000 Home Care Packages, an additional 34,000 additional training places, 7000 personal care workers and 8,400 respite care services
    • 218,000 older Australians have access to a Home Care Package which is 25% more since the end of 2020 (although many older Australian’s have unspent funds due to the worker shortage in the home care sector).
  • Pillar 2: Residential Aged Care Services:
    •  $20.1 million over three years (from 2022-2023) to complete the implementation of the Australian National Aged Care Classification (AN-ACC) and a new funding model for residential aged care over a two year period.
  • Pillar 3: Residential Aged Care Quality and Safety:
    • $345.7 million over four years to improve the administration of medication management in Aged Care Facilities for residential aged care residents.
    • $22.1 million to establish a fund and invite States and Territories to put forward proposals to trial new models of multidisciplinary outreach care for residential in residential aged care.
    • $18.3 million over 2 years from 2021/2022 to extend arrangements for third party quality assessors for site audits of residential aged care facilities.
  • Pillar 4: Workforce:
    •  $32.8 million over four years for additional clinical placements for students in the care and support sectors.
    • $10.8 million for the Cross Agency Task Force to implement new reforms across the aged, disability and veterans’ care sectors
    • $6.9 million to support co-operatives and other collaborative business models access the aged, disability and veterans’ care sectors.
  • Pillar 5: Governance:
    • $6.1 million to extend the aged care system regional stewardship outreach model to the 31 December 2022 to strengthen governance of the aged care system.

Other key initiatives noted:

  • $10 per resident per day funding uplift in residential aged care to improve food and nutrition.
  • National Aged Care Advisory Group and Council of Elders established to provide advice on the reforms.
  • Reporting of care staffing minutes commenced at residential aged care facility level.
  • Given aged care providers must invest in digital technology (Recommendation 68 from the Royal Commission that has been adopted), they can now claim a $120 tax deduction for every $100 they spend on buying software, as well as $120 tax deduction for every $100 spent on training in digital and a bonus 20% deduction for business costs supporting digital update.
  • $215.3 million to support aged care workers with a bonus of up to $800 for each worker.
  • $50.4 million will fund 4000 training places for nurses to deliver vaccination services to aged care residents and staff.
  • $37.6 million to establish grants for up to 2907 training places in infection prevention and control for qualified nurses.

Mercer’s Perspective


This Budget announcement falls short of additional funding called for by the Aged Care Royal Commission, the industry and other forecasters who believe the funding required is closer to $50 billion over the same period. With only a further $468.3 million in this Budget, it’s just the tip of the iceberg as to what’s needed.

The funding for additional Home Care Packages or extra hours of care required in residential care is welcome. However Mercer believes this will make minimal impact on older Australians if we continue to face shortages of skilled, quality, and empathetic workforce needed to meet this increased demand.

In light of this Mercer welcomes the funding for an additional 34,000 training places and 7000 new personal care worker so long as these places can be filled. The $800 bonus to aged care workers is trumped by the fact that a significant wage review and increase is required to attract more people to the industry.

Many migrant and older workers are currently holding up a very fragile system without a real workforce strategy in place.  Workforce shortages were identified some 20 years ago and continues to an opportunity missed by the Government.

The workforce issues also mean that smaller providers will find it more difficult to compete with the larger providers for staffing, compliance and maintaining quality care. The implication of this is that the number of providers may shrink creating less competition and possibly higher costs for individuals and their families.

The Government has still not addressed the ‘unspoken’ issues of greater private contribution required from individuals and their families who can afford to contribute to their ageing care and living needs. The Government is wary of being perceived as raising taxes ahead of an election even though the Aged Care Royal Commission recommended that the issue of private contributions be addressed. 



Implications for employers 

  • Training places and funding to support new entrants into the industry
  • Review of SCHADS award for personal carers, support staff and nurses’ award for registered nursing staff aiming to build a bigger, stronger workforce to assist our burgeoning ageing population.
  • New funding to help with adopting digital technology and skills training will help small providers (i.e. small business).
  • There was no connection made between informal and family carers of older Australians and how their caring responsibilities may impact their jobs and their employers. This is a significant impact for employers, not only for the wellbeing of their employees but also the level of productivity and ultimately profitability because of their impacted employees being focused on personal necessities rather than their employment.

Implications for individuals (Senior Australians)

  • This Budget is to be welcomed by Australian individuals based on the increased size in funding and the support the Government has committed to additional funding for the recommendations of the Aged Care Royal Commission.
  • For those awaiting a Home Care Package, the pipeline for accessibility has been somewhat improved with 40,000 new home care packages announced. The challenge will be accessibility as there are not enough qualified care workers available to provide this care.
  • The reforms for residential aged care will support higher levels of quality and safety for residents and peace of mind for their families. These reforms will take many more years to be put in place and be noticeable.
  • There will be continued improvement in the level of support for informal and family carers in the form of more respite care and support services, as well as dementia support. In addition, navigating the system is receiving greater transparency and coordination, particularly for rural, regional and First Nation Australians.

Insight: Does more super buy you more happiness in retirement?

The purpose of superannuation is to provide an income for Australians in retirement. Yet, as the recent Retirement Income Review found, there has been insufficient attention put on helping people to optimise their retirement income through the efficient use of their savings.

For this reason, Mercer wanted to turn this problem on its head and not ask, how much superannuation do you need in retirement, but instead: how can superannuation be used to improve happiness in retirement for all Australians?

Dr David Knox and Will Burkitt share their insights:

Does more super buy you more happiness in retirement

This content is intended to inform clients of Mercer’s views on particular issues. It is not intended to be provided to any person as a retail client and should not be relied upon or used as a substitute for professional advice specific to a client’s individual circumstances. Whilst Mercer believes the prospective information and forward looking statements made by Mercer in this report are based on reasonable grounds, they are predictive in character and may therefore be affected by inaccurate assumptions or by known or unknown risks and uncertainties. This content has been prepared by Mercer Consulting (Australia) Pty Ltd (MCAPL) ABN 55 153 168 140, Australian Financial Services Licence #411770. Any advice contained in this content is of a general nature only and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this content you need to take into account your own financial circumstances, consider the Product Disclosure Statement for any product you are considering and seek advice from a licensed, or appropriately authorised financial adviser if you are unsure of what action to take. ‘MERCER’ is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917.

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