State of the Nation

    Author //

    • Judd Last Partner
      Phone: 61 7 3001 9212

    As published in CK Momentum Issue 5  (Click here to download)

    As the Australian population ages, the demand for accommodation, services and care within the aged care sector continues to increase rapidly. This demand, the highly regulated nature of the industry and the complex political and legislative environment in which the industry operates present many challenges for operators, providers and other stakeholders in this sector.

    Here, Property & Projects Partner, Judd Last, looks at some of those issues.


    As we are living longer, the aged care industry is coming under greater pressure. Currently, the Australian Government spends more than $14 billion annually on aged care. This is anticipated to increase to approximately $17.5 billion per annum by 2016/17.

    The aged care system in Australia directly and indirectly affects the lives of millions of Australians every day. Here are some interesting facts:

    • More than 1 million people receive aged care services, with over half a million people receiving “at home” support.
    • We have 2.7 million unpaid carers, many of whom are family members.
    • The industry employs around 350,000 aged care staff across some 2,100 aged care providers.
    • Millions of Australians have a loved one receiving aged care services or are thinking about their own or someone else’s needs.


    The Federal Government has recently introduced a number of important changes with the stated objective of ensuring aged care is sustainable and affordable, offering choice and control to consumers, encouraging businesses to invest and grow, and providing diverse and rewarding career options.

    The changes are intended to give older Australians more choices, easier access and better care. They commenced in 2012, with the first significant changes implemented on 1 July 2013. The second tranche of major changes commenced on 1 July 2014.


    The more notable changes include:

    • greater support for older Australians to stay independent in their own home by utilising more home care packages to meet their needs;
    • greater choice and flexibility for seniors in how they decide to pay for accommodation and services (allowing them 28 days to decide how they wish to pay);
    • transparent accommodation prices and services, with all residential aged care providers required to publish the maximum amount they can charge for accommodation and extra services;
    • a new means test in residential aged care to help determine a person’s fair contribution to their accommodation and care needs, which will also apply to home care packages;
    • new capping arrangements to assist make the system more affordable overall for individuals; and
    • removing the distinction between high and low care in residential aged care.


    The changes will have a significant impact on financing and funding arrangements in the residential aged care industry. Generally, these reforms are expected to have a positive effect on the aged care industry, but some have the potential to have a negative impact.

    The broad consensus is that the “for profit” operators and providers specialising in high care needs and operating facilities out of metropolitan or city areas are likely to receive the greatest benefit from the reforms. Operators and providers who focus predominantly in low care needs and operate facilities in rural or regional areas appear less likely to receive the same benefits. 

    Click here for a report published by KordaMentha "Residential Aged Care Industry:  Consolidation and Convergence", Publication No. 14-07, December 2014

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