The 2025–26 Federal Budget delivers $290 million for aged care reform measures and confirms the previously announced $2.6 billion to boost wages for aged care nurses — but beyond that, stakeholders say there’s little new for the sector.
While cost-of-living relief dominated Treasurer Jim Chalmers’ fourth budget, aged care received targeted support to sustain the workforce and progress long-awaited reforms. The funding will help prepare the sector for the rollout of the new Aged Care Act from 1 July 2025, with investments in regulatory capability, digital infrastructure, and culturally appropriate assessment services.
However, the absence of broader support for providers — particularly for ICT upgrades, capital investment, or additional home care packages — has drawn concern from industry leaders. As the sector braces for a period of significant transition, many say the budget stops short of fully equipping providers for the scale of reform ahead.
$2.6 Billion Workforce Investment
One of the most significant measures for the sector is the confirmation of $2.6 billion over five years to fund award wage increases for aged care nurses and personal care workers. This applies across residential aged care, Home Care Packages, the Support at Home program, CHSP, Multi-Purpose Services, and care programs for First Nations communities.
These wage increases are scheduled to take effect from 1 March 2025 and form part of the government’s broader $17.7 billion investment in aged care wages.
While warmly welcomed by the sector, provider organisations have emphasised the need for matching operational and ICT investment to manage the financial and systems impact of these increases.
$291.6 Million to Support Reform Implementation
In preparation for the new Aged Care Act (commencing 1 July 2025), the budget allocates $291.6 million over five years, with a focus on regulatory readiness, digital transformation, and support for culturally appropriate care.
Key allocations include:
- $116.1m for the Aged Care Quality and Safety Commission to enforce the new Act
- $53.2m for implementing the Single Assessment System and digital infrastructure
- $47.6m to support First Nations organisations in delivering culturally safe assessments
- $37.8m for digital transition work by the Commission
Additional funding for dementia monitoring, CHSP assessments, cooperative care models, and workforce support in remote regions.
Some of this funding will be offset by $50 million in internal reallocations and savings, including:
- $21.2m from cancelling a multidisciplinary care trial
- $27.7m from new cost recovery charges by the regulator
Despite this investment, sector leaders are calling for greater financial support for providers to upgrade critical systems and prepare for compliance under the new Act.
Additional Support Measures
The budget also offers modest relief for aged care workers:
- Income tax cuts from 1 July 2024
- Workers earning $70,000–$80,000 could receive up to $536/year in tax savings by 2027–28
Combined with wage increases, these measures aim to improve worker retention across the sector.
Reform Fatigue Builds as Sector Seeks Clearer Path Forward
Industry peak bodies have expressed concern about the lack of dedicated funding to help providers implement the new Aged Care Act.
Tom Symondson, CEO of Ageing Australia, acknowledged the wage investment but highlighted the absence of funding for ICT upgrades, stating:
“Provider systems need to interface with government platforms. Some are already spending millions. Grants of $10,000 simply aren’t enough.”
Ageing Australia had called for $600 million for ICT infrastructure and $188 million to help transition over 450,000 aged care workers to the new legislative framework.
The sector is also requesting more time and staged implementation, citing risks of disruption and uncertainty if reforms are rushed.
Broader Budget Measures Affecting the Sector
Cost-of-Living Relief
- $150 energy bill relief per household
- PBS co-payments capped at $25 from Jan 2026
- Income tax cuts from July 2024
Housing & Infrastructure
- Ongoing commitment to 1.2 million new homes, but no specific aged care housing initiatives
Workforce & Skills
- $3.6b for early childhood educators
- 100,000 permanent free TAFE places
- Student debt relief through reduced HELP balances
Implications for the Aged Care Sector
While the Budget did not include new home care packages or capital grants, it clearly positions 2025–26 as a year of consolidation, focused on workforce wage growth and laying the groundwork for reform.
Key challenges are expected to persist, particularly around the sector’s transition to the new Aged Care Act, the rollout and refinement of the Support at Home Program over the next two financial years, and the eventual integration of the Commonwealth Home Support Program (CHSP) into the broader system.
Strategic Takeaways for Aged Care Providers
- Compliance readiness is crucial for FY25–26
- Begin workforce planning and leadership development ahead of 1 July 2025
- Prioritise ICT infrastructure planning despite limited federal support
- Engage with the government on the need for clearer implementation timelines and transitional funding
The aged care sector continues to balance between reform ambition and operational capacity. This budget delivers incremental progress, but the path to full readiness, especially under the new legislative and digital frameworks, requires further investment, clarity, and collaboration.
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