Sector questions adequacy of aged care AN-ACC funding rise

Questions are being raised about whether additional government funding to aged care providers slated to start next month is enough to offset rising costs.

From 1 October, the Australian National Aged Care Classification (AN-ACC) price will increase to $303.19 per resident per day, with the average funding going up from $317 to an estimated $325, providing additional support for the more than 200,000 older Australians living in residential aged care.

The government said the increase forms part of its ongoing response to the Royal Commission into Aged Care Quality and Safety, which called for a funding system that reflects the real cost of care.

Aged Care and Seniors Minister Sam Rae said properly funding aged care remained a priority for the government.

“Making sure older Australians and their families have a quality, affordable and safe aged care system that is properly funded is a priority of the Albanese Government,” he said.

“This announcement means more funding for aged care homes, supporting workers and better care for our loved ones.”

The government said average per-resident funding is now around 65 per cent higher than it was in September 2022. It will also maintain current care minute requirements and existing AN-ACC funding structures, following advice from the Independent Health and Aged Care Pricing Authority (IHACPA).

Alongside the funding increase, the government confirmed the hoteling supplement, which helps providers cover costs such as food, cleaning and laundry, will remain unchanged at $22.15 per resident per day while an IHACPA review continues.

IHACPA chair David Tune said the Authority’s advice to government reflected rising superannuation guarantee obligations, recent Fair Work Commission decisions and the indexation of historical cost data.

“We are committed to ensuring that our pricing advice for residential aged care is transparent, evidence-based and reflects the costs of delivering quality care,” Mr Tune said.

“The advice has been developed through extensive consultation and rigorous analysis, helping to support a sustainable aged care system and the delivery of safe, high-quality care for older Australians.”

Labor has confirmed it will spend $47 billion on aged care this year, including a $1.7 billion investment announced in the 2026-27 Budget to support the construction of an additional 5,000 aged care beds annually.

However, providers claim the increase does not go far enough.

Anglicare Sydney chief Simon Miller said the 2.6 per cent increase to the base funding price falls short of the 4.75 per cent increase in award wages and current inflation levels affecting the sector, and argued that describing the funding change as an increase overlooked the financial pressures providers continue to face.

“In real terms this means less money for the care of older people, not more. If aged care isn’t funded properly, you don't save money, you just move the cost to our hospitals. There’s a direct line between this decision and ambulances ramping outside emergency departments next winter, with older people caught in the middle,” he said.

“This is being called an increase, but when wages are climbing 4.75 per cent and costs are rising faster than the funding, it's a cut in everything but name. Older people are being short-changed, and the dedicated workers who care for them are being asked to do more with less.”

Mr Miller also urged the government to finalise the hoteling supplement review and ensure future funding reflects the true cost of delivering care.

“The government must fund aged care at the true cost of care and resolve the hotelling supplement review without delay, so older Australians get the care they deserve and the people who provide it are properly backed,” he said.