Introduction

Australia is a federal parliamentary democracy with three tiers of government.

• Commonwealth (Federal) Government. Responsible for national policies, including aged care, social security, healthcare funding, defence, and immigration.
• State/Territory Governments: Manage service delivery for health, hospitals, education, and transport.
• Local Governments: Deliver community services like waste management and local infrastructure.

Aged care is a federal responsibility, governed by Commonwealth legislation, including the Aged Care Act 1997. This centralised approach ensures national consistency in care standards and funding across the country.

State/territory governments primarily manage health service delivery. State health departments (like NSW Health) manage hospitals and healthcare professionals.

This arrangement differs from the UK's system, where local government has statutory responsibility for adult social care, and the national government is responsible for health.

Like the UK, Australia's divided aged care and health systems can make it hard to coordinate care for older people.

On 1 July 2025, Australia will implement groundbreaking legislation to create a new Support at Home programme, replacing the existing Home Care Packages system[1]. This reform follows recommendations from a Royal Commission into Aged Care Quality and Safety[2]. It aims to establish a more personalised, accessible and sustainable homecare system.

Current Australian aged care landscape

Growing preference for home-based care

Australian authorities recognise that most people prefer ageing at home. Government strategy therefore emphasises care and support in familiar surroundings.

In 2022/23, over 1.2 million Australians received home-based care and support services, including:

• 275,000 people with Home Care Packages (up from 217,300 in 2021/22)
• 1 million people accessing lower-intensity home support through the Commonwealth Home Support Programme[3]

In contrast, c. 310,000 people used residential services.

• 240,000 in permanent residential care (showing a slight decline from previous years)
• 70,000 accessing short-term residential respite care

This represents a significant trend towards homecare, with the proportion of Australians aged 65+ in residential care falling to 6.1% in 2022/23 (down from 7.1% in 2012/13). Government spending on homecare rose to AUD 6.8 billion in 2022/23, up from AUD 5.2 billion in 2020/21, reflecting this shift in care preferences.

The financial case for homecare

Government spending patterns

The Australian government is investing heavily in aged care, with a rising focus on home-based services[4]. During 2022/23:

• Governments spent almost AUD 28.3 billion on aged care, with 58% on residential care and 33% on home care and support
• The AUD 16.3 billion expenditure on residential aged care was almost double the amount spent on home care and support (AUD 9.5 billion)
• Homecare and support spending was 10% higher than in 2021/22 and 46% higher than in 2018/19
• Over the same five-year period (2018/19 to 2022/23), spending on residential care increased by only 13%

This shows the government's strategic shift towards homecare, with spending growth in this area significantly outpacing residential care.

Cost per person analysis

When examining costs per person in the target population (people aged 65+ and Aboriginal and Torres Strait Islander people aged 50-64):

• Government spending on aged care services per person increased by 14%, from AUD 5,354 to AUD 6,097 between 2018/19 and 2022/23
• In 2022/23, spending per person was highest for residential care (AUD 3,518) followed by homecare and support (AUD 2,040)
• Residential care costs 72% more per person than homecare

Individual cost comparison

From an individual perspective, homecare generally offers better value than residential care[5]:

Residential aged care costs:

• Basic daily fee: AUD 63.82 per day (AUD 23,294 annually)
• Means-tested care fee: Up to AUD 34,311 annually for those with income exceeding AUD 33,849 or assets above AUD 61,500
• Accommodation payments: Either a Refundable Accommodation Deposit (RAD) averaging AUD 470,000, or a Daily Accommodation Payment (DAP) of approximately AUD 64.38 per day

Total annual costs for residential care typically range from AUD 57,605 to AUD 108,000, with higher costs for specialised care such as dementia support.

Home Care Package costs:

• Government subsidies: Range from AUD 10,687 (Level 1) to AUD 62,014 (Level 4) annually
• Basic daily fee: AUD 13.14 per day (AUD 4,796 annually) for Level 4 packages
• Income-tested care fee: Capped at AUD 34,311 annually (same as residential care)

Total annual costs for a government-subsidised Level 4 Home Care Package typically range from AUD 15,000 to AUD 39,107, depending on income-tested contributions.

Care recipient contributions

There is a striking difference in the financial burden placed on individuals in different care settings:

• In 2021-2022, residents in care homes paid 25% of the total cost of their care, contributing $5.6 billion
• In contrast, homecare recipients contributed just AUD 111 million, accounting for only 2.4% of the total revenue received by homecare providers
• Homecare contributions rose much faster (16%) than residential care contributions (1.7%) between 2020/21 and 2021/22

Homecare is usually cheaper than residential care, even after adding private care supplements for unmet needs (at AUD 45-55 per hour). Homecare costs only approach or exceed residential care when people require 24/7 support.

The Royal Commission's call for reform

The Royal Commission into Aged Care Quality and Safety conducted a thorough examination of the sector [2]. It identified several critical issues requiring reform:

• Inconsistent care quality and safety standards across service providers
• Workforce challenges, including staff shortages and insufficient training
• A complex, difficult-to-navigate system creating barriers to timely care
• Access and equity issues especially affecting vulnerable populations
• Inadequate governance and accountability frameworks

These findings led to the creation of the Support at Home programme, which aims to fix systemic problems.

How Australians access aged care: current system

The Australian aged care system provides a structured pathway for citizens to access care and support.

1. Understanding care options and eligibility

To be eligible for government-funded support, individuals must generally be:

• 65 years or older (50 years or older for Aboriginal and Torres Strait Islander people)
• Require help with daily activities
• Be an Australian citizen, permanent resident, or a protected special category visa holder

People over 50 who are homeless or at risk of becoming homeless are also eligible.

2. Registering with My Aged Care

My Aged Care serves as Australia's central portal for aged care services. Individuals register by:

• Calling the contact centre (1800 200 422)
• Visiting the website
• Asking a healthcare professional to assist with registration

Upon registration, My Aged Care creates a client record to track the individual's care journey.

3. Assessment process

Currently, assessments may involve:

• Regional Assessment Service (RAS) for basic home support
• Aged Care Assessment Team (ACAT/ACAS in Victoria) for higher-level needs

From July 2024, the Single Assessment System using the Integrated Assessment Tool (IAT) will streamline this process (see below). 

4. Selecting providers and starting services

Once approved, individuals can choose service providers based on their preferences. My Aged Care provides lists of local providers.

5. Managing care costs

Care recipients contribute to costs based on means testing, with varying contribution rates for different services.

The Support at Home Programme: key features

The new programme, launching on 1 July 2025, introduces several significant improvements. It will replace the existing Home Care Packages Programme and Short-Term Restorative Care (STRC) Programme. The Commonwealth Home Support Programme (CHSP) will transition to Support at Home no earlier than July 2027.

The Minister for Aged Care, Anika Wells, announced the allocation of an additional 83,000 packages for the first year. This makes it "the largest home care package delivery on record, with 107,000 in total over the next two years across both the existing and incoming home care systems".

Expanded classification system

Unlike the old four-level system, the new programme has eight levels, each with a set budget for each quarter.

This expanded framework allows for more nuanced, personalised care planning that better aligns with individual needs.

Specialised pathways

The programme introduces two specialised short-term pathways:

1. Restorative Care Pathway: Extended from 8 weeks to 12 weeks, providing about AUD 6,000 (potentially increased to AUD 12,000 when eligible) to help maintain and improve independence for those with rehabilitation potential.
2. End-of-Life Pathway: Providing about AUD 25,500 for 12 weeks to support Australians who prefer to remain at home during their last months.

Flexible budget management

Under Support at Home, the programme divides annual subsidies into four equal quarterly budgets. Recipients can transfer unspent funds of up to AUD 1,000 or 10% of their quarterly budget (whichever is more) to another quarter to meet unexpected needs.

Services Australia, not service providers, will manage recipients' care funding, offering more recipient control.

Enhanced access to home modifications and assistive technology

A new Assistive Technology and Home Modifications Scheme (AT-HM Scheme), offers significant support for independent living:

• Up to AUD 15,000 for home modifications to make homes safer
• Fast access to assistive technology like walkers and wheelchairs
• A new equipment loan scheme

The funding is structured in three tiers for both assistive technology and home modifications:

Streamlined assessment process

A Single Assessment System will replace all current aged care assessments. This aims to shorten wait times and simplify navigation of the system. The government has already begun implementing this change with the new Integrated Assessment Tool (IAT) in July 2024[6].

Following assessment, participants will receive a notice of decision with an individual support plan containing:

• A summary of their aged care needs and goals
• A classification with an associated ongoing quarterly budget
• Approvals for short-term supports (if applicable)

Financial framework and contribution arrangements

Current homecare pricing structure

Under the existing Home Care Packages system, providers can charge for three key components:

Care services

• Government-subsidised services: The Australian government funds most care costs through Home Care Packages.
• Consumer contributions:
  • Basic Daily Fee: Up to 17.5% of the basic age pension (currently AUD 12.53/day).
  • Income-Tested Care Fee: Means-tested contributions, capped at AUD 12,719.99/year (2023/24 figures).

Care management and package management fees

• Care management fee: Covers care planning and coordination, up to 20% of the package budget.
• Package management fee: Covers administrative costs, capped at 15% of the package budget.

Typical hourly charges (2023/24)

• Personal Care & Domestic Assistance: AUD 50-70 per hour
• Nursing Services: AUD 80-110 per hour
• Specialist Allied Health (e.g., Physiotherapy, Occupational Therapy): AUD 90-150 per hour
• After-hours or Public Holidays: Up to 50-100% extra for services delivered outside standard weekday hours

Factors influencing hourly rates include: geographic location; staff qualifications; service complexity; and provider type (for-profit vs. not-for-profit).

New three-tiered contribution system

The Support at Home programme will introduce a three-tiered contribution system based on service types and financial means:

1. Clinical Supports Category: Fully government-funded services including nursing and allied health interventions.
2. Independence Category: Services maintaining independence (e.g., personal care, assistive technology) requiring moderate contributions.
3. Everyday Living Services Category: Higher contribution rates for services such as domestic help and gardening.

Starting on 1 July 2026, the government will introduce price caps for each service type. The Independent Health and Aged Care Pricing Authority (IHACPA) will advise on these caps to ensure fair and transparent pricing. Importantly, these caps will include the full cost of service delivery, including administration costs. This means providers won't be able to charge separate administration fees.

Contribution rates and lifetime cap

The new programme will structure contribution rates according to pension status.

• Full pensioners: 0% for clinical, 5% for independence, and 17.5% for everyday living services.
• Part pensioners and card holders: Varying rates determined by means assessment.
• Self-funded retirees: Higher contribution rates for non-clinical services.

A lifetime cap of AUD 130,000 applies to total contributions for non-clinical care across both home and residential care settings, providing financial security for care recipients.

Regulatory oversight and quality assurance

Australia's aged care system features robust regulatory oversight and comprehensive data reporting requirements. This ensures both transparency and quality in service delivery.

Regulatory bodies and oversight

The Aged Care Quality and Safety Commission[7] plays a central role in regulating the sector by:

• Conducting surprise inspections of care providers
• Investigating complaints about overcharging or poor transparency
• Enforcing compliance with quality standards
• Administering penalties for non-compliance, including fines up to AUD 55,000 for misleading pricing or failure to report data

The My Aged Care website helps people find care and compare prices.

Provider reporting requirements

Providers must routinely submit comprehensive data to ensure compliance and funding accountability.

Financial reporting

• Quarterly financial statements detailing income and expenditures
• Reports on unspent package funds held in consumer accounts

Service delivery data

• Documentation of direct care hours delivered to each consumer
• Tracking of consumer outcomes against care plan goals

Quality and safety reporting

• Providers must report serious incidents within 24 hours
• Regular submission of data on key metrics like pressure injuries and medication errors

Annual audits

• The regulator audits providers for financial and quality compliance.

These regulatory mechanisms will continue under the Support at Home programme, with further enhancements to strengthen consumer protections.

Workforce reforms and challenges

Care worker wages

In the Home Care Packages Program, the total estimated number of staff increased from 80,340 in 2020 to 170,000 in 2023. Of these 170,000:

• 142,000 staff (84%) were directly employed.
• 128,000 (76%) staff were employed in direct care roles. For employees providing direct care, 103,000 (81%) were directly employed.
• Direct care workers comprised an estimated 100 nurse practitioners; 5,500 registered nurses; 1,700 enrolled nurses; 114,000 personal care workers; and 7,100 allied health professionals and assistants.

The Australian Government invested AUD 11.3 billion to support increased wages in the sector. This was in response to the Fair Work Commission’s decision to increase aged care award wages by 15% from 30 June 2023.

In 2024, the Work Value Case determined the following minimum wages for homecare workers.[8]

In contrast, UK care workers typically earn closer to the UK national minimum wage (£11.44 per hour in 2024 and £12.21 per hour in 2025/26)[9]. Based on a 37.5 hour week, the NMW at £12.21 per hour equates to an annual salary of £23,809.

A level 1 role in Australia is equivalent to an annual salary of £29,448; level 2, £31,257; level 3, £32,281; level 4, £34,336; level 5, £35,029; and level 6, £36,977.

Comparing workforce challenges: Australia and England

Both countries face similar challenges with workforce stability and recruitment:

Staff turnover and retention

• England's domiciliary care services had a turnover rate of 25.3% in 2023/24
• Australia's annual turnover rate for homecare workers was 29% in 2023[10], slightly down from 31% in 2022

International recruitment

• In England, the proportion of British workers in domiciliary care decreased from 84% to 70% between 2017/18 and 2023/24, with 30% migrant workers
• Australia's proportion of migrant workers in aged care stands at 37% in 2023/24, up from 28% in 2020

Employment conditions

• In England, 38% of domiciliary care workers are on zero-hours contracts
• Australia has focused more on improving pay conditions, with higher relative wages compared to the national minimum wage

Transition arrangements and implementation

A key feature of the reform is the "no worse off" principle for contribution arrangements. Those receiving or eligible for Home Care Packages (by Sept 12, 2024) will pay the same or less under the new Support at Home programme.

All existing Home Care Package recipients will automatically transition into the Support at Home programme on 1 July 2025 and receive a Support at Home budget that matches their Home Care Package level. Australians on the National Priority System will receive funding matching their approved Home Care Package level. Reassessment will not be necessary unless needs have changed.

Prioritisation system changes

The prioritisation system will feature two important improvements:

• Priority ratings will be automatically determined based on assessment results, with applicants receiving a rating tier of High, Medium, or Standard
• Those facing longer-than-expected waits will receive 60% of their Support at Home budget until full funding is released

Challenges in Australia's system

Despite its strengths, Australia's aged care system faces several notable challenges:

1. Workforce shortages: Despite higher wages, Australia faces a projected shortfall of 35,000 aged care workers by 2028.
2. Waitlist management: As of December 2023, about 55,000 people were on the National Prioritisation System waitlist for Home Care Packages. Average wait times ranged from 3 to 9 months depending on package level. The government aims to reduce these gradually, with a target of an average 3-month wait period by July 2027.
3. Rural access inequities: Older Australians in remote areas have 34% less access to care services compared to urban counterparts.
4. Managing unprecedented growth: Homecare recipients increased by 33% between 2018/19 and 2022/23, creating challenges in maintaining service quality during rapid expansion.

Comparative insights: Australia and the UK

Provider landscape

Australia has around 900 approved providers for government-funded home care services. This relatively concentrated market contrasts sharply with England's highly fragmented system of over 10,500 homecare organisations.

When considering population scale, the difference becomes even more striking:

• Australia (population 26 million): one approved homecare provider for every 29,000 citizens
• England (population 57 million): one homecare organisation for every 5,428 citizens—over five times the provider density

This more streamlined provider landscape in Australia enables more consistent regulatory oversight.

UK system challenges

The UK adult social care system faces its own set of challenges:

1. Underfunding and fragmentation. Reliance on financially constrained local authorities has created significant funding gaps in social care. The Homecare Association calculates a funding deficit of £1.8 billion for homecare alone[11]. The Nuffield Trust calculated a £2.8 billion deficit after the Autumn Budget 2024[12].
2. Workforce instability. Low wages and challenging working conditions have resulted in 131,000 vacant care sector jobs in England alone[13].
3. Regional disparities. There is substantial variation in care availability and quality across different regions. Care and Support Alliance research shows the chance of having a request for care refused varies from 85% in some local authority areas to 12% in others[14].

Conclusion

Australia's Support at Home programme is a major step in transforming the country's aged care landscape. By addressing systemic issues highlighted by the Royal Commission, the programme aims to deliver more accessible, fair, and sustainable support for older Australians.

The data show Australia's commitment to home-based care, with over 1.2 million Australians receiving home care services compared to 240,000 in residential care. This 5:1 ratio reflects both consumer preferences and policy priorities, with home care recipients increasing by 33% between 2018/19 and 2022/23.

The Australian homecare model has benefits over the English one. Its consumer focus; streamlined processes; fair funding; fair prices; and fair wages, help address common challenges.  

Australia's My Aged Care system provides a clear pathway for citizens to access care, contrasting with the fragmented approach in the UK.

The financial case for homecare is compelling, with annual costs per person substantially lower than for residential care. This enables support for more people with the same budget while meeting the preference of older Australians to age at home if possible.

Improving aged care while managing costs is key for both countries as their populations age.

Note: Financial details and exchange rates mentioned may vary depending on current market conditions.

References