KPMG Aged Care Market Insights 2026 webinar

Reform Reckoning in Aged Care

Australia's aged care sector is midway through the most significant transformation in decades. The Royal Commission into Aged Care Quality and Safety, concluding in 2021, exposed systemic failures including neglect, underfunding, and a provider-centric framework unfit for purpose. Its 148 recommendations prompted the government to enact the Aged Care Act 2024, which commenced on 1 November 2025.

This rights-based legislation places older people at the centre, enshrining their entitlements to dignity, choice, and high-quality care. It underpins major changes, notably the Support at Home program that replaced the Home Care Packages and Short-Term Restorative Care Programme on the same date. The shift aims to let more people age in place, with projections that around 1.4 million will benefit by 2035.

Yet the changes carry concrete costs. Residential providers, many already loss-making, must comply with strengthened quality standards, minimum staffing levels (including 24/7 registered nurses), and new funding via the Australian National Aged Care Classification model. In-home care has seen sharp price increases for certain services after caps on management fees, leaving some families facing higher bills despite grandfathering provisions for existing recipients.

Deadlines add pressure: providers had to verify services and update pricing immediately upon commencement, with government-set price caps arriving in July 2026. Non-compliance risks regulatory action from the Aged Care Quality and Safety Commission. Inaction threatens closures in a sector where demand outstrips supply, particularly in metropolitan areas.

Non-obvious angles include the trade-off between user-pays sustainability and equity. While means-testing targets those who can afford contributions to free up public funds, critics argue it burdens modest-income households and may deter uptake. Workforce shortages persist despite reforms, as higher wages compete with other sectors. Progress on the full Royal Commission agenda remains partial—by January 2025, only a fraction of recommendations were complete—raising questions about whether the overhaul will deliver promised quality gains or merely redistribute pressures.