A new aged care home every three days? Canberra’s maths is right – its capital plan isn’t

Federal Health Minister Mark Butler dropped a line last week that should have stopped the sector cold: Australia needs to open a new aged care facility every three days for the next 20 years. Not a wing. Not a refurbishment. A whole facility – every 72 hours – just to keep pace with the first wave of Baby Boomers turning 80.

At 100 beds apiece, that’s around 12,000 beds a year – not far off what the Department of Health, Disability and Ageing has been forecasting.

The demographic maths is straightforward. Butler spelled it out: when he last held the aged care portfolio 15 years ago, about 15,000 Australians turned 80 each year. Next year, he says, it will be 90,000.

That’s not a “future problem” – that’s a “now problem”.

And yesterday morning on ABC Radio National, he was blunt: we’re falling “quite a long way short” – and approvals today reflect decisions made years ago, because planning, finance and construction take that long.

The Government, he said, is “very worried” it’s not seeing the surge in approvals providers said would follow the “once-in-a-generation” reforms passed in 2024.

The pipeline problem isn’t policy – it’s capital

So here’s the uncomfortable truth: Canberra is finally talking like it understands the pipeline problem – but it’s still acting as if the fix is policy, not capital.

The Government keeps insisting the sector is investable. But if that were true, operators would be building.

StewartBrown’s latest September 2025 Aged Care Performance Survey reinforces that without stronger financial investability, the sector will struggle to fund the new builds and renewals needed to meet looming demand.

As we reported in the latest edition of SATURDAY, residential aged care is still facing a capital freeze.

Outside of a handful of developments and OpCo/PropCo-style deals – one of the few areas still attracting fresh money – the development engine remains stalled.

Operators are still reshuffling portfolios, buying existing stock, renovating where they can – but greenfield builds are still the hardest equation in the system.

Returns remain thin, construction costs remain high, and regulatory and funding uncertainty continues to put off investors.

This is the disconnect between Canberra and reality: Australia can pass reforms and still fail to build beds, because reforms don’t automatically create returns that bring capital back.

And there’s no cavalry coming from Government. Everyone knows there’s no extra river of Commonwealth money waiting to fund a 20-year construction blitz.

Which means the “every three days” target lives or dies on one question: who funds the build?

The obvious funding pool isn’t in the Budget

As I argued in SATURDAY, Australia’s superannuation system holds trillions in long-term capital designed for long-duration assets. If anything should fit that mandate, it’s ageing infrastructure.

Yet Super has stayed cautious – scarred by past experience and unconvinced the aged care operating model delivers the risk-adjusted returns it needs.

Meanwhile, the Future Fund is already signalling where it is directing its exposure to the ageing sector – not by piling into residential aged care builds, but through retirement living and land lease, where cashflows are cleaner and platforms are easier to scale.

States can’t fill the gap either. Yes, we’re now seeing low- or no-interest loan schemes aimed at boosting bed construction – including South Australia’s $250 million no-interest election promise tied to 650 beds this week – but State incentives are not a national capital strategy.

If we don’t solve the capital problem, we just shift the bill

If we don’t build, we don’t avoid the cost – we simply make it tomorrow’s problem. Hospital budgets blow out while families burn out.

And the funding burden shifts to the next generation, through higher taxes and a more expensive acute care system doing the job that aged care can’t currently take on.

Butler is right to sound alarmed – because the bed maths is now impossible to ignore. But the sector doesn’t need another warning. It needs a plan that recognises the real constraint. But is this not his job?

Until Canberra stops treating investment as something that will inevitably “follow” reform – and starts designing a system that earns investment – the funding puzzle will remain unsolved.