Aged care is entering a no-money decade

If you’re waiting for a cavalry charge of new money for aged care, MYEFO delivered the answer this week. No.

Treasurer Jim Chalmers confirmed yesterday that aged care has now fallen out of the top pressures on the Federal Budget. Home care funding, in effect, will move into negative territory from 2027-28.

Reserve Bank Governor Michelle Bullock put it bluntly last week: the next five years will be marked by a slow-moving global economic decay. She likened the fallout from Trump’s global tariff regime to Brexit’s long shadow over the UK economy.

In that environment, is there spare cash for aged care? Highly unlikely.

Yet demand is accelerating in plain sight.

Supply will never catch demand

For the next 20 years, around 60,000 Australians will turn 80 every year. This year’s release of 83,000 Home Care Packages won’t clear the backlog – not even close.

There are 107,281 older Australians waiting at their assessed level of need, another 113,150 waiting just to be assessed, and a third, uncounted queue of people with Packages but no workforce to deliver services.

Now imagine those numbers compounding year after year. Supply will never catch demand on current settings.

The uncomfortable truth is this: we cannot build our way out of the problem with taxpayer money alone.

Private aged care the only answer

Despite the pushback against consumer contributions under Support at Home, the reality remains that many older Australians can afford to contribute – and will have to, if they want timely access to care.

Privately funded aged care – including services into the home, not just in a retirement village setting – must form part of the solution.

A strong safety net must always exist for those who can’t. But pretending everyone is broke helps no one.

In 2021, 82% of Australians aged 70-74 and 91% of those over 80 owned their own home. That is an enormous pool of locked-up wealth sitting alongside rising unmet care needs.

Superannuation must be part of care funding conversation: Chris Blake

In our recent SATURDAY special edition, St Vincent’s Health Australia CEO Chris Blake said what many policymakers won’t: superannuation must re-enter the conversation.

For wealthier older Australians, super should be used “for what it was designed for – funding needs in retirement,” not simply as a tax-effective inheritance vehicle.

“There is no more money coming,” Chris said. “Not at the rate of demographic need. So we have to design differently.”

That redesign has to go beyond aged care alone. As we have reported, retirement villages are likely to increasingly be seen as a safe harbour by older people and families – but new stock must be built.

With most Australians ageing at home, we also need better financial products to unlock housing equity for home care, not just residential care.

Stamp duty reform could encourage Baby Boomers to downsize, freeing up family homes while creating capital for care.

This shift must also extend to the workforce – with current staff tired and migration likely to be a hot topic, we will need to do ‘more with less’ through virtual care, telehealth and remote monitoring.

The final focus needs to be prevention – and stopping the next wave from requiring aged care.

Without these shifts, we already know how this story ends: more headlines about people missing out, hospitals clogged, exhausted families stepping in – and the first generation where the children are financially worse off because the system refused to face reality.

Food for thought as we head toward 2026.