New Aged Care Act and Rules upset the "operator of last resort"
An auditor's report and a new submission both highlight the pressures aged care services place on local councils.
A nine-page submission by the Australian Local Government Association to the Senate's Review of the Aged Care Rules 2025 and the Aged Care (Consequential and Transitional Provisions) Rules 2025 states requirements of the new Aged Care Act duplicate regulations already in place for local government, creating confusion and added administrative and regulatory burden.
The submission says elected local government officials are already subject to "comprehensive" state and territory integrity frameworks, and the aged care rules create inconsistencies.
"ALGA considers it essential that clearer provisions within the Aged Care Act 2024 or Aged Care Rules 2025 recognise existing state and territory integrity regimes as satisfying, or substantially satisfying, suitability requirements for elected councillors," the submission states.
Without clarification, there is a risk of duplicated processes, increased administrative burden, regulatory complexity, uncertainty and inconsistency, the association states.
The submission also flags concerns about the proposed transition from block funding to activity-based funding under Support at Home.
"The transition to activity-based funding introduces cashflow volatility, increased administrative requirements, and exposure to unrecoverable costs where payments do not reflect the true cost of service delivery," the submission states.
In thin markets, the changes risk "compounding financial pressures" on Local Government in a way that could "discourage continued participation" in delivering aged care services - in other words, operators could exit the sector.
Councils already under financial pressure
The submission follows the Local Government 2025 report by the Audit Office of NSW, which reveals residential aged care operations are constraining council finances.
Seventeen councils reported operating losses in 2024-25 and 19 had insufficient cash to cover three months of general expenses.
The report notes 11 councils are at heightened financial sustainability risk.
Kiama Municipal Council was among the 11. The South Coast saw cash balances impacted by borrowing repayments in 2024–25 and ongoing losses from its Blue Haven Bonaira aged-care facility, which Council sold to WA-based Hall & Prior in May 2025.
Cobar Shire Council was another of the 11. It had insufficient revenue to cover expenses, and was being impact by the high costs of running its aged care facility as the "supplier of last resort".
You can read the ALGA submission here.
You can read the Local Government 2025 report by the Audit Office of NSW here.
