Operators Warn Australia’s Care Funding Increase Falls Short
Australian aged-care operators say the 2.55% AN-ACC increase remains below costs, prompting delayed projects and demands for higher government reimbursement across Australia. (Stock Photo)
Australian residential aged-care operators are calling for a larger government funding adjustment after warning that the latest AN-ACC price increase fails to cover rising wages and operating costs.
Australia raised the Australian National Aged Care Classification, or AN-ACC, starting price by 2.55% on 1 October 2026. The rate increased from A$295.64 to A$303.19 per resident per day.
The AN-ACC price is not a fee charged directly to residents. It is the base rate used to calculate subsidies that the Australian government pays residential aged-care providers, adjusted according to residents’ assessed care needs and other facility factors.
The government estimates that average funding will increase from approximately A$317 to A$325 per resident per day. It says the adjustment accounts for workforce wage decisions and growth in non-labour costs.
However, the government did not change existing care-minute requirements, classification weightings or base-care tariffs. The separate hotelling supplement—which helps cover food, cleaning, laundry and energy—also remains unchanged at A$22.15 per resident per day.
Operators call increase a real-terms cut
Operators generally support increasing the AN-ACC price but argue that 2.55% is insufficient.
Regis Healthcare, one of Australia’s largest aged-care operators, said the increase was substantially below the sector’s underlying cost growth. It pointed to a 4.75% award-wage increase, additional nurse wage increases of between 1.5% and 4.4%, enterprise-agreement costs and annual inflation of 3.8%.
Regis said the funding outcome did not reflect the true cost of care. It is responding to margin pressure through higher room prices, expanded Higher Everyday Living Fee services, revenue optimisation and operating efficiencies.
UnitingCare Australia similarly described the determination as a setback. The not-for-profit network warned that smaller rural and remote providers could find it particularly difficult to remain viable. It said operators may have to absorb further losses or make difficult operational trade-offs while meeting higher standards and regulatory requirements.
Thousands of planned beds affected
Ageing Australia, the national provider association, reported on 7 October that projects covering more than 3,000 planned beds had been cancelled, delayed, reduced or placed on hold. Subsequent media reporting put the total at 3,661 beds, including 938 in Victoria, 933 in Western Australia and 535 in New South Wales.
Specific projects reportedly affected include Regis Healthcare’s proposed 99-bed Belrose home in Sydney, an 80-bed Abound development in Berwick, Victoria, and a planned 100–160-bed Whiddon facility in New South Wales. Providers said the revised funding made these developments financially unviable.
Providers seek approximately 5.2%
Ageing Australia cited independent StewartBrown modelling indicating that an AN-ACC increase of approximately 5.2% was needed merely to match operators’ cost growth. That would lift the starting price to around A$311 per resident per day—approximately A$7.82 above the approved rate.
The association estimates that the government’s decision leaves providers about A$7.72 per resident per day short of their care-delivery costs. It is urging the government to revise the determination so funding more closely reflects wages, inflation and other expenses.
The disagreement has implications beyond operator profitability. Australia reportedly needs about 10,000 additional residential beds annually to meet future demand, while nearly 4,000 older people already face delayed hospital discharge because suitable aged-care placements are unavailable.
Unless funding and construction economics are brought closer together, operators warn that Australia could experience fewer new facilities, greater pressure on hospitals and widening differences between urban and regional access to care.
source: Regis Healthcare, UnitingCare Australia, Ageing Australia
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