Spending on aged care
Australian aged care services operate through a combination of government (federal, state, territory and local), non-government (charities, religious and community groups), and personal financial contributions.
Last updated: 26 April 2023
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Contents
Government spending over time
Care recipient spending
Government spending by state and territory
COVID-19 and government spending
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Related information can be found on other GEN topic pages:
For more information about Government spending on aged care, view the Report on the Operation of the Aged Care Act.
For more detailed data tables, view the Report on Government Services.
Allocation of government spending
Government spending referred to in this webpage is the total spending from both Australian Government and state and territory governments. The majority of this government spending (98.6%) comes from the Australian Government. These data have been sourced from the Report on Government Services 2023: part f, chapter 14, aged care services report.
During 2021–22:
- Governments spent over $25.1 billion on aged care, with the largest proportion (59%) spent on residential aged care. The remaining funds were spent on home care and support (33%) and on other care, including flexible care, workforce and service improvement, and assessment and information services (7.8%).
- The $14.9 billion expenditure on residential aged care was almost double the amount spent on home care and support—comprising home care ($5.0 billion) and home support ($3.1 billion), and other community care services ($0.2 billion), which includes the Department of Veterans’ Affairs community nursing and Veterans’ Home Care (VHC) programs.
The aged care system offers a continuum of care under three main types of service.
- Home support (Commonwealth Home Support Programme), which provides entry-level services focused on supporting individuals to undertake tasks of daily living to enable them to be more independent at home and in the community.
- Home care (Home Care Packages Program), which is a more structured, more comprehensive package of home-based support, provided over four levels.
- Residential aged care, which provides support and accommodation for people who have been assessed as needing higher levels of care than can be provided in the home, and the option for 24-hour nursing care. Residential care is provided on either a permanent, or a temporary (respite) basis.
There are also several types of flexible care, and services for specific population groups, available that extend across the spectrum from home support to residential aged care:
- Transition care, which provides short-term care to restore independent living after a hospital stay
- Short-term restorative care, which expands on transition care to include anyone whose capacity to live independently is at risk
- Multi-purpose services, which offer aged care alongside health services in Regional and remote areas
- Innovative Care Programme, which includes a range of programs to support flexible ways of providing care to target population groups
- National Aboriginal and Torres Strait Islander Flexible Aged Care Program, which provides culturally-appropriate aged care at home and in the community
- Department of Veterans' Affairs community nursing and Veterans' Home Care services for eligible veterans and their families, which provides support to help people stay independent and in their own home.
For more information on aged care services in Australia see the Report on the Operation of the Aged Care Act, or visit the Department of Health website.
Government spending over time
During the 5 years between 2017–18 and 2021–22, spending patterns on aged care services have changed. For example, spending on flexible care services increased by a larger proportion than spending on residential aged care services. (Note: Time series data in this topic have been adjusted for inflation).
During 2021–22:
- Government spending on aged care services was 27% higher than it was during 2017–18, resulting from annual spending increases across this period.
- Spending on residential aged care services was 1.9% higher than it was during 2020–21, and 12% higher than it was during 2017–18.
- Spending on flexible care was 9.0% higher than it was during 2020–21, and 39% higher than it was during 2017–18.
Care recipient spending
Most people using aged care contribute to the cost of their care. The level of contribution is subject to an assessment of affordability. Information on government and aged care recipient contributions to aged care services in this section is sourced from the Financial Report on the Australian Aged Care Sector 2020–21.
Overall, during 2020–21:
- Contributions from residents (excluding lump sum deposits) represented 27% of total residential care provider revenue (the same as in 2016–17).
- People using home care packages contributed $96 million, which represented 2.2% of home care provider revenue (down from 7.4% in 2016–17).
- People using home support contributed $269 million, which represented 8.5% of total spending on home support (it was 7.8% in 2016–17).
Government spending by state and territory
Australian and state and territory government spending varies. The amount spent on aged care services per person in the target population (that is, all people aged 70 and over and Aboriginal and Torres Strait Islander Australians aged 50–69 years) differed by spending type and state and territory.
Government spending refers to the total spending from both Australian Government and state and territory governments.
During 2021–22:
- Total per person government spending on residential aged care was highest in South Australia ($5,070 per person), followed by Victoria ($4,863 per person).
- South Australia had the highest rate of government spending for home care and support ($2,674 per person), followed by Queensland and Victoria ($2,637 and $2,605 per person respectively).
- The Northern Territory had the lowest rate of government spending on residential aged care ($1,988 per person) and home care and support ($1,542 per person). However, the rate of government spending on flexible care (which includes a specific program for Indigenous Australians) was highest in the Northern Territory ($1,870 per person).
COVID-19 and government spending
Australia has faced significant challenges during the COVID-19 pandemic. COVID-19 illness can be more serious for people who have pre-existing health conditions, including older Australians.
The Australian Government implemented funding measures to support aged care providers impacted by the COVID-19 pandemic. This included:
- the COVID-19 Aged Care Support Program to reimburse aged care providers for expenditure incurred managing the direct impacts of COVID-19,
- the Home Care Packages (HCP) Program COVID-19 Vaccination Support Grant to increase COVID-19 vaccination in the home care workforce, and
- the COVID-19 Emergency Support for Commonwealth Home Support Programme (CHSP) service providers to respond to unforeseen and exceptional circumstances that directly impact service delivery arrangements.
Other COVID-19 funding measures include the one-off Residential Care Subsidy increase and the Workforce Retention Bonus, as well as non-aged care-specific measures, such as JobKeeper.
For further information on Government spending and the COVID-19 pandemic, see the Report on the Operation of the Aged Care Act and the Financial Report on the Australian Aged Care Sector 2020–21.