Aged care initiatives: Mercer's Australian Federal Budget 2023-24 analysis and insights 


This Federal Budget is reasonably simplistic in the range of measures it includes in support of aged care. Whilst it does not address the main issue of long-term financing for aged care, it is significant in that it addresses one of the most important issues that currently hinders the consistent delivery of good quality care – the workforce.

There are not enough workers within Australia’s aged care industry, exacerbated by COVID with international borders being shut to new migrant care workers. In addition, the level of training and monitoring is insufficient. This budget commits to fund the largest ever increase to award wages for aged care workers to the tune of 15%, equating to $11.3 billion over the next four years starting from July 2023.

The Budget continues to deliver on the range of recommendations made by the Royal Commission into Aged Care Quality and Safety in 2021. A number of other measures announced in this budget also contribute to the improving standard of care available for Australians, with measures including:

  • 9,500 additional home care packages to allow more older people to live at home
  • Further support for older Australians with disability
  • Continuing to invest in the strengthening of the regulatory framework
  • Improving food and nutrition available in aged care
  • Continuing to finalise the design of the new Support at Home Program and also to further build out the Star Rating System designed to assist Australians with their provider choices
It should be recognised that older Australians will also benefit from a number of the other measures in this Budget to reduce the cost-of-living pressures, including energy bill relief, rent assistance and Medicare bulk billing reforms.

Mercer’s Perspective

This is a significant budget for the Australian aged care industry in that it gives a significant boost to the recognition of the value of workers in the industry by bringing their wages closer to those of other related industries. This is important as the aged care industry is significantly understaffed and is not attracting the number of workers required quickly enough. Between this 15% wages increase and the focus on improved training and other related measures over the past couple of years, there is now a solid foundation for the industry to meaningfully compete to attract a large enough and qualified workforce required to deliver the care required as our society rapidly ages.

The additional funding of $166.8 million for 9,500 new home care packages is small relative to previous recent years and tens of thousands of people will remain on the national waiting list for home care. However, if the increase in wages can increase the pace of recruitment of workers for the aged care industry, then the ability to fulfil home care packages is an important step forward. Many home care package providers currently turn Australians away because they cannot find enough workers to support the activities within the home care package.

The outstanding big issue which remains unresolved is the long-term financing of the cost of ageing care for Australians. Aged Care costs are the fifth largest budget allocation behind health, NDIS, defence and interest on debt. The Government cannot afford to continue to proportionately increase the budget allocation to aged care alongside these other critical areas of our society into the future. Consumers will therefore need to pay more for their ageing care and living. However, neither the current or former Government has tackled the debate and finding a solution for this fiscal challenge. This remains the one final big challenge for Australian aged care which must be resolved in coming years.

Implications for employers 

The aged care industry will be grateful and relieved by the Governments commitment to fund the 15% wage increase for aged care workers. This is a significant boost for the employers within the industry. Indirectly, this will take a few years to ripple through to accelerated increases in workers however as this occurs it will relieve the pressures on older Australians and their adult children carers as a result of more abundant good quality care arrangements in place.

Implications for individuals 

Similarly for individuals, this is a positive budget in the medium to longer term as it should provide the incentive for more people to be attracted to a career in the aged care industry. This will in turn support Australian who come to rely on support and care, as well as their adult children carers.

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