The Albanese Government is investing $3.8 billion over four years to support the aged care sector to deliver a higher standard of care for older Australians, by funding pay rises for workers from 1 January 2025.
This $3.8 billion investment will fund the Fair Work Commission Aged Care Work Value Case Stage 3 decision, which is anticipated to benefit 340,000 aged care workers in residential and home care.
This funding builds on our $11.3 billion commitment in 2023, to fund the previous 15% award wage increase determined by the FWC and is on top of the $5.6 billion announced by the Prime Minister last week.
Aged care workers will see these increases from 1 January 2025, with many workers receiving further increases from 1 October 2025.
Historic aged care reforms announced last week, in response to the final report of the Aged Care Taskforce, outlined a number of essential changes to improve the funding, viability, and quality of residential care.
Ahead of those changes commencing on 1 July 2025, the Government is supporting residential aged care providers to meet the increasing costs of delivering care and hotelling services to older people in residential care settings.
From 1 October 2024, the Australian ³Ô¹ÏÍøÕ¾ Aged Care Classification (AN-ACC) price will be increased to $280.01, which funds the FWC stage 3 increase as well as other cost increases. This represents a 13% increase in average daily funding and will also enable providers to meet the increase to 215 care minutes that also comes into effect on 1 October 2024. Overall care funding has now increased 58% since we came to Government in 2022.
Changes to AN-ACC fixed and variable funding categories will also be implemented on 1 October to better align funding with costs, informed by 2024-25 pricing advice from the Independent Health and Aged Care Pricing Authority (IHACPA). This will particularly benefit regional and rural services, which have higher care costs compared with services in metropolitan areas.
From 20 September 2024, the hotelling supplement will also increase from $11.24 to $12.55 per resident per day. This includes $1.09 to fund the FWC stage 3 increase. There will be a further increase of $1.89 on 1 July 2025 to fund higher hotelling costs as announced on Thursday 12 September 2024. These two increases will ensure providers are funded to deliver the cost of everyday living services, consistent with the recommendation of the Final Report of the Aged Care Taskforce that funding for daily living needs to cover the full cost of providing these services.
For the ³Ô¹ÏÍøÕ¾ Care Packages (HCP) Program, the Government has earmarked $0.4 billion over 4 years to increase the Commonwealth portion of the home care subsidy. The subsidy increase will enable providers to pass on this historic wage increase to staff and ensure that care recipients will see no change in their services or hours of care.
Commonwealth ³Ô¹ÏÍøÕ¾ Support Programme (CHSP) providers will be able to apply for a Grant Opportunity for additional funds. This will ensure that CHSP providers are supported in providing the wage increases to eligible staff.
