The federal government has announced a $3.7 billion investment in aged care as part of the 2026-27 Budget, marking one of the most substantial funding commitments to the sector since the Royal Commission into Aged Care Quality and Safety handed down its findings.
Health Minister Mark Butler outlined the package in a Budget statement that also detailed sweeping changes to the NDIS, describing both moves as necessary to build a stronger care system for older and disabled Australians.
Where the Money Is Going
A centrepiece of the package is $1.7 billion allocated to incentivise the delivery of 5,000 new residential aged care beds annually, commencing 1 July 2027, alongside accelerated rollout of Support at Home packages for people wanting to remain in their own homes longer.
“Aged care is expanding — $1.7B to incentivise 5,000 new beds a year, accelerated Support at Home packages, and personal care co-contributions removed.”— Avaana Disability Services, Federal Budget 2026-27 analysis
Personal Care Becomes Fully Funded
From 1 October 2026, personal care services delivered under Support at Home — including showering, dressing, and continence support — will be reclassified as clinical care and fully government-funded for eligible participants. This removes a co-contribution requirement that had drawn sustained criticism from advocacy groups and the nursing sector.
Dementia Australia welcomed a related $200 million investment for 20 additional Specialist Dementia Care Program units, alongside an expansion of the Hospital to Aged Care Dementia Support Program.
Why the Investment Matters
The funding responds directly to mounting demand pressure across the sector. More than 300,000 Australians received home care packages in 2025, a 12 percent jump on the prior year, while residential facilities in many parts of the country continue operating close to capacity.
Workforce shortages remain the structural issue the funding package does not fully resolve — with an estimated 35,000 additional aged care workers still needed nationally by 2030.
What Comes Next
Implementation will roll out progressively over the next 18 months, with the personal care funding changes landing first in October 2026 and the new residential bed incentives beginning the following July. Providers are being encouraged to engage early with the new funding frameworks as further detail is released.
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