Why Labor’s shiny new aged care scheme is a $10b rip-off

When the new Aged Care Act came into force in November 2025, the language was unequivocal. “We owe Australian families a system that works on the day they need it, and every day after,” Aged Care and Seniors Minister Sam Rae said. It sounded like a line drawn under decades of disappointment.

However, aged care has become a masterclass in overpromising and underdelivering – while quietly saving the federal budget billions of dollars.

The first failure happens before people even enter the system. My Aged Care’s phone interview is now a gatekeeper, not a guide. Give the “wrong” answer – misunderstand a question, downplay a symptom or simply have a good day – and you can find you’re not eligible for an assessment. You are out before you even get in.

Those who make it through face the next delay: waiting for assessment. The Report on Government Services published in January shows that half of seniors waited up to 27 days for assessment with 10 per cent waiting up to 172 days.

Then comes the assessment itself – one now dominated by an opaque algorithm. Families and providers are reporting that care needs are being systematically understated, and clinicians are unable to override incorrect outcomes.

The most alarming stories involve people with rapid need who are already receiving Support at Home. They seek reassessment, only to be told under the new assessment that the person is no longer eligible for any funding.

Is it bumbling bureaucracy, or a convenient way to prevent a budget blowout?

Approval adds you to the next queue, waiting for your package. The Report on Government Services shows that half of seniors waited up to 204 days after their approval to be assigned a home care package, with 10 per cent waiting up to 326 days.

When packages finally arrive, they are often worth far less than promised – the government term is “interim funding”. Many recipients report receiving only 60 per cent of the funding they were assessed as qualifying for.

Is it bumbling bureaucracy, or a convenient way to prevent a budget blowout: deny, delay and underfund?

Let’s put numbers around it. More than 200,000 people are waiting for aged care. Just under half are waiting for assessment; the rest have been approved but are waiting for their package.

Using a Level 5 package – worth $39,697 a year – a “typical” delay of 27 days for assessment and 204 days for funding could save the government more than $5 billion a year compared to immediate access. Put another way, every day of delay saves around $13.8 million.

At the extreme – 172 days for assessment and 326 days for funding – the delay represents as much as $10.8 billion a year in savings compared to if the assessment and funding was available immediately.

Ripping off seniors of the care they need isn’t free. The bill shows up elsewhere: avoidable hospital admissions, families scrambling to fill the care gap and earlier entry into residential aged care. The most tragic consequence of all – people dying waiting for home care, which was the case for 4812 seniors last year.

The government promised a system that works when it’s needed. Currently, it’s working remarkably well – just not for older Australians.

Rachel Lane is the author of Downsizing Made Simple, a book and website aimed at demystifying downsizing.

• Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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