Catholic Health Australia Submission: Pre-Budget Submission 2026–27: Aged Care

Executive Summary

Australia’s aged care reforms are being challenged at the system edges. Where funding meets delivery, where capital meets demand, and where health and aged care intersect. The aged care system is at a critical juncture. Significant reform is underway through the introduction of Support at Home, changes to residential aged care funding, and broader efforts to integrate aged care more effectively with the health system. However, current policy and funding settings risk undermining these reforms by failing to address key delivery constraints, capital shortfalls and system interface failures.

The result is not only reduced access and poorer outcomes for older Australians, but increasing fiscal and service delivery pressure across the broader care economy. Particularly on hospitals, where aged care system failures frequently manifest as delayed discharges, avoidable admissions and inefficient use of acute capacity.

These failures are already creating fiscal leakage and hospital pressure. The recent Senate Inquiry’s recommendation to end the rationing of Home Care Packages (HCP) underscores the urgent need for a coordinated transition from a rationed model to a demand-driven system. Targeted Commonwealth action in the 2026-27 Budget is essential to address these issues and ensure that reforms foster a responsive, equitable, and sustainable aged care continuum.

This submission argues that aged care reform will not succeed through program design alone. To deliver on the Government’s objectives, Budget decisions must address the practical conditions that determine whether funded services can actually be delivered. Including workforce capacity, assessment and care coordination, residential capital viability, and the interface between aged care and health systems.

Catholic Health Australia (CHA) proposes a focused set of Budget priorities across three areas:

• Support at Home. Where demand continues to outstrip supply and where underinvestment in care management and assessment risks leaving funded places undeliverable, misallocated or failing to deliver appropriate outcomes for older Australians.
• Residential aged care. Where sustained capital underinvestment is constraining bed supply, accelerating service closures in thin markets, contributing to hospital discharge pressures and disproportionately impacting poorer Australians.
• The health and aged care interface. Where structural misalignment between programs and funding streams is driving inefficiency, cost shifting and avoidable harm.

The priorities outlined in this submission are deliberately targeted at these priorities. Fully meeting future demand for aged care will require substantial long-term investment and policy reform. However, well-designed interim measures and enabling investments can materially improve system performance now, protect existing Commonwealth expenditure, and reduce downstream fiscal risk.

Taken together, these proposals are intended to strengthen the foundations of aged care reform, support system sustainability, and ensure that public investment delivers intended outcomes for older Australians and the broader health system.