Total government expenditure on aged care services in Australia - Data and Analysis (2006-2034)

IBISWorld forecasts government expenditure on aged care services to increase by 5.4% in 2026-27, reaching $45.0 billion. The proportion of the population aged 70 and over continues to grow as the baby boomer generation enters the high-care aged brackets, accelerating demand for aged care while capacity constraints limit access. This has prompted a $3.7 billion investment in the Budget 2026-27 to lift supply and access across both residential and home care. Key elements include $1.7 billion to support the construction of aged care beds, funding to bring forward Support at Home packages and full subsidisation of everyday personal care services. This additional funding has supported growth in expenditure in the current year.Public expenditure on home aged care is predominantly funded by the Federal Government under the Commonwealth Home Support Programme (CHSP) and Home Care Packages Program (which has been replaced by the Support at Home program in November 2025). Funding, administration and policy for aged care services were previously the responsibility of the states and territories under their respective Home and Community Care (HACC) schemes. Most states and territories transferred responsibility for HACC services to the Federal Government under the CHSP from 1 July 2012. The two exceptions were Victoria, which transitioned to the CHSP on 1 July 2016 and Western Australia, which transitioned on 1 July 2018.The Royal Commission into Aged Care Quality and Safety has identified widespread issues in the aged care sector in its interim report. In response, the Federal Government has allocated significant additional expenditure over the past few years to address the issues raised by the commission. Funding has significantly accelerated following the Royal Commission into Aged Care Quality and Safety, which identified multiple key areas of concern in the sector. The Royal Commission's 2021 report recommended increased funding for the sector and additional reforms like mandated quality and safety standards for daily staff time. The transition to the Australian National Aged Care Classification model, effective from October 2022, has also increased funding per resident. Funding increases were also driven by the Fair Work Commission's Aged Care Work Value Case, which delivered a 15% increase to healthcare workers' wages in mid-2023.Increases in the elderly population and service costs are the main drivers of total expenditure growth. An ageing population contributes to higher demand for aged care services and drives increased investment in expanding capacity and service offerings. According to the Productivity Commission, expenditure per person (in 2024-25 dollars) for those aged 65 and above, as well as for Aboriginal and Torres Strait Islander people aged 50 and above, continues to grow, from $5,998.19 in 2019-20 to $7,895.41 in 2024-25. As a result, IBISWorld forecasts government expenditure on aged care services to grow at a compound annual rate of 9.4% over the five years through 2026-27.