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

IBISWorld forecasts government expenditure in aged care services to rise by 4.4% in 2026-27, to reach $2.78 billion. This number represents continued steady growth in the population over 70 years old and rising care costs. However, growth is slower than in previous years following strong funding increases over the two years through 2025-26, aimed at increasing pay to help keep nurses employed in the sector and reduce staff shortage-based aged care facility closures, as well as making improvements to the quality of home care systems.Aged care in New Zealand has traditionally been provided by the District Health Boards (DHB), which received funding from the government under the Residential Care and Disability Support Services Act 2018. Support packages introduced during the COVID-19 pandemic, some of which were directed towards aged care providers constrained growth in total government spending on aged care services in 2024-25. However, the regional DHB systems were replaced by a national health system governed by Health New Zealand and the Maori Health Authority in June 2022. Over the past five years, the population aged 70 and older has increased in both numbers and as a proportion of the national population. People in this age group are typically more susceptible to ailments and injury, generally requiring more frequent and complex healthcare assistance than their younger cohorts. As people age, greater assistance with day-to-day activities is also often required. As a result, government expenditure on services dedicated to the elderly is significant. The expansion of this demographic has contributed to greater demand for government spending on aged care services. The growing cost of health care, along with rising co-morbidity rates among the elderly, has driven higher public spending on aged care over the past five years.The Healthy Ageing Strategy was launched in December 2016. The strategy outlined the targeted vision for the health and well-being of older New Zealanders over the ten years through 2026-27. It adopted a life-course approach, which began with a focus on the prevention and early detection of conditions, progressing to the management of advanced chronic conditions over time. The roll-out of the Healthy Ageing Strategy has boosted government spending on services for the elderly over the past decade. Spending was also boosted by a top-up of government funding over the two years through 2025-26, with the government increasing funding, in part, to improve pay equity between aged care nurses and those working at hospitals, to try to alleviate workforce shortages in the residential aged care sector. Overall, IBISWorld forecasts total government expenditure on aged care services to rise at a compound annual rate of 5.7% over the five years through 2026-27.