More than 3,000 planned aged care beds have now been shelved as a direct result of the Australian Government’s decision to deliver a real-term cut to residential aged care funding.

Ageing Australia has been collecting information from providers across the country since the Government announced a below-inflation increase to the Australian National Aged Care Classification (AN-ACC) price earlier this month.

Providers have now reported that more than 3,000 planned new beds have been affected by the decision, with projects cancelled, put on hold, delayed or reduced.

The top 3 states for cancelled beds are Victoria (938), WA (933) and NSW (535).

“We warned the Government this decision would stop new aged care beds being built. We can now see exactly how devastating this cut to care funding is,” Ageing Australia CEO Tom Symondson said.

“In less than a month, providers have told us that projects representing more than 3,000 new beds have been shelved as a direct result of this funding decision.

“To put that into perspective, Australia managed to build just 800 new aged care beds last year. That is a drop in the ocean compared with the 10,000 beds we need to build every year just to keep pace with demand.

“We were already facing an enormous capacity challenge. This decision is making it significantly worse and could see the total number of residential aged care beds in Australia decline for the first time since records began in 1963.”

From 1 October, the AN-ACC price increased by 2.55 per cent, from $295.64 to $303.19 per resident per day.

Independent modelling by StewartBrown shows that an increase of around 5.2 per cent was needed just to reflect the actual increase in providers’ costs.

“The Government knows all too well how desperately Australia needs more aged care beds. It has repeatedly acknowledged the scale of the challenge and even committed funding for new builds in this year’s Budget,” Mr Symondson said.

“So its decision to cut, in real terms, the funding providers use to pay the salaries of our hard-working nurses and carers is bewildering. No provider can build a home they will not be able to afford to staff, particularly when providers are losing money on existing beds.

“Almost two-thirds of residential aged care homes were already operating at a loss before this announcement. With inflation at 3.5 per cent and wages increasing by 4.75 per cent, the Government has increased funding by just 2.55 per cent.

“StewartBrown’s independent modelling shows that leaves providers around $7.72 per resident, per day short of what is needed to meet the cost of care.

“This isn’t theoretical. More than 3,000 beds that providers intended to build have already been shelved. And the consequences extend well beyond aged care.

“Nearly 4,000 older Australians are already facing delayed discharge from hospitals, while residential aged care is effectively full in many parts of the country. These are real people who cannot get out of hospital because there is nowhere for them to go.

“The Government cannot acknowledge, on the one hand, that Australia needs thousands more aged care beds while, on the other, making decisions that stop them being built.

“All is not lost. This decision can be fixed. We are calling on the Government to urgently revisit the AN-ACC pricing decision and ensure funding reflects the actual cost of delivering care.

“If it does, many of these projects can move again. If it doesn’t, the number of shelved beds will continue to grow, pressure on hospitals will get worse and more older Australians will find that the aged care bed the Government promised would be available when they needed it simply won’t exist.”

Media contact: Francis Truong, Ageing Australia via 0412 024 176 (call only) or