We say this every year, and every year it’s true: the aged care industry is set to be overhauled by massive reforms over the next 12 months.

A new Aged Care Act, Quality Standards and Regulatory Model as well as wage reforms and fee changes are all coming in 2025. Here’s what providers need to know.

Key Points

• The Government will introduce a new Aged Care Act, strengthened Aged Care Quality Standards and a new Regulatory Model on 1 July 2025.
• The changes are being made in response to feedback from the Royal Commission into Aged Care Quality and Safety, which said that the system should be more focused on the needs of older people.
• The new Act will introduce a new “person-centred” aged care system that includes a Statement of Rights; it will set new obligations for providers and workers and expand the powers of the regulators. The new Act will also provide the legal basis for the strengthened Quality Standards and the new Regulatory Model.
• The strengthened Quality Standards will reduce the number of Standards from eight to seven, consolidate some areas covered by each of the Standards and introduce a new “Food and Nutrition” Standard.
• The new Regulatory Model aims to make regulation more streamlined and less “one-size-fits-all”. Providers will have to meet registration conditions and re-register every three years. A transition period will apply so that providers don’t have to re-register immediately on 1 July 2025.
• Wage increases for aged care workers will be phased across 2025, with some already commenced from 1 January and others to commence as late as October.
• Adjustments to fees and charges commence from 1 January 2025, with an increase in the maximum room price that residential aged care providers can charge without approval (from $550,000 to $750,000) and a new Higher Everyday Living Fee replacing the Extra Service Fee and Additional Service Fee

The New Aged Care Act

A new Aged Care Act will commence on 1 July 2025. According to the Department of Health and Aged Care, key changes that affect providers include:

• Providers will have to ensure their actions are guided by the Statement of Rights.
• Providers will have to register with the Aged Care Quality and Safety Commission (ACQSC) (with transitional arrangements in place for existing providers) and have any residential care homes approved.
• Providers who deliver NATSIFAC, CHSP and digital platform services will be registered under the new Act and regulated by the ACQSC.
• The new Act will provide a revised set of provider obligations including conditions on registration.
• New Aged Care Quality Standards will apply (see below).
• Providers will have to comply with new financial and prudential standards.
• Providers will have to ensure their workforce meets revised worker screening requirements.*
• Providers will be subject to new statutory duties.
  
  

According to the Department of Health and Aged Care, key changes that affect aged care workers include:

• The Statement of Rights will include a right for individuals to have services delivered by aged care workers of registered providers who have appropriate qualifications, skills and experience.
• The Statement of Principles will say that the aged care system should support workers to: 
  • be empowered to support innovation, continuous improvement and the delivery of high-quality care
  • participate in governance and accountability mechanisms.
• Workers will be covered by expanded whistleblower protections.
• Workers must fulfil and comply with revised worker screening arrangements.*

Other changes to note include:

• New terminology: e.g. “Governing Persons” will now come under the umbrella of a broader term called “Responsible persons”; “Representatives” will be called “Supporters and Representatives”.
• Subcontractors: the Act will include a set of key obligations that apply to registered providers and apply even where registered providers subcontract the delivery of services to associated providers.
• Operators of digital platforms: specific obligations will apply to operators of digital platforms that facilitate access to aged care services.
• Regulatory system: the new aged care system will be governed by the Secretary of the Department (System Governor) and the Aged Care Quality and Safety Commissioner (Commissioner), who will both have expanded regulatory powers.
• New Complaints Commissioner: the new Act will establish the new Complaints Commissioner with the aim of ensuring a more "person focused” complaints process.
  
  

*According to the Department of Health and Aged Care, the new worker screening requirements might not commence at the same time as the other requirements in the Act: “We know providers need time to get ready. We are working with states and territories to plan for implementation. We will share information with providers as soon as we can.”

The New Strengthened Aged Care Quality Standards

The new “Strengthened” Aged Care Quality Standards will reduce the number of Standards from eight to seven, and consolidate some areas covered by each of the Standards. According to the Department of Health and Aged Care, the strengthened Standards will be:

• Standard 1: The Person
• Standard 2: The Organisation
• Standard 3: The Care and Services
• Standard 4: The Environment
• Standard 5: Clinical Care
• Standard 6: Food and Nutrition
• Standard 7: The Residential Community

Each Standard will include:

• an expectation statement for older people
• the intent of each standard
• outcomes that providers would be assessed against
• actions – which are how providers might demonstrate achievement of the outcome (these will replace the “organisational requirements” in the current Standards). There are 152 of these in the strengthened Standards.

The New Regulatory Model

According to the Department of Health and Aged Care, the new model will “emphasise stronger working relationships, transparency and collaboration between aged care providers, the department, and the Aged Care Quality and Safety Commission (ACQSC).” The new model changes:

• how providers enter the sector
• provider obligations
• regulatory oversight of the sector
• how we manage complaints and feedback
• information available to older people.

Key changes and points to note include:

• All providers will need to be registered through a new provider registration model. Registration is expected to be for three years.
• Transition period: on 1 July 2025 when the new model commences, existing providers will be “deemed” to be registered and won’t have to go through the registration process immediately. The Department of Health and Aged Care will then talk with providers and give them a date for re-registration. Timeframes will be staggered so that the Department doesn’t have to organise everyone’s re-registration at once. For now, the Department advises that “As an existing provider, you do not need to take action at this time. You will continue to operate as normal through the transition deeming process. We’ll be in contact with information, as we prepare you for transition.”
• Non-corporations, such as sole traders and partnerships, will be eligible to register to as providers.
• To move on from an inappropriate “one-size-fits all” system, the new model will classify services into registration categories based on similar risk and service characteristics. This means that services that are lower risk (such as meal delivery services) will face fewer obligations than higher risk services such as residential care.
• Providers will be expected to act consistently with the Statement of Rights and Principles outlined in the new Act and have practices in place to ensure they are able to do so.
• Some providers (e.g. residential care) will also have to comply with requirements such as “ongoing continuous improvement” and Financial and Prudential Standards.
• Transparency of sector and provider performance will be improved via a new public register of registered providers and published sanction information.

Wage Increases

From 1 January 2025, aged care workers have received additional award wage increases, complementing the 15% boost introduced in 2023. These changes, tailored to various roles and classifications, provide significant benefits for workers in direct care and support positions.

The Department of Health and Aged Care has published detailed information on the changes. This includes further details on award increases and new classification structures such as:

• a 3% increase for employees providing ‘general and administrative services’ under the Aged Care Award 2010
• a substantial 6.96% rise for Level 2 laundry staff, cleaners, and food services assistants, who are now reclassified as Level 3
• additional wage increases for direct care staff under the Aged Care Award and employees in the newly introduced Schedule F of the Social, Community, Home Care, and Disability Services Industry Award 2010 (SCHADS Award)
• the transition of assistant nurses and nursing assistants from the Nurses Award 2020 to either the Aged Care Award or Schedule F of the SCHADS Award, depending on whether they work in residential or home care settings
• the phased wage increases, with full adjustments for some from 1 January 2025, and others receiving a second increment from 1 October 2025.
  
  

Adjustments to Fees and Charges

Effective 1 January 2025, significant adjustments to fees and charges have been introduced. The Department of Health and Aged Care has published information on the changes, which include: 

• The maximum room price that residential aged care providers can charge without approval has risen from $550,000 to $750,000, streamlining processes while retaining oversight through the Independent Health and Aged Care Pricing Authority (IHACPA).
• A new Higher Everyday Living Fee replaces the Extra Service Fee and Additional Service Fee, offering residents the option to personalise their care with premium services. Providers must transition all agreements to this structure by 30 June 2026.

More Information

• Department of Health and Aged Care: New Aged Care Act
• Department of Health and Aged Care: What the new Aged Care Act may mean for you
• Aged Care Quality and Safety Commission: New Aged Care Act
• Department of Health and Aged Care: The Aged Care Quality Standards
• Aged Care Quality and Safety Commission: Stronger Standards, Better Aged Care Program
• Aged Care Quality and Safety Commission: Strengthened Quality Standards framework analysis
• Department of Health and Aged Care: About the new model for regulating aged care
• Department of Health and Aged Care: A new model for regulating Aged Care – Summary Consultation Paper No. 2
• Department of Health and Aged Care: Aged Care Worker Wages
• Department of Health and Aged Care: Accommodation Costs

Nicole Chen

Nicole is a Principal Consultant at Ideagen CompliSpace with a background in the healthcare industry across acute, aged, and community services. Throughout her career, she has held various management and clinical positions, contributing significantly to both research and higher education within the sector. Nicole provides valuable knowledge and insights from both a clinical perspective and a nuanced understanding of the operational and strategic aspects of healthcare. She holds a Doctor of Philosophy (PhD), a Postgraduate Certificate and a Bachelor in Nursing.

 

 

Nick Edwards

Nick is a Legal Content Senior Associate at Ideagen CompliSpace. Nick has several years' experience designing and administering eLearning for the Aged Care Sector and holds a Bachelor of Laws from the University of Technology Sydney with First Class Honours.

 

 

Mark Bryan

Mark is a Legal Content Consultant at CompliSpace and the editor for ACE. Mark has worked as a Legal Policy Officer for the Commonwealth Attorney-General’s Department and the NSW Department of Justice. He also spent three years as lead editor for the private sessions narratives team at the Royal Commission into Institutional Responses to Child Sexual Abuse. Mark holds a bachelor’s degree in Arts/Law from the Australian National University with First Class Honours in Law, a Graduate Diploma in Writing from UTS and a Graduate Certificate in Film Directing from the Australian Film Television and Radio School.