Upstream or overwhelmed: Rewiring the aged care budget – not beds – for real reform

Upstream or overwhelmed: Rewiring the aged care budget – not beds – for real reform

Budyeri kamaru – hello in Gadigal language.

I want to acknowledge the Gadigal people of the Eora nation; their Elders past and present, and I want to acknowledge and thank our Aboriginal and Torres Strait Islander colleagues in the room.

Beyond that acknowledgement, I want to situate ourselves on this country for a minute, and remind us all how the story and energy of the past – right here in this spot – relates so squarely to this minute.

When we talk about 'the Sydney CBD', we often forget that these streets sit on much older pathways.

Just a short distance from here, Warrane – Sydney Cove – was the heart of Gadigal Country, and from that shoreline, Aboriginal people moved inland along ridgelines and watercourses that later became our streets. Pitt Street follows one of those ridges, running alongside the Tank Stream – a vital freshwater source — and it became a corridor not because the city designed it, but because people had walked it for thousands of years. 

In the earliest days of colonisation, Gadigal people – including elders – moved along these routes to observe, to negotiate, to resist, and to make sense of what was unfolding on their Country. 

Elders were not hidden away; they were present, central, and authoritative. Age brought knowledge, standing and responsibility. And ageing – and dying – were understood as part of life, held within community, not displaced into other places and other spaces.

And that’s just what we are meant to be achieving in this brave new world of reform – under an Act that promises dignity, compassion, kindness: relevance.

But I worry we are getting further away from that – and I suspect you see it too. So, thank you - thank you for being here and thank you for listening.

Before I say anything as Inspector‑General – before I talk about reform, funding, or policy – I want to start somewhere more personal.

I want you to imagine yourself older. Not as a professional. Not as a provider. But simply as a person. And I want you to hold two questions in your mind. If you were unable to look after yourself independently when you become older:

• What would you most want?
• And what would scare you most about being dependent?

I ask those questions deliberately – because when I ask them of ANY audience, whether consumers, or advocates, or workforce or providers – the answers are remarkably consistent.

People don’t say: “I hope my care minutes are perfectly calibrated to at least 215 per day.” “I hope my provider meets every reporting requirement.” 

They say THE SAME THINGS. What they DO want is often blended with what they DON’T want. Things like:

• I don’t want to lose control over my life.
• I don’t want to be reduced to tasks, or time slots, or a bed number.
• I’m afraid of being invisible.
• I’m afraid of being rushed.
• I’m afraid of being treated like a problem to be managed.

And I suspect or hope that many of the reasons you came into this work – despite how hard it is – are bound up in exactly those answers.

At its core, care is not a system. It’s a profoundly human function, it’s relational, it’s contextual. It is grounded in knowing another person: who they are, where they come from, what matters to them.

And yet, over time, we have done something quite extraordinary. We have systematised care, professionalised it, regulated it, funded it – all for good reasons – but in the process, we have also made it rigid within an inch of its life.

I say that carefully. Why? Well for those of you who might not be aware, my role was introduced 2 years ago to hold the government accountable for its administration, regulation and funding of the aged care system.

And respectfully, my perspective as the oversight body for government, is that we are in this situation is because – in a hurry – we were trying to transform a system towards a vision that embodies everything you just said you dream of when you get older.

But in doing so, we glorified low hanging fruit. We just doubled down on our existing compliance-based system – that was designed at its core to regulate providers; instead of changing its core to meet this brand-new ambition – framed within the statement of rights and high-quality care.

That requires a whole theory of change – instead of grasping for the low hanging fruit regulatory reforms

And if you’re not yet bored of me saying this in every forum: low hanging fruit is the enemy of reform. By definition, nothing truly changes.

But the Royal Commission that prompted the new Aged Care Act asked for a diametric, paradigm shift. The net result was a series of isolated, disconnected reforms that have created a raft of unintended consequences and perverse outcomes that are playing out in practice.

I want to be clear: I really think we got the compass right. We set it through legislation. But that means it cannot be aspiration, it has to be codified. 

BUT I am now really worried we have few mechanisms to deliver on that vision, and some of the mechanisms in place are undermining it. I am concerned we never answered the question: What problem are we actually trying to solve?

Because how we answer that question determines everything that follows: our laws, our funding models, our administration, and – most importantly – how all of that translates into the lived experience of older people.

Australia’s reform agenda promises a rights‑based aged care system. One grounded in dignity, kindness, self‑determination and respect for the whole person. That promise is now enshrined in our new Aged Care Act.

But when you look at how the system is actually funded, actually accessed, and actually experienced, a different picture emerges. And it’s one you know well: long waits, brittle service settings, and people holding on without support – until they tip into crisis.

And when they do, the system responds – but late, expensively, and often in ways that strip away independence rather than preserve it.

So today I want to argue preconception of a conundrum I hear repeated over and over: “The problem is that we have a largely static aged care budget, demand is growing as our population ages, and the tax base that funds it is under pressure".

Over time, that observation hardens into a kind of fatalism; the idea that the budget will never be enough, and that this is, ultimately, an unsolvable problem.

But I think that framing is part of what is holding us back.

The new Aged Care Act invites – in fact, it requires – us to ask a different budgetary question altogether.

Not simply: how do we stretch a finite budget to meet ever‑growing demand? But rather: how do we use that very budget to prevent frailty, cognitive and physical decline, and support people to age in place — so that fewer people need the most expensive, tertiary services, and they need them later?

Because when we reconceive the system this way, something important happens: more people get access to support earlier, at lower intensity; decline is slowed; pressure on residential entry eases; and the system is no longer forced to respond primarily at the point of crisis. Fewer people need beds, sooner — and the budget works harder, for longer, for more Australians.

And that reframed question becomes even more urgent when we are honest about the reality in front of us: we do not have the residential infrastructure we would need to meet unchecked demand. Nor, realistically, do we have a credible prospect of building our way there.

My contention this morning is that the rights enshrined in the Act are not just morally important. They are fiscally intelligent. If taken seriously, they point us toward a system that serves more people, earlier, with shorter waits, better lives – and at lower cost over time.

So, if we want real reform – not rhetorical reform – we have to re‑wire how the aged care budget works. That means funding upstream, rather than continuing to double down downstream.

You may be asking yourself, 'Why is that pesky Inspector‑General talking to providers about the aged care budget?' 

Because the budget is not just a funding envelope. It is one of the strongest signals government sends about what it values.

And right now, the way we distribute the aged care budget tells a very particular story. It tells us that we are far at responding late than supporting early. Far better at paying for dependence than investing in independence.

And that matters both morally AND economically.

Many people do not arrive at your services early. They arrive exhausted, frightened. After holding on for too long. After families have burnt out. After health has deteriorated. After choices have narrowed. And not because they didn’t want help, but because the system makes early engagement hard, confusing, or intimidating.  

By the time they reach you, you are often dealing with complexity that could have been avoided with earlier support.

And this is where the economics and the humanity converge.

So, from where I sit, 'the math ain't mathin''. 

There is nothing radical about what I’m saying here. It is public health 101. If you invest upstream, you slow decline. You reduce severity. You extend independence. You reduce the intensity – and cost –of downstream services.

We have decades of evidence – across health, disability, and ageing – that the need for high-cost, high-intensity care is delayed by:

• timely, low‑level support
• social connection
• appropriate housing and environments
• continuity of relationships
• support that adapts as people change.

And yet our aged care budget remains structurally weighted toward late‑stage intervention, clinical task funding, and crisis responses.

This is not because providers prefer it this way. It is because the budget demands it of you.

Many of the pressures you experience – the narrow margins, the reporting burden, the difficulty investing in innovation – are not failures of intent or care. They are the logical outcome of a system that funds you to respond, not to prevent.

Funding quietly reshapes practice when it:

• only recognises certain kinds of work
• values what can be counted over what can be felt
• reimburses tasks rather than outcomes.

And now, let's look at the other end of the system.  

Residential aged care is the most expensive setting in the aged care system.
Evidence consistently shows that delaying entry – even by months – through effective home‑based and community support reduces overall public spending, lowers downstream hospital use, and slows growth in residential demand. 

This is the age-old public health doctrine: spend earlier, spend less later.

A 2025 actuarial and public health study using longitudinal Australian data found that government spending is highly sensitive to the age and acuity at which people enter residential aged care. Later entry – associated with better health and functioning – is linked to shorter length of stay and lower cumulative cost, even where total lifespan does not change. 

This is not about denying care — it is about postponing high‑cost care until it is genuinely needed. And doing everything we can to incentivise keeping people connected, independent and fulfilled longer – the key things that indisputably stop decline.

A reality check that I don’t need to give you: We cannot build our way out of this. We cannot build enough beds. We cannot staff them fast enough. And we cannot afford to treat residential care as the default destination.

Which means the real question is not: 'How do we manage demand?' It is: “How do we slow the rate at which people need beds at all?”

Why does all of this meta-view on government budget matter to you? Because actually - you are not just service providers. You are the translators of policy into lived experience. The place where rights become real — or don’t. The ones who absorb system failure when people arrive too late. And you are also the ones who know – better than anyone – that care works best when it is timely, relational, and flexible.

Yet too often, the system asks you to deliver humanity in spite of its design.

Residential care cannot – and should not – absorb unchecked inflow driven by late access to support, poor navigation of the system, or underinvestment in prevention.

Yet our budget architecture still behaves as though residential and acute care are the inevitable destination.

And as I said, funding models are signals. And right now, the signal is this: 'Wait until you are unwell enough, frail enough, or desperate enough — then we’ll respond'.

That is the opposite of dignity. It is the opposite of rights. And it is extraordinarily expensive.

The uncomfortable truth is, we are trying to deliver relational, humane, preventative care through a system designed for transactions, compliance and late‑stage intervention.

By contrast, ageing in place is not sentiment. It is strategy.  Keeping people well at home, connected to community, supported early is often spoken about as a preference. But it is far more than that. It is a rights‑based outcome, a quality‑of‑life outcome and it's a fiscal necessity.

The law alone cannot do this work. Without mechanisms, incentives and funding structures that reward prevention and independence, the Act risks becoming poetry without plumbing. 

The budget is not just a ledger, it is a lever. And it is one of government’s most powerful policy levers. I am worried that right now, it is pulling in the wrong direction. Our funding system overwhelmingly privileges clinical interventions, task‑based care, and late‑stage dependency while systematically under‑funding:

• social connection
• navigation and care partnership
• built environments that support independence
• emotional, spiritual and relational care
• early intervention that slows decline.

So, you may now be asking, 'What are you gonna do about it, Natalie, and what can providers do?' Let's push for the funding conversation to start from a different starting point. 

I know sometimes the public conversations can frame you as the bad guys. But, so often, I hear you want the same things as consumers. So many of your staff write to me asking for change because you care about the people you care for. 

So actually we can push for this together.

A system where:

• independence is a success metric
• delayed entry into residential care is celebrated
• and as providers you are enabled – not constrained – to do what you already know works.

This is not naïve. It is actually how public systems stay sustainable.

If we continue to fund aged care as though crisis is inevitable, it will be. If we continue to under‑invest in ageing in place, beds will fill faster. If we continue to talk about ‘dignity’ while in reality emphasising funding towards ‘dependency’, the system will fracture further.

But if we realign the budget with what people actually want when they age – and what you already know delivers better outcomes – we can serve more people, better, for longer.

Thank you.