Understanding the 2025 Aged Care Act: A new era for aged care in Australia

The Aged Care Act, effective July 1, 2025, signifies a transformative shift in Australia’s approach to aged care. 

Grounded in recommendations from the Royal Commission into Aged Care Quality and Safety, the Act replaces previous legislation with a comprehensive framework that prioritises consumer rights, safety, and quality of care. 

Within this article, we look further at how this this legislation is both a challenge and an opportunity for aged care providers, as it necessitates major operational changes while setting the stage for innovation and improvement in the sector. 

Sectoral impacts of the new act

Rebuilding public trust

One of the most pressing issues exposed by the Royal Commission was the widespread erosion of trust in aged care providers. The new Aged Care Act aims to rebuild this trust through improved transparency and quality standards:

• Mandatory public reporting on care outcomes and funding usage ensures providers are held accountable. Families can make more informed choices, leading to increased trust in the system​; and
• The rights-based framework gives older Australians a stronger voice, reinforcing their role as active participants in their care plans rather than passive recipients.

By aligning service delivery with community expectations, the sector has an opportunity to repair its reputation and rebuild confidence among older Australians and their families.

Sustainability in aged care delivery

The Act’s funding reforms, combining government subsidies with means-tested user contributions, aim to create a more sustainable financial model for aged care:

• The new model ensures funding is directed to those who need it most, addressing inequities in the current system​; and
• Providers must adjust to stricter financial governance, reducing inefficiencies and ensuring resources are used effectively.

In a rapidly aging society, these measures lay the groundwork for a financially viable system that can meet future demand.

Workforce transformation

The workforce is the backbone of aged care, yet it has long faced challenges of low pay, limited career progression, and high turnover. The Act addresses these issues by mandating workforce reforms, including:

• Requirements for mandatory care minutes and 24/7 registered nurse coverage in residential care settings will elevate care quality​; and
• Providers will need to invest in ongoing training and upskilling of staff, creating opportunities for career progression and enhancing job satisfaction.

These changes will not only improve care outcomes but also help position aged care as a respected and desirable profession.

Encouraging innovation and technology adoption

The Act creates an environment conducive to innovation, encouraging providers to adopt new technologies and care models:

• Tools for remote monitoring, electronic care records, and real-time reporting will streamline care delivery and enhance consumer satisfaction.
• Data-driven insights can enable providers to offer customised services that meet individual needs, setting a new standard for consumer engagement.

Embracing innovation will differentiate providers and ensure their services remain competitive in a reformed marketplace.

Regional and small-scale provider challenges

While the Act introduces comprehensive reforms, smaller providers, particularly in regional areas, face unique challenges:

• Meeting enhanced staffing and infrastructure requirements may strain smaller operations.
• Targeted subsidies and support programs will be essential to prevent the closure of regional and community-based services, which are critical for underserved populations​

Deep dive into the act’s key changes

Unlike the previous legislation, which often prioritised system efficiency over individual outcomes, the new Act adopts a consumer-first approach. It redefines the responsibilities of aged care providers, modernises funding models, and sets new benchmarks for care delivery. These changes aim not only to improve the lived experience of those in aged care but also to rebuild public trust in a system that has faced significant scrutiny.

In this section, we explore the Act’s key changes and the insights which can be gained from them.

Rights and person-centred care

The introduction of a Charter of Aged Care Rights codifies key principles, ensuring all older Australians have access to safe, dignified, and equitable care. Unlike previous frameworks, this rights-based approach is binding, emphasising self-determination, social inclusion, and protections against neglect and abuse​

Impact:

• Providers will need to actively demonstrate how their services uphold these rights, from care planning to daily operations.
• Advocacy bodies and regulators will play a stronger role in monitoring compliance with the Charter.

Strengthened quality and safety standards

The Act imposes strict mandates such as mandatory care minutes per resident, 24/7 registered nurse availability, and improved infection control and nutrition standards​. These reforms address significant gaps identified in the Royal Commission, particularly in residential aged care.

Impact:

• Facilities will need to revamp staffing models and training programs to meet these benchmarks.
• Non-compliance could lead to severe penalties, including loss of accreditation.

Enhanced accountability measures

Transparency is central to the new legislation. Providers must adhere to robust governance standards, including public reporting on care outcomes and clearer accountability for board members and executives.

Impact:

• Enhanced whistleblower protections and stricter incident reporting requirements aim to foster a culture of safety and openness.
• Providers will need to establish internal mechanisms to ensure compliance, mitigate risks, and demonstrate accountability​

Revised funding mechanisms

The Act introduces a nuanced funding model that blends government subsidies with means-tested contributions from users. This aims to make funding fairer and more sustainable while ensuring resources are directed to where they are most needed.

Impact:

• Financial planning will be critical for providers to maintain sustainability under the new arrangements.
• Smaller and regional providers may require targeted support to adjust to these changes.

Consumer empowerment and engagement

The Act emphasises consumer choice, requiring providers to offer more tailored services and actively involve residents and families in care decisions​

Impact:

• Digital tools and platforms for feedback and care customisation will likely become a norm.
• Providers excelling in consumer engagement will gain competitive advantages.

Challenges and opportunities

While the reforms promise better outcomes for older Australians, they also present a complex set of challenges and opportunities for aged care providers. In this section, we delve into the operational, financial, and cultural challenges providers face, while also highlighting the opportunities for those who adapt proactively to the new era of aged care. 

Operational shifts: Workforce requirements will increase significantly, necessitating investments in recruitment, training, and retention. Providers must meet mandatory care minutes and staffing ratios while ensuring service quality remains high.

Financial considerations: Compliance with the new Act could drive up costs due to higher workforce demands, infrastructure upgrades, and technology adoption. The government’s support for small providers and rural facilities will be vital to sustaining equitable care.

Innovation as a catalyst: The reforms incentivise innovation, encouraging providers to embrace technology for remote monitoring, personalised care, and efficiency. Leveraging data analytics to track care outcomes can enhance transparency and service delivery.

Cultural change: Adopting a consumer-first mindset is essential. This requires shifting from transactional care delivery to relationship-based models that prioritise dignity, trust, and consumer voice.

Conclusion: Embracing the change

The new Aged Care Act is a milestone in ensuring that aged care in Australia meets modern standards of dignity, safety, and quality. While its implementation will undoubtedly challenge providers, it also offers a framework for innovation and improvement. Those who embrace these changes proactively will not only comply with the law but also redefine the care experience for older Australians.

The time to act is now. Providers, regulators, and consumers must work collaboratively to ensure the Act’s promise translates into meaningful outcomes.