The Federal Government is undertaking a Residential Aged Care Accommodation Pricing Review, signalling potential major changes to how accommodation is funded across the sector.
The review follows the Government’s response to the Aged Care Taskforce, which committed to an independent assessment of accommodation pricing. The review will examine:
- Current rates of accommodation supplements
- Incentives for providers to develop and maintain high-quality accommodation
- Incentives to accept low-means residents
- Pricing arrangements for residents who pay some or all of their accommodation costs, including how lump sum and daily payments are converted
The final report will be tabled in Parliament by 1 July 2026.
Announced by the Minister for Aged Care and Seniors in September 2025, the review will assess whether current policy, funding and administrative settings deliver fairer resident contributions, equitable access to quality accommodation, and sufficient financial incentives for providers to invest in new and upgraded facilities.
The review will also examine the adequacy of accommodation revenue, including the Higher Accommodation Supplement, taking into account recent reforms such as the 2% retention on Refundable Accommodation Deposits (RADs) and the increase in the maximum room price from $550,000 to $750,000 from 1 January 2025.
Matters outside scope include the legislated 2% RAD retention rate, permitted uses of refundable deposits, and the long-term role of RADs, which will instead be considered through a separate legislated review by 2030.
Advisory firm StewartBrown has met with the co-chairs of the review and lodged a formal submission, consenting to its publication by the Department of Health and Aged Care.
In its submission, StewartBrown warned the residential aged care sector remains “not investible”, even with recent funding reforms, and expressed concern about the sector’s ability to deliver enough new beds or refurbish ageing facilities as demand rises.
Key recommendations from StewartBrown include increasing the Higher Accommodation Supplement to encourage providers to admit supported residents, introducing a sliding scale based on the age of homes, number of supported residents and regional location, and closing the funding gap between Daily Accommodation Payments (DAPs) and supplements. The firm also advocated replacing the Maximum Permissible Interest Rate with a more commercial benchmark and transitioning toward a rental-style model, with DAP as the default payment mechanism.
Industry observers say the review represents a critical opportunity to develop a more equitable and financially sustainable funding framework, capable of supporting innovation, attracting investment and meeting Australia’s growing demand for residential aged care.
