Proposed new residential care funding model

A landmark University of Wollongong study about a new residential aged care funding model—the Australian National Aged Care Classification—has been released today.


This study addresses the need for a more stable, contemporary, efficient and effective funding tool and system to provide greater financial stability to both the residential aged care sector and the Government.


The Federal Government’s funding of residential aged care was around $12.2 billion in 2017–18 with about $11.3 billion being payments made under the Aged Care Funding Instrument (ACFI).


This is supported by the 18-19 MYEFO announcement of a $4.6 million trial of a new residential care funding tool to replace the Aged Care Funding Instrument. The new tool is to provide better levels of accountability and transparency in the aged care sector, ensuring people have certainty and confidence about providers.


The Government commissioned the University to undertake a detailed Resource Utilisation and Classification Study of the aged care sector to inform the development of a new funding model and system.


The university’s research could be a ‘game changer’ for aged care because the proposed new system is a completely different way of allocating funding for residential aged care.


The proposal includes the removal of identified flaws in the ACFI including complex and time consuming assessment process as well as eliminating incentives found not always to be in the best interests of consumers.


The Federal Government is now seeking sector and community feedback.


Feedback will help inform decisions around residential care funding reform and the design elements of the proposed new funding model, the Australian National Aged Care Classification.


Consultation is open until 31 May 2019.


The consultation paper can be accessed at (or via and the University’s reports at


15 March 2019.