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Just 1,672 new residential aged care places became operational in 2025–26, Department of Health, Disability and Ageing first assistant secretary for the access, dementia and First Nations division Luke Mansfield told senators during this week’s Supplementary Budget Estimates.
While this is more than double the 802 beds that came online in 2024–25, it remains well below the 10,000 new places the government has estimated will be needed every year to meet growing demand.
Mr Mansfield said the total number of operational places as of 30 June 2026 is 226,165.
Ageing Australia chief executive officer Tom Symondson told The Ageing Agenda that older Australians are paying the price for the failure to deliver on capacity needs.
“Australia needs around 10,600 additional residential aged care places every year just to keep pace with demand. Yet we added just 802 in 2024–25 and 1,672 last year. That’s less than 2,500 additional places over two years, when we needed more than 20,000,” he told TAA.
“We know exactly how much additional capacity Australia needs, yet year after year we’re delivering barely a fraction of it. Older Australians are paying the price for that failure.”
The government allocated $1.7 billion in the 2026–27 budget to support and incentivise the construction of 5,000 new beds.
But in September, the government announced the Australian National Aged Care Classification price would only increase to $303.19 – a 2.55 per cent increase.
Modelling by StewartBrown found the AN-ACC price needs to increase by around 5.2 per cent to reflect the actual rise in providers’ costs.
The new AN-ACC price has been criticised by the sector, and Ageing Australia said it has received reports of an estimated 3,000–4,000 planned beds now being paused or cancelled entirely due to the price.
First assistant secretary of the department’s residential care and market division Daen Dorazio told senators the department is aware of these reports but has not been able to independently verify that number.
Responding to a question from Senator Anne Ruston on whether the department has done any profiling into the future, or reprofiling, following the AN-ACC changes and subsequent sector response, Mr Mansfield said the department does monitor market dynamics and that it does look at where capital investment is occurring.
He said the latest sector data insights into residential aged care construction projects underway show there will be an estimated 4,500 new beds in 2026–27 and a slightly lower, albeit similar, number in 2027–28.
Mr Mansfield said that while it’s important to understand that there are many variables in construction that can impact the number of builds, the Australian Bureau of Statistics’ approvals data show 264 building approvals across the sector in 2025–26, which he said is consistent with the previous year and higher than the two preceding years.
“So, I guess from a trends perspective, I would say, Senator, the number of beds being built has been increasing,” Mr Mansfield said.
“As you’d know, last estimates we talked about the year previous was about 800 beds built, this year, 1,600 beds built, and we’re expecting that trend to continue to increase with the combination of investments that government has made and is making, of which there’s been focus on AN-ACC, but there are many different elements of investment that are being made to help create and strengthen the investment environment to support future residential aged care construction, including the $1.7 billion package announced in 2026–27 budget.”
Mr Symondson called for the government to “urgently revisit” its AN-ACC decision, which the sector has described as a cut to care funding in real terms.
He told TAA the only alternative is an increasing number of existing beds closing and the number of new beds being built declining even further.
“We urgently need to turn this situation around, but the government’s latest AN-ACC funding decision made it all but impossible for providers to build any beds at all. Providers have told us they’ve shelved plans for more than 4,000 beds as a direct result of that decision, and the number keeps growing,” he said.
“Basic common sense tells us that no organisation can justify spending between $50-$100 million on a new aged care home that they won’t be able to afford to open. And how can they persuade a bank to lend them the money when they can’t prove they will be able to pay it back?”
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