Federal Budget 2025-26: what it means for aged care

First published: May 2025

The Federal Budget 2025-26 was announced on the 25th March 2025 which included economic forecasts and what areas would be allocated funding and financial backing this coming year.

Covering areas such as the cost of living, housing prices, education, healthcare and student debt, it offers a projection of what each sector is going to receive in the new financial year.

Funding wage increase for aged care workers

Already part of the aged care reform roadmap, workforce retention and pay increases will be supported further with an investment of $2.6 billion. Pay rises for aged care nurses was awarded at the start of the year, and from 1st March 2025. Included in the wage increases for this year was non direct aged care workers, who did not receive the historic aged care pay rise of 2023.

Improving aged care support

The government has pledged to provide $291.6 million to continue to delivery aged care reforms and high quality aged care services. This funding is to allow older people to live in their homes for longer and to remain independent, whilst improving aged care services within residential aged care homes.

The new Aged Care Act, to be implemented in July 2025, responds to the recommendation from the Royal Commission into Aged Care Quality and Safety to build an act that puts older people at the centre of the aged care system. This funding will assist with the implementation of this new act.

Strengthening Medicare

Alongside the aged care funding, $1.2 billion will be allocated to a Strengthening Medicare package, to help upskill aged care workers and to care for those with complex care needs. Support will be offered to older people living with dementia who are transitioning from hospital to aged care services and to those recovering from hospital stays.

Cost of medicines will freeze for up to five years for Pensioners and Commonwealth Senior Health Cardholders, and aged care residents will have access to vaccinations with no out of pocket expenses through the National Immunisation Program Vaccinations in Pharmacy Program.

Read the Federal Budget 2025-26 recap in full on the government website