Australia is spending heavily on aged care, yet many older people would rather stay at home—and the system may not have enough workers, money, or places to make either choice work well. Population aging represents a major socioeconomic transformation that profoundly affects nearly all nations globally.

In Australia, the proportion of individuals aged 65 and above already stands at 16.7% and is projected to rise from 4.31 million in 2021 to 6.66 in 2041. That means aged care is not a small service for a fixed group. It is being asked to support a growing part of the country, while most older adults prefer to live in their own homes or familiar communities rather than in institutions.

Addressing these challenges necessitates fundamental reforms to the Australian Aged Care system. However, it will not be achieved without a comprehensive overview of the current aged care system. So this study brings together perspectives from peer-reviewed literature, government policies, industry reports, and Australian aged care websites to inform policies that can strengthen both current and future aged care systems.

The census data on the number of permanent residents living in Australian aged care facilities from 1999 to 2023 shows a general upward trend, reflecting the increasing demand for aged care services over this period. But the pattern is not perfectly smooth.

The data indicates some fluctuations, including slight decreases in 2015 and again in 2018, before rising again to 185,127 residents in 2023. In contrast, the number of Home Care Programs generally increased, reflecting a growing trend towards in-home care services for the older adult.

These trends suggest a shift towards providing more older adult care options that allow individuals to stay in their homes rather than move into residential care facilities. The preference for home-based care could be influenced by the desire for personalized care, comfort, flexibility, affordability, and safety.

The Australian aged care sector is facing growing challenges including workforce crises, population ageing, and financial sustainability to support the sector. Additionally, the service sector is becoming highly complex and persistently struggles to deliver high-quality care to the rising number of older Australians.

As the number of Australians expected to need aged care services increases, existing funding mechanisms are no longer sustainable with deteriorating health and high acuity. The future supply of aged care accommodation will be constrained as the population continues to age.

Sustained funding is critical to maintaining care quality and minimizing negative care experiences. The government would need to focus funding on having a suitably sized and skilled workforce critical to the effectiveness and sustainability of any reforms.

Australia’s aging population places a significant strain on the aged care sector, with a growing number of individuals aged 65 and older. The Australian government has introduced various reforms to address the needs and rising expectations of older citizens. Nonetheless, challenges persist, such as workforce shortages, unsustainable financing mechanisms, the aging burden, and adapting to emerging technologies, impacting the quality of care provided to older Australians.

Discontent with aged care homes has led to a preference for in-home care among older adults receiving care. The growing aging population necessitates governments to ensure sustainable long-term care delivery, promoting healthy aging and enhancing the quality of life for older adults.

The review finds that Australia’s future aged care system must follow people’s preference for care at home while securing enough funding and skilled workers to keep care safe and dependable.