Provider group says October increase leaves a gap in FY27
Medical & Aged Care Group says the Federal Government’s latest residential aged care pricing decision amounts to a real funding cut once wage growth, inflation and timing are counted.
From 1 October 2026, the AN-ACC price will rise from $295.64 to $303.19 per national weighted activity unit. That is a nominal increase of 2.55%.
Because the increase starts three months into the financial year, MACG puts its effective value across FY27 at about 1.91%.
Meanwhile, modern award minimum wage rates increased by 4.75% from 1 July 2026. Labour is the largest cost in residential aged care.
Providers are also absorbing higher costs for food, energy, insurance, maintenance, clinical systems and regulatory assurance.
Annual inflation was 3.5% in July 2026. Health costs rose 3.8%, food 3.2%, electricity 6.1% and insurance 4.2%.
Cameron McPherson, chief executive of MACG, said aged care workers deserved their wage increases. He said the problem was the government lifting wage, care, compliance and reporting expectations while leaving providers to fund the gap.
Hotelling supplement frozen at $22.15
The hotelling supplement remains $22.15 per resident per day. It helps pay for meals, cleaning, laundry and energy.
The Government says the new AN-ACC price includes the 4.75% Annual Wage Review, aged care work-value and gender-undervaluation decisions, and non-labour cost growth. However, MACG argues inclusion does not mean the allowance is adequate.
McPherson said: “There is no discretionary version of aged care.” He added: “Registered nurses, personal care workers, meals, cleaning, laundry, electricity, infection prevention, clinical systems and safe buildings are not optional expenses.”
MACG wants three changes. It is seeking an urgent reconciliation of the pricing decision against actual FY27 wage and non-labour costs, automatic and transparent indexation of both AN-ACC and the hotelling supplement. A corrective mid-year adjustment where funded assumptions do not match real expenditure.
According to MACG, providers cannot bridge the gap through efficiency alone for long. The group says weaker operators may withdraw, capital may retreat and the supply of places may tighten as Australia needs more capacity.
MACG did not disclose when any corrective mid-year adjustment would be needed or what level of AN-ACC increase it believes would match costs.
