Aged care providers call for urgent rule change

Pat Garcia, CEO of Catholic Health Australia (CHA), has called for the scrapping of an “outdated” 40-year-old rule.

According to Mr Garcia, a cap on what is known as the Basic Daily Fee (BDF) should be removed. The fee gives wealthy Australians access to cheap aged care, putting the industry on the verge of collapse, he claims.

The BDF is the amount everyone pays for the day-to-day services they receive at aged care facilities. A cap on the fee was introduced in the 1980s, but Mr Garcia believes that cap is no longer fit for purpose.

The fee is capped at 85 per cent of a single person’s basic pension, and currently stands at $58.98 per day. Mr Garcia says it is not enough to cover the providers’ costs, particularly in light of increases resulting from the COVID pandemic.

He is not alone in calling for the removal of the cap.

Rachel Argaman, CEO of Opal HealthCare, says asking wealthier Australians to pay more makes good sense. Opal HealthCare last month committed to giving its staff a salary increase from July this year.

“Opal HealthCare is committed to a 15 per cent increase to award rates for its aged care team who provide direct care to residents,” said a company media release.

Ms Argaman says this will help Opal to maintain quality aged care, but will need to be funded. It makes sense, she says, to ask wealthier residents to contribute more towards their care instead of burdening taxpayers further.

Who should pay?

Along with Opal and CHA, other aged care providers called for a removal of the cap. Anglicare Sydney, and Southern Cross Care (QLD) echoed the concerns of Mr Garcia and Ms Argaman.

The providers have proposed a removal of the cap for self-funded retirees. But not everyone agrees that ‘self-funded’ equates to ‘wealthy’.

Whether or not targeting self-funded retirees is the best solution, few would argue with the need for aged care reform.

Jason Kara, director of Aged Care at CHA, supported his CEO’s stance. “Aged care providers are losing a lot of money,” he said. “It’s time to ask those who can afford it to contribute a little bit more to the cost of their care.”

Mr Kara said considering one’s own daily household expenses helps put the fee cap into perspective. “If people think about their own budget, they would also recognise that $59 a day just isn’t appropriate,” he said.

A report prepared by chartered accountants StewartBrown revealed that 63 per cent of aged care homes operated at a loss in December 2022, up from 60 per cent a year earlier.

“The average operating results for residential aged care homes in all geographic sectors was an operating loss of $15.98 per bed day,” the report says. The December 2021 figure was $10.31 per bed day.

The Albanese government will deliver the 2023-24 Federal Budget on 9 May.

Also read: Pressure mounts on retirees as aged care interest rates soar

Andrew Gigacz
Andrew Gigacz
Andrew has developed knowledge of the retirement landscape, including retirement income and government entitlements, as well as issues affecting older Australians moving into or living in retirement. He's an accomplished writer with a passion for health and human stories.


  1. I am so angry with two Agedcare providers seeking to increase the fees to so called wealthy people.
    The Federal Govt already impose a means test fee on the so called wealthy.
    In my situation I now pay $30.00 a day above the daily rates and will never get to the maximum of $70.000, roughly as it is indexed each year.
    This money is collected by the Agedcare provider but paid to the federal Govt.
    It is basically a tax on old vulnerable people.
    Stay out of social engineering and dig down into your own wasteful business costs ms Argaman.
    Perhaps you spend more time taking the opaqueness out your expenditure so the Govt and your residents can measure your financial decision making.
    Perhaps Agedcare Homes can be more visable with the expenditure of the windfall of being able to able to invest the RAD at 7% approx compared to just over 3% 3 years ago..
    4 % increase is a windfall of $28000 a year.
    Perhaps Opal can explain how their extra services fee applicable in some Homes is applicable in in dementia houses where it is impossible to deliver those extra services.
    I shall certainly be sending a letter to ms argaman At Opal pointing out where my expenditure of $310,000.00 over the past 3 has not been spent.
    Very grumpy

    • I understand how you feel. If you pay more you should see something extra for that extra money. There should be a cap. And get what you pay for.
      Or what’s point in working hard in life to leave something to family.

  2. Why are such agencies always trying to get more from those who saved for their retirement rather than from those who didn’t. It seems that all Government services are designed to rip money off those who went without in order to not be a drag on fellow taxpayers.

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