Aged care in New Zealand: A new report says the system needs a big shake-up
A government-appointed group has handed the government 40 recommendations for fixing aged care, including paying providers more and changing the rules around who pays what towards their care.
The report, released on Monday and titled "A place to grow old: Securing the future of aged care," warns that without change there could be a shortage of more than 9000 aged care beds in just over a decade, at an additional cost to the government of nearly $600 million a year. The group, chaired by former Labour Minister of Health David Cunliffe, described the aged care system as built for a "different era" and under "sustained financial pressure" (RNZ).
"If we do nothing there will be a mountain of unmet need, alongside a much higher demand for hospital beds," the report states.
The group started its work in January 2026 and was asked to report back by the middle of 2026. It reports directly to the Minister of Health and the Associate Minister of Health responsible for aged care. Its instructions say both major parties should work together on the changes, so that reform doesn't get undone after an election (Ministry of Health).
Associate Health Minister Casey Costello said in late 2024 there were "major political considerations" attached to any changes in aged care, and that the government set up the group because it wanted reform ideas. Government reviews had already found the aged care model out of date before the group was appointed (Beehive).
The government spends more than $2.5 billion a year on aged care, including both care in people's homes and care in residential facilities. On top of that, unpaid care — the help family members and others provide for free — was estimated to be worth $3.6 billion, based on data from LiLACS NZ carers (RNZCGP).
The numbers driving the report are clear. About 950,000 people in New Zealand are aged 65 or over. That is expected to reach about 1.3 million by 2040. In 1996 about one in 10 people were aged over 65; by the 2050s it is projected to be one in four.
The report also points to "well recognised inequities" in aged care. Māori, Pacific and Asian people are much less likely to be living in residential care in advanced old age. The group describes care models that help older people stay connected to whānau and community.
The broader context here is that the government already has a health plan for 2024–2027 that sets out its spending priorities, so any response to these recommendations will have to fit alongside what the government has already committed to. The report's call for higher payments and a lower asset threshold — the point at which people who own property or savings have to pay more towards their care — is exactly the kind of thing Costello called politically difficult. The asset test touches home equity, superannuitant income and questions about what families pass on to their children. No government has wanted to deal with that.
For people working in aged care, the 9000-bed shortfall and the $600 million annual cost figure give a concrete number to what has until now been discussed in general terms. The $3.6 billion unpaid-care estimate makes the fiscal picture more complicated: if the government moves to pay for care that is currently provided free by families, costs will shift onto the public purse even as care quality improves. The instruction for both parties to work together is not a detail. Aged care funding reform has historically stalled at a basic disagreement: should care be based on what you can afford, or should it be provided to everyone regardless of means? A group set up to bridge that divide suggests those involved know that changes to the asset test will not survive a single election without cross-party support.
What is not yet known is whether the government will adopt, change or set aside the 40 recommendations. The report has been delivered; the response has not.
