What the new aged-care report means for older New Zealanders

A government-appointed group has handed the government 40 recommendations for fixing New Zealand's aged-care system. The minister in charge says the cost will be significant.

The group, led by former health minister David Cunliffe, says the current system cannot cope with future demand without major change. Its analysis found that fixing the system would actually cost the government less in the long run than leaving it as it is (RNZ).

Some of the key ideas in the report:

• Pay providers more. The report says the government should increase the daily amount it pays aged-care homes for each resident.
• Lower the threshold. Right now, there is a cut-off point based on what assets you own — like your house or savings. Above that point, you pay more towards your own care. The report wants that cut-off lowered, meaning more people would pay a bit more.
• Pay different rates for different rooms. A brand new room would get a higher daily payment from the government than an older room. The idea is to encourage providers to build new facilities.

(RNZ)

The minister responsible for aged care, Casey Costello, said the report gives useful guidance for future decisions. She was direct about the cost, saying there is no denying the significant price tag. In late 2025, she said there were "major political considerations" around any changes (RNZ).

The group was appointed in December 2025 and was asked to produce a draft report by April 2026, with a final version later in the year (Beehive).

The proposal to pay different rates for different rooms has drawn the most pushback so far. Tracey Martin, who leads the Aged Care Association, welcomed the report but worried that smaller operators, charities, and not-for-profits — which tend to have the oldest buildings — would get paid less while their costs stay the same or go up (RNZ).

Think of it like a hotel: a brand new hotel can charge more per night than a run-down one. But if you already own the run-down hotel, you still have to pay staff, keep the lights on, and look after guests — with less money coming in.

Aged Care Commissioner Erin James also welcomed the report but raised a different concern. She wants to make sure any reforms actually improve the quality of care. She pointed out that the report pushes for more home-based care, where carers visit people in their own homes rather than in a regulated facility. That carries more risk, she said, because the home-care workforce is largely unregulated (RNZ).

Alzheimer's New Zealand said in March that the report recognises the need for more residential and dementia-specific care, but does not focus enough on care in the community. The organisation said dementia must be at the centre of aged-care reform, not on the sidelines (Alzheimer's NZ).

The government has already taken some short-term action. In June, Health New Zealand announced a 4 per cent funding increase worth about $79 million for aged residential care. Costello has previously said improving the lives of older people is a priority for the coalition government (Beehive; Beehive).

There are other reviews under way as well. Health New Zealand has published a review of aged-care funding and service models, aimed at making sure older people get the right care when and where they need it, alongside their whānau. The Health Committee has looked into aged-care support for people with neurological conditions like dementia. And a 2021 review into COVID-19 outbreaks in aged-care facilities, which had 19 recommendations, still shapes thinking on reform.

The political difficulty for the government is clear. The report says reform is the cheapest option, but the upfront costs are large. The room-pricing model creates winners and losers: providers with new buildings get more money, while those with older buildings get less — and many of those are small operators and charities caring for the bulk of residents. Ministers will need to work through that tension before adopting any recommendations.

The push for more home-based care raises a separate issue. James pointed out that home-care workers are largely unregulated — meaning there are fewer rules overseeing who does the work and how it is done. If the government moves towards more home-based care, the Ministry of Health and Health New Zealand would need to address that gap. It is a safety question as well as a funding one.

What the government has not said is when it will respond to the 40 recommendations, or which ones it will adopt, change, or reject. Costello has welcomed the report and acknowledged the cost, but the decisions now sit with ministers.