Aged-care reform: 40 recommendations, a big price tag, and tough choices for government
A government-appointed advisory group has handed down 40 recommendations for overhauling New Zealand's aged-care system, with the minister responsible acknowledging the cost will be significant.
The report comes from the Ministerial Advisory Group on Aged Care, chaired by former Labour health minister David Cunliffe. It states that the current system cannot meet future demand "safely, equitably or sustainably" without major, deliberate change. The group's analysis found that reforming the system would cost the Crown less over time than keeping things as they are (RNZ).
Among the 40 recommendations, the report proposes the government commit to substantial price increases for aged-care providers and lower the asset threshold — the point at which people who own assets like a home or savings must contribute more towards their own care. It also puts forward a differentiated room-pricing model: a higher daily rate would be paid for a brand new room, a lower rate for a less new room, and a lower rate again for an older room (RNZ).
Associate Health Minister Casey Costello, who holds delegated responsibility for the aged-care portfolio, said the report provides valuable insights for future policy and funding decisions. She flagged the fiscal implications directly, noting there is no denying the significant price tag. In late 2025, Costello said there were "major political considerations" attached to any changes in the aged-care system (RNZ).
The advisory group was appointed in December 2025. Its terms of reference required a draft report to ministers by 17 April 2026 for feedback, followed by a final report with recommendations later in the year (Beehive).
The differentiated room-pricing proposal has drawn the most immediate sector pushback. Aged Care Association chief executive Tracey Martin welcomed the report but raised concerns that differentiated pricing could hurt small owner-operators, charities, and not-for-profits, which tend to hold the oldest facilities in the sector. Under the proposed model, those providers would receive lower daily rates while facing the same or higher operational costs (RNZ).
Aged Care Commissioner Erin James also welcomed the report but pointed to different concerns. Her focus, she said, was ensuring reforms improved quality of care and upheld the rights of older people. James specifically flagged the report's push to increase access to home-based care, noting that this introduces greater risk of harm because home-based care is provided by a largely unregulated workforce operating in a person's home rather than a regulated facility (RNZ).
Alzheimer's New Zealand, in a response published in March, said the report recognises the need to expand residential and dementia-specific care capacity but places too little emphasis on community-based care. The organisation argued that dementia must be central to any aged-care reform, not peripheral to it (Alzheimer's NZ).
The government has already moved on short-term funding pressures. In June, Health New Zealand announced a 4 per cent funding uplift worth approximately $79 million to the aged residential care sector. Costello has previously described improving the lives of older people as a priority for the coalition government (Beehive; Beehive).
The broader policy landscape includes several intersecting reviews. Health New Zealand published a review of aged-care funding and service models examining the sustainability of aged residential care and home and community support services. That review's stated aim is to ensure older people get the right care when and where they need it, alongside their whānau. Separately, the Health Committee conducted an inquiry into aged-care support services for people experiencing neurological cognitive conditions, with the government welcoming the committee's report. The 2021 Independent Review of COVID-19 Clusters in Aged Residential Care Facilities, which contained 19 recommendations, also continues to inform the reform context.
The political calculation for the coalition government is straightforward but difficult. The report's own analysis says reform is the cheapest path, but the upfront cost of price increases and asset-threshold changes is significant, and the differentiated pricing model creates immediate winners and losers within the provider base. Small operators, charities, and not-for-profits holding older facilities face a structural funding disadvantage under the proposed model — a point Martin has raised directly. The tension between driving capital investment in new facilities through price signals and protecting the providers who care for the bulk of residents in older facilities is one ministers will need to resolve before adopting any recommendations.
The home-care question raises a separate set of regulatory issues. James's observation that expanded home-based care relies on a largely unregulated workforce points to a gap the Ministry of Health and Health New Zealand would need to address if the government adopts the report's direction toward community-based models. That is a workforce regulation and safety question, not merely a funding one, and it falls across multiple agency responsibilities.
What is unclear is the government's timeline for responding to the 40 recommendations. Costello has welcomed the report and acknowledged its cost implications but has not indicated which recommendations the government is prepared to adopt, modify, or reject. The terms of reference anticipated a final report in 2026; ministers now have the substance of that work in front of them.
