Aged care reform: back on the agenda

By Kate Austin, Ilaria Bigaran, Zoe Tripovich
Corporate Governance Disputes & Investigations Government Healthcare Risk & Compliance

Regulatory enforcement and governance reforms and their implications 7 min read

In March 2021, the Royal Commission into Aged Care Quality and Safety (Royal Commission) handed down its Final Report: Care, Dignity and Respect. Despite the Royal Commission's recommendations for radical and urgent reform of the sector (see our 2021 Insight), significant change has yet to follow.

The previous Federal Government introduced the Aged Care and Other Legislation Amendment (Royal Commission Response No. 1) Bill 2021 with a specific focus of regulating restrictive practices. This legislation came into force on 1 July 2021. A second reform bill, intended to implement further recommendations, was introduced to the Parliament late last year but lapsed on the calling of the 2022 election and the dissolution of Parliament.

Having campaigned on a platform of urgent aged care reform, last week the Government put reform back on the agenda. Two key pieces of legislation were tabled on the first sitting day of the new Parliament:

  • the Aged Care and Other Legislation Amendment (Royal Commission Response) Bill 2022 (Royal Commission Response Bill); and
  • the Aged Care Amendment (Implementing Care Reform) Bill 2022 (Implementing Care Reform Bill).

The Royal Commission Response Bill, with support from the Coalition in opposition, has since quickly been passed by both Houses. The Implementing Care Reform Bill is currently before the House of Representatives and is the subject of an inquiry by the Community Affairs Legislation Committee due 31 August 2022.1

In this Insight, we focus in on the key regulatory enforcement and provider governance reforms to be implemented under the Royal Commission Response Bill and the implications for approved providers.2

Royal Commission Response Bill

In the Final Report, the Royal Commission found that ineffective 'light touch' regulation, a poor track record of enforcement, together with failures in the leadership and culture of many providers were causes of the high levels of substandard care found to exist across the sector.3

The Royal Commission made a number of recommendations in response to these findings, some of which are to be implemented by the Royal Commission Response Bill.

Increased regulatory oversight through new Code of conduct

The Bill will introduce a Code of Conduct which will apply to approved providers of home, residential and flexible aged care, their aged care workers and key personnel.

The Code's content and operation is being developed through a consultation process with sector stakeholders and will be based on the existing National Disability Insurance Scheme Code of Conduct, with modifications to ensure relevance to the aged care sector. The Code is likely to include a requirement to provide care in a safe and competent manner, free from all forms of violence, discrimination, exploitation, neglect, abuse and sexual misconduct.4

The Aged Care Quality and Safety Commissioner will be given significant powers to enforce the Code, including:

  • the power to enter aged care facilities and exercise monitoring powers to determine whether the facility and its workers are complying with the Code of Conduct;5
  • the power to issue compulsory examination and document production notices to aged care providers and their personnel in relation to compliance with the Code;6
  • the power to issue enforceable undertakings and seek civil penalty orders for Code breaches (in addition to the existing power to impose sanctions);7 and
  • the power to make banning orders against aged care workers and key personnel for serious Code breaches. A register of individuals the subject of banning orders may be made publicly available.8

These changes will take effect from 1 December 2022.9


  • The enhanced regulatory powers to be granted to the Commissioner are similar to those currently exercised by the ACCC and ASIC. In 2023 and beyond, we expect the sector will see increased regulatory requests, surveillance and investigations. More frequent enforcement action with potentially serious consequences for aged care workers, key personnel and providers will also be a feature of the new regulatory landscape. In particular, civil penalty and banning orders (the more serious forms of enforcement action) will be entirely new to the sector.
  • This will represent a step change and requires careful consideration and planning. Matters to consider include:
    • preparing governance, policies, procedures and training for ensuring and demonstrating compliance with the Code and investigating instances of non-compliance;
    • ensuring relevant staff are equipped and trained to deal with regulatory requests and visits to premises; and
    • preparing a strategy for engagement with the Commissioner and managing accountability internally for the regulatory relationship.

Improved provider governance

The Bill will introduce new governance and reporting responsibilities for approved providers in relation to their key personnel and boards or governing bodies.

In relation to key personnel, the key changes include requirements for approved providers:

  • to consider on an annual basis, and be reasonably satisfied that, their key personnel are suitable to be involved in the provision of aged care. Failure to do so will attract a significant fine.10
  • to notify the Aged Care Quality and Safety Commissioner of any changes to key personnel, or changes to the suitability of key personnel. Key personnel will also be required to notify the provider if they become aware of changes in their circumstances relating to a suitability matter. A failure to notify by either party will be a strict liability offence.11

The Bill provides for a range of suitability matters for approved providers to consider, including experience in providing aged care or other forms of care, previous convictions or insolvency events.12 The Aged Care Quality and Safety Commissioner may make a determination that an individual is not suitable to be involved in the provision of aged care.13

These changes will commence from 1 December 2022.14

In relation to boards or governing bodies, with limited exceptions, key changes require approved providers of home, residential and flexible aged care to:

  • ensure that a majority of members of their board are independent non-executive members;15
  • ensure that at least one member of their board has experience in the provision of clinical care;16
  • establish a quality care advisory body to provide ongoing feedback and advice (including a written report every six months) on the quality of the aged care service;17 and
  • require that their board ensure staff have appropriate qualifications, skills or experience to provide aged care services, and are given development opportunities.18

In response to concerns regarding a lack of independence of boards of subsidiary companies, the Bill also requires that the constitution of the subsidiary provider not authorise a director of the provider to act in the best interests of the holding company.19

For new approved providers entering the system, the changes will apply from 1 December 2022.20 For existing approved providers, the changes will apply from 1 December 2023 to ensure sufficient time to meet the new requirements.21


  • Providers will need to assess and revise (as appropriate) existing structures and processes for:
    • the ongoing assessment of the suitability of their key personnel;
    • ensuring the appropriate skills mix of boards, including a focus on clinical care experience; and
    • ensuring the board receives comprehensive and timely information regarding quality of care matters and takes steps to ensure staff are appropriately qualified and receiving ongoing training and support.
  • Implementation of these reforms will require deep scrutiny by providers of their existing governance and management arrangements and the uplift that is required to meet the new standards.
  • The rights-based principles of care articulated by the Royal Commission are a lens through which providers can approach this exercise.

Further reform on the horizon

During the federal election campaign, the ALP committed to further reforms to ensure the delivery of safe and high quality aged care. Potential significant future reforms in the regulatory enforcement and governance space include:

  • A general duty of care: as recommended by the Royal Commission, the ALP has committed to introducing a general duty of care owed by approved providers (and key personnel) to provide safe and quality care. Serious, repeated and deliberate breaches will result in civil and criminal penalties, and a compensation regime made available to care recipients.22 The ALP has expressly stated that the compensation regime 'will create a path for class actions'. Providers should continue to monitor developments in this space in light of the potential for increased class action risk.
  • A new Complaints Commissioner: the ALP has stated that it intends to introduce a new Complaints Commissioner to fast-track the consideration and resolution of complaints in the sector.23 If implemented this will impose additional obligations and increase risk for providers, with the Commissioner potentially empowered to direct providers to take certain actions, including providing apologies or explanations.


  1. The Implementing Care Reform Bill proposes changes to the delivery of aged care services, including requiring providers to have at least one registered nurse on site and on duty for 24 hours a day, 7 days a week.

  2. The Royal Commission Response Bill contains a range of other changes. These include a Star Rating System for residential aged care services to provide public transparency regarding quality and performance, and the new Australian National Aged Care Classification (AN-ACC) funding model for residential aged care homes. The Bill is substantially similar to the second reform bill introduced by the previous Federal Government in 2021. 

  3. See Royal Commission Final Report: Care, Dignity and Respect, Executive Summary, p.77.

  4. See Aged Care and Other Legislation Amendment (Royal Commission Response) Bill 2022 Explanatory Memorandum, p.62.

  5. Aged Care and Other Legislation Amendment (Royal Commission Response) Bill 2022 sch 3 item 13.

  6. Ibid sch 3 item 23.

  7. Ibid sch 3 items 11, 14.

  8. Ibid sch 3 item 26 .

  9. Ibid item 2 ('Commencement').

  10. Ibid sch 5 item 15.

  11. Ibid sch 5 item 6.

  12. Ibid sch 5 item 25.

  13. Ibid sch 5 item 28.

  14. Ibid item 2 ('Commencement').

  15. Ibid sch 5 item 16.

  16. Ibid.

  17. Ibid.

  18. Ibid.

  19. Ibid.

  20. Ibid sch item 36(2).

  21. Ibid sch 5 item 36(1).

  22. Australian Labor Party, Stronger Penalties to Protect Australians in Aged Care <>.

  23. Ibid.