Comparing Residential Aged Care in Australia and New Zealand

Last Updated: 23 August 2022

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Globally, the demographic of people over the age of 65 is growing at a rate that the world has never before seen. Australia and New Zealand contribute to this statistic as they are home to ageing populations, and the full effects of this have not yet even been felt.

As a result, the residential aged care industry is set to grow at similar rates commensurate to both countries' populations. However, there are various factors at play that are hindering – or accelerating – this growth in ways specific to Australia and New Zealand, such as New Zealanders' reluctance to leave their homes until later in life and Australians' lack of interest in retirement villages.

But what are the differences between the two Tasman nations? And why do these differences exist?

Pensions and superannuation

The difference that affects a potential resident before anything else is the retirement fund system. Both countries have public pensions and private superannuation funds available, but they function in different ways.

First, Australia’s age pension is means-tested to see whether or not you require financial assistance, while New Zealand’s age pension is available to everyone (Guest et al, 2017). Some journalists and researchers believe that this causes New Zealanders to work for a longer period of their lives than Australians, however there is little information available as to the tangible effects the pension has upon residential aged care choices aside from dictating the average price consumers are willing to pay.

Second, Australian employers have to make compulsory payments into their employees' superannuation accounts under the Superannuation Guarantee, and Aussies cannot withdraw their superannuation – nor stop paying money into it – unless in exceptional circumstances. In New Zealand, however, employers do not have to make deposits into an employee’s superannuation: employees have the choice to either receive regular payments from their employer, or contribute to their superannuation on their own in lump sum payments at a higher rate per annum (Guest et al, 2017).

Additionally, New Zealanders can halt or access their funds if required, such as if they do not have expendable cashflow or if they are buying property (Guest et al, 2017). In short, New Zealanders have more freedom to use their super throughout their lifetime while Australians are strictly guaranteed a stronger super account respective to their earnings.

While this is a lot of data-driven information, it’s integral to understand how superannuation and pension programs influence the growth and implementation of Australia and New Zealand’s residential (and community-based) aged care support. The rate at which populations save for retirement – and, in effect, for aged care – directly influences the amount of money governments are willing to invest into that industry.

Why would a government support the construction of thousands of residential aged care beds if nobody would be able to afford them in 20 years? These choices are based on a lot of long-term projections using data like that listed above.

Culture of living independently

On a more qualitative side of the issue, citizens of Australia and New Zealand have very different individual views towards when and how they should make the move into community or residential aged care. Obviously, government regulations and the characteristics of the property market influence this choice, but people also cite a desire to retain their habits and lifestyle for as long as possible.

In New Zealand, aged care is a popular choice:

  • As of 2017, over 13% of people over the age of 75 live in retirement villages (Broad et al, 2019).
  • Around 100 New Zealanders were moving into retirement villages every week (Collyns, 2021).
  • Over 34,000 people are living in residential aged care facilities, with around 45% of them on lower care levels (NZACA, 2020).

In Australia, however, there is a far smaller culture of transitioning from independent living to a retirement village, and then from a village to an aged care residential facility. Instead, Australians are more likely to enter permanent residential aged care facilities later in life, having only accessed home care very late in life as well. On average:

  • Men and women start using home care packages at 80 and 81 years old respectively (gender non-confirming averages are unavailable at this time) (AIHW, 2021).
  • Men and women enter permanent residential aged care at 82 and 85 respectively (AIHW, 2021).
  • Over 14% of people over the age of 80 use long-term care in an institution (excluding hospitals) (AIHW, 2021).

However, these statistics are likely to boom as baby boomers reach retirement age: by 2050, over 25% of all Australians will be over 65 years of age (AHRC, 2014).

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Are AUS and NZ moving in the same direction?

As people start living longer lives all over the globe, older adults are entering aged care homes at a later age. This is due to both an improving level of health for older adults, as well as – at least in Australia and New Zealand – the option for appropriate people to access government-supported home care initiatives.

This trend is flattening the curve of revenue growth and occupancy levels in care homes in both countries, despite the projected boom scheduled to have hit already. A pre-boom is currently occurring where home-support is acting as a buffer between complete independent living and residential aged care facilities (NAZCA, 2021).

With this in mind, both governments have made plans to assign large sums of money to provide reliable and affordable community care: the Australian Labour Party promised in 2022 to increase wages for aged care workers and to demand financial transparency from Australian residential aged care providers (ALP, 2022). Similarly, New Zealand’s Labour government commits to growth by assigning around $50M NZD per year as of 2021 (NZACA, 2021). In total, Australia’s aged care industry is worth over $20B per annum while New Zealand’s industry is worth around $3B per annum (Link Business, viewed 2022).

Both countries have initiated a move away from aiding the creation of residential aged care facilities and towards more accessible and wide-reaching community and home care.


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