Budget 2025
Mixed Messages and A Mixed Bag For The Care Economy

Alex McDonald
March 28 2025

In what has been an incredibly challenging few years for the Australian Care Economy, the 2025 federal budget was among the most highly anticipated in recent memory. In fact, I cannot think of a more awaited budget from Care Economy organisations, ever.



The ongoing profitless prosperity most organisations are currently circumnavigating to provide the essential services connecting Australia’s core to its heart, is eroding. These organisations, the very organisations that care for us all in our time of need, require care as well. Perhaps, this is why this budget felt different. In a world of ever-growing hyperbole, it is challenging not to overstate the importance of this budget for Care Economy providers. For several, it will be their last.

The known realities of global economic headwinds, domestic cost of living increases, sharp increases in service delivery costs primarily attributed to scarcity of workforce and a burgeoning care expectation across the community – have materially weathered the health and going concern for many providers. Market consolidation across the Australian Aged Care sector, Childcare and Disability providers is accelerating in what has been coined by many providers as the “battle of the balance sheet”.

The stark economic realities for leadership across these organisations, whilst completely understood, was met with a tepid anxiety pre-budget. This anxiety was both validated and vindicated through this budget.

While the government has made significant strides in addressing long-standing workforce challenges in Aged Care, other vital sectors appear to have been left wanting. In a press cycle that denotes winners and losers in budgets, the chasm this budget provides across large sections of the Care Economy, is palpable.

The headline announcement for Aged Care is the substantial $2.6 billion investment in wage increases for Aged Care nurses. A stellar announcement, long overdue for those that provide invaluable contributions to our community, every day. This, coupled with funds to support minimum wage increases, offers a much-needed boost to the Aged Care sector's ability to source, train and retain skilled professionals. In a sector facing critical shortages, this announcement is timely and welcomed. Such a significant wage increase propels the sector as a career not just of material moral contribution, but also of higher income aspiration. Big tick.

Across the sector, this change has uniformly been welcomed, with particular jubilation found in regional and remote nursing locations, where labour shortages are most prevalent. It must be said that while the change in pay rates for nurses in Aged Care galvanises the sectors competitiveness with other nursing professions, it does little to remedy Australia’s nursing shortage on a macro level. A rising tide does lift all boats, but that tide does not recede spawning more nurses.

Longer term, elevating these pay rates assists increase the profession of nursing. It is the right thing to do when building a long-term care commitment to a nation. The concern we have for this change is the competitive tension this will now provide for many of the state-based Government Health providers that will unquestionably be impacted by the increased optionality of nurses. This will be a matter to watch as a gain on one side and a loss to another is not really a gain for the care of those in need.

The creation of an additional 24,100 Home Care packages to reduce waiting lists offers broad commercial opportunities for providers to assist the community to age in place and will support further development of the workforce. Tick. 

For the Disability sector, the budget allocates funds to increase the public service headcount at the NDIA, safeguard the NDIS, and reform the Information, Linkages, and Capacity Building program.

While these investments are vital, and I am yet to meet a provider wavering in their commitment to elevate the quality of their service, there is a noticeable absence in this budget of specific initiatives directly targeting the disability support workforce itself. This challenge, partnered with much required pricing indexation relief, remains unanswered in this budget. There is a feeling that the epicentre of the challenge the Disability sector is navigating, has not been remedied by this budget. 

Despite the initial optimism of the sector heading into the budget period that there would be improvements to pricing for service delivery, the budget is largely seen as underwhelming by a sector facing legitimate going concern challenges. This is a missed opportunity to further support the dedicated individuals who empower people with disabilities.

One upside is the commitment to banning non-compete clauses, a measure generally deployed to prevent executives taking corporate knowledge between organisations. For care workers, these clauses have historically hindered mobility for higher paying opportunities – contributing to an unnecessary golden handcuff’s situation. Tick.

Perhaps the most disappointing aspect of the budget for the Care Economy workforce is the limited attention afforded to Mental Health. Despite the escalating demand for services and acknowledged workforce shortages, the budget offers little beyond continued funding for existing digital and culturally safe programs.

Mental Health organisations have voiced their strong disappointment, highlighting the lack of meaningful investment in the specialist workforce. For Australians seeking support for severe mental health conditions, their GPs and the broader mental health sector will absorb the increasing demand.

Overall, while the 2025 budget provides welcome relief and investment across several Care Economy staples, it falls short in delivering comprehensive support.

With an election now announced for May 3rd, all eyes will be on the forthcoming campaign and the commitments by both the Government and Opposition. Targeted initiatives are still needed to bolster the Disability Support and Mental Health workforces to ensure all Australians receive the quality care they deserve. If history has taught us anything, the next five weeks for all budget commitments will be telling. Here’s to hoping they find a few more pages in that chequebook!

Alex McDonald is the founder and Managing Director of the Orchard Talent Group - Australia's largest social purpose search and selection firm.

Through unprecedented change, shifting global dynamics and growing demand, Orchard stands side-by-side with clients to enhance operational outcomes and elevate public comfort in our country’s social purpose organisations. Delivering steadfast and immersive support, with optimism and imagination, we’re not only transforming organisations; we’re changing lives.