What directors need to know about aged care regulation shifts

Tougher accountability rules and a new regulatory model are coming to tighten governance oversight and hold lagging boards accountable.

Update: On 4 June 2025, the Government announced that the new Aged Care Act will start from 1 November 2025 – a 4 month delay from the original date of 1 July 2025 – to allow more time for aged care providers to prepare their clients, support their workers and get their systems ready for the changes.

Australia’s aged care sector faces imminent and profound change as the new Aged Care Act approaches, amid urgent community demands for major reform. Critical funding shortfalls, chronic workforce issues and significant gaps in home-care availability have dominated headlines in the aged care environment.

Stakeholders have lamented delays in acting on findings from the Royal Commission into Aged Care Quality and Safety some four years ago. According to the ABS, more than a third of older Australians (39.8 per cent) say they need assistance to remain at home. But obtaining this support requires an aged-care assessment, a process that urgently needs improvement, with waiting times now stretching up to five months.

“These failings show that the way in which governance is regulated is not fit for purpose,” says former Australian Children’s Commissioner Gillian Calvert AO, now a director of Embrace People and Place. “That’s not so surprising when you consider that governance was developed for businesses with the purpose of maximising returns to shareholders. The purpose of human services should be to maximise client wellbeing, so we need to reorient our thinking.”

New Aged Care Act

The Royal Commission’s principal recommendation was for the government to replace the current legislation with laws that prioritise dignity, respect and individual rights. Set to take effect on 1 July, the Aged Care Act 2024 introduces stronger accountability measures, a single entry point for aged care services and a new regulatory model to improve oversight.

Nadine White GAICD is a director at Care Connect, Goodwin Aged Care and Scope Australia, which supports people with complex intellectual, physical and multiple disabilities. “Around 60 recommendations have been incorporated,” she says. “They fall into a handful of areas and consolidate around new and expanded powers for the Aged Care Quality and Safety Commission.”

She breaks these down into four key areas: 

• A framework that embeds the rights of older people throughout the aged care system.
• A “responsible person duty”, which imposes direct accountability on directors and senior managers for the rights and wellbeing of older Australians in their care, as well as a responsible provider duty around the standard of care provided.
• Support At Home, which replaces Home Care Packages and Short-Term Restorative Care programs with a more personalised, easier-to-navigate model.
• A new funding model for residential care with  some adjustments to means-tested fees.

Claire Robbs GAICD, CEO of not-for-profit Life Without Barriers, has extensive experience in the fields of disability, mental health, aged care and out-of-home care services. She believes directors need to be aware of their responsibility to understand the new Act as a whole.

“There aren’t areas you can delegate to management,” she says. “Directors must be across the practice and governance of direct care, clinical governance and the care environment in the same way that they’re across the finances and other more commercial areas.”

The Albanese government initially proposed criminal penalties of hefty fines and up to five years’ imprisonment for providers who breach the Act. However, following opposition from industry groups, unions and the Coalition, criminal penalties were removed from the final legislation. Instead, the Act imposes civil penalties for breaches of statutory duties, such as failing to ensure safe and high-quality care.

“There’s a strong argument that harsh criminal penalties could drive talented and experienced directors away from the sector,” says White.

Four practical steps to achieve people-centred care

1. Bring lived experience to the table

Along with the core skills required in every boardroom, human care providers need at least one director who understands the care environment, says Robbs. Ideally, there will also be a director with lived experience, or a family member who cares for them.

“When Life Without Barriers appointed people with lived experience to the board, it changed the conversation around strategy, regulation, safeguarding and reporting in a way that enabled us to improve the quality of care,” says Robbs. “In my experience, theirs is the most valuable contribution, because it grounds everyone in what really matters for the people we’re trying to provide with really good care. However, it’s vital boards consider their input in terms of skill and expertise rather than personal character. The whole board must be genuinely committed to inclusivity, treat people with lived experience with respect and create space for them to bring their experience into the boardroom.”

Calvert points out that directors without lived experience and with high levels of privilege will need to adjust their behaviour — and possibly the way they carry out their board activities. “For example, if you have a director who is vision-impaired, you’ll have to establish the best way to present board papers so they can easily access all the information,” she says.

Physical changes might include creating wheelchair-friendly spaces, developing flexible meeting formats to support different energy levels and introducing assistive technology such as screen readers and voice-to-text software.

2. Ensure you receive the right information

Calvert would also like directors to check the information that shapes their decision-making. “Financial data is easier to collect than data about client wellbeing, which could explain why I’ve seen it get more attention on some boards,” she says.

Boards must be able to trust the quality and scope of management reporting. “Directors must feel confident they’re receiving comprehensive and accurate information about the provision of care, the processes and frameworks,” says White. “They should ask questions, such as whether there are processes in place to inform them about any failings or risks, and whether there’s an escalation process to ensure they’re kept up to date on regulatory obligations that might be high-risk in their care environment. They should also think about eyes-on oversight the board can put in place, such as physical inspections of facilities.”

The board also needs honest feedback. “There should be mechanisms in place to ensure everyone in the organisation feels able to provide both positive and negative feedback,” says Calvert. “If anyone is afraid to report an issue to their superiors, including executives to the board, you’re missing out on a crucial source of information.”

The goal should be to create a just culture — an environment where clients, carers, family members and staff all feel safe enough to speak freely and are confident of having their voices heard.

“We’re all human and things can go wrong even when we’ve got the best possible frameworks and systems in place,” says White. “But having a just culture means anyone who notices any potential improvement will speak out and, quite possibly, help to prevent a relatively small issue from developing into a major problem.”

The confidence to speak out also supports continuous learning and improvement. “If you have a culture of blame, people run away from failure,” says Calvert. “A culture of continuous improvement regards failure as an opportunity for learning.”

All directors need a growth mindset, and White believes the AICD is supporting directors in this space well. “They have produced many excellent guides, including good updates around the aged care reforms.”

3. Know your clients and your workforce

In human care, directors need to do more than sit in the boardroom. “It’s only by visiting sites and facilities that you gain a real understanding of the services your organisation is providing, your clients and your workforce,” says White. “You can also see how risk management controls operate on a day-to-day basis, which is extremely important and probably hasn’t been done well in the past. It is critical these requirements are appropriately recorded and documented.”

Visits must be arranged with care. “On a practical level, it’s more difficult to organise visits to people’s homes than a residential facility, although it can be managed,” says Robbs.

Directors must know what to look for. “A director who is an experienced service provider knows how to assess the situation by observing, listening and talking with clients and providers,” says Calvert. “This can help those without this experience to make an effective evaluation.” She adds directors must also understand the potential impact of their visit, particularly in a residential setting, to avoid confusion or distress.

4. Establish a care committee

One of the key findings of the AICD’s 2024–25 Not-for-Profit Governance and Performance Study was that only 43 per cent of health and residential aged care providers have a care committee or its equivalent — although some organisations may call their committee something else. “A care committee has a particular focus on quality, safety and accountability, including resource allocation,” says Calvert. “I believe that, by integrating client voices, enforcing regulation and promoting ethical leadership, they really do help to build an effective care system. But we have to be careful not to silo the care committee so there’s a sense that care is something the rest of the board doesn’t have to worry about.”

Life Without Barriers uses the term “practice governance” committee. “Along with directors, we have independent experts in our areas of service — disability, aged care and child, youth and family care — to augment the board’s expertise, specifically around our care and practice,” says Robbs. “I can state categorically as chief executive that we are stronger in our practice and the quality of our care as a result of having this committee.”

Wake-up call

White believes the Royal Commission acted as an important reality check for the entire industry. “I’m not suggesting every organisation was inappropriately treating clients, but we’re all adult enough to understand that standard systems and processes might not have been quite so good in some areas prior to the Royal Commission,” she says. “It served as a wake-up call, reminding us to make sure we stay focused on the safety and wellbeing of the clients within our care.”

By exposing failures in aged care to the public, the Commission also affected community expectations. “The Royal Commission shone a light on practices no-one would want to have in their community or organisation,” says Robbs. “The public now expects, if you’re a director of a care-based organisation, that you need to have suitable responsibility and accountability for the quality of the care you provide. Perhaps a decade or so ago, there was a sense this was more the job of management than the board. Now, the public expects stronger governance and enforceable standards for aged care providers from boards, with directors who understand the care environment and directors with a lived experience representative of the community they serve.”

This article first appeared under the headline 'Duty of care' in the June 2025 issue of Company Director magazine.