The new Aged Care Act 2024 and the Aged Care Rules 2025

Understanding the New Provider Governance Policy in Aged Care

The aged care sector is preparing for significant changes with the introduction of the new Aged Care Act 2024. Coming into effect with the commencement of this Act on 1 July 2025, the Provider Governance Policy outlines new expectations and obligations for registered providers. This policy is being released in draft form to help providers prepare for the new legislative landscape, which replaces existing aged care legislation. The Aged Care Rules 2025 will support the Act and provide further details on its operation.

The Provider Governance Policy has been developed by the Aged Care Quality and Safety Commission (the Commission). Its purpose is multifaceted: to explain what good provider governance entails, highlight why it is essential for providing safe and high-quality care, detail how providers must act compatibly with the rights of older people, describe how providers can improve the safety, health, wellbeing, and quality of life of care recipients, and outline how the Commission identifies, checks, and responds to governance risks. Recommendations 88 and 90 of the Royal Commission into Aged Care Quality and Safety underscored the importance of good governance in aged care services.

Governance, in essence, is the framework of rules, systems, and processes that dictate how an organisation is run. It shapes decision-making, sets priorities, and influences organisational culture and leadership. Good governance is fundamental to ensuring individuals accessing funded aged care services receive safe, high-quality care.

What the Policy Means for an Aged Care Service Provider as an Organisation

For registered aged care service providers, the new Provider Governance Policy introduces clear expectations and statutory legal requirements. Provider governance obligations, detailed in Part 3 of the policy, are the legal mandates registered providers must adhere to under aged care laws. These obligations ensure providers establish systems and processes to identify if older people are being harmed or are at risk, and understand the causes.

The organisation's governing body, which could be a board of directors, committee, or the person responsible for executive decisions, is central to this policy. Every provider's governing body is responsible for identifying and managing risk and monitoring the provider's compliance with all legal requirements and their own policies. The Commission expects governing bodies to be proactive in using their governance framework to address identified risks and issues and to monitor and respond to risks in line with their own risk management framework.

Key provider governance obligations under the legislative framework, as outlined in section 33 and the Aged Care Act 2024, include specific requirements related to:

Governing body membership: As a condition of registration, governing bodies must generally have a majority of independent non-executive members and at least one member with clinical care experience. Exceptions apply to government entities, local government authorities, providers with fewer than 5 governing body members delivering services to fewer than 40 individuals, and those specifically exempted. Providers unable to meet these requirements may request a 'determination' from the Commissioner, who considers factors like the number of services/people, geographic area, and governance arrangements.

Quality care advisory body: Providers of a prescribed kind must establish and maintain a quality care advisory body. This body must meet specific membership requirements, including a responsible person with aged care experience, a person directly involved in service delivery for relevant categories, and a person representing the interests of older people. This body must report to the governing body at least every six months and can provide feedback at any time. The governing body must consider these reports and feedback and inform the advisory body in writing how they were considered.

Consumer advisory bodies: Providers of a prescribed kind (currently residential care, nursing, and transition care) must offer to establish one or more consumer advisory bodies at least annually to provide feedback on service quality. If established, the governing body must consider their feedback and inform the body in writing how it was considered. Protections are in place for individuals participating in consumer advisory bodies against civil, criminal, or administrative liability, and providers cannot discriminate or victimise someone for their membership.

Provider constitution: Under specific circumstances involving body corporate providers and holding companies, the provider's constitution must not authorise a director to act solely in the best interests of the holding company, as this may affect registration.

Record Keeping: Providers must keep and retain records for 7 years to demonstrate compliance with requirements for independent non-executive members and members with clinical care experience. Records related to quality care advisory bodies (names, membership details, meeting minutes, reports, feedback, governing body advice) must also be kept for 7 years. For consumer advisory bodies, records of written offers and, if established, meeting minutes, feedback, and governing body advice must be kept for 7 years.

Effective governance also links directly to compliance with the Aged Care Quality Standards, specifically Quality Standard 2, for providers in certain categories. This standard focuses on the governing body's role in setting priorities and fostering a culture of safety and quality. Providers must demonstrate understanding of diverse needs, strategic business planning, ensuring quality care delivery, using continuous improvement and risk management processes, regular reporting on their quality system and performance, ensuring workers receive competency-based training, supporting a psychologically safe workforce, and planning for emergencies.

Furthermore, providers must comply with the Financial and Prudential Standards, which include the Investment Standard, Liquidity Standard, and Financial and Prudential Management Standard. These standards require effective management of investments and finances, sufficient liquidity to meet obligations, and robust practices for managing financial and liquidity risks. The Commission monitors providers' financial viability and compliance through reporting and reviews.

The Commission collects provider governance information through various reports, including the Provider Operations Collection Form, Aged Care Financial Report, and Quarterly Financial Report, as well as notifications of changes in circumstances. The Commission's approach to regulation is responsive, risk-based, and proportionate to the risk to older people. They use preventative regulation (e.g., education, monitoring) and responsive regulation (e.g., managing non-compliance, enforcement action). Tools include targeted enquiries, reviews, inspections, investigations, and sector campaigns. Failure to comply with governance requirements or other obligations can lead to compliance and enforcement actions, such as infringement notices, civil or criminal penalties, conditions on registration, variation, suspension, revocation, or banning orders.

What the Policy Means for Frontline Workers

While the policy primarily addresses the governance responsibilities of the provider organisation and its governing body, it has significant implications for frontline aged care workers through its focus on culture, leadership, and workforce.

Good governance underpins a strong organisational culture, which dictates how people behave, what is prioritised, and how processes are managed and improved by the workforce. The policy states that a culture of safety and quality is older person centred, driven by information, and organised for quality and safety. Leadership from the governing body is crucial in fostering this culture; a disconnect between vision and funded resources can lead to workforce disengagement and potentially poor care quality.

Effective governance supports workforce planning practices. This includes ensuring the provider hires people with the necessary skills, qualifications, and experience, identifies resourcing needs, and provides enough training, support and supervision. This training, including regular competency-based training as required by Quality Standard 2, is essential to ensure workers have the skills, knowledge, and capability to provide person-centred care.

Importantly, good governance seeks to ensure that aged care workers' actions are consistent with the Statement of Rights This means the organisational framework and culture should support workers in upholding the independence, autonomy, empowerment, freedom of choice, privacy, and dignity of older people.

The policy also notes the importance of a quality culture where people feel safe and included. This implies an environment where frontline workers are encouraged and supported to participate in continuous improvement efforts and provide feedback. Workers may also be members of quality care advisory bodies or consumer advisory bodies in certain roles. Protections are explicitly provided for workers who participate in consumer advisory bodies, ensuring they are not subject to liability or discrimination for their involvement.

The Commission uses education as a preventative measure to improve provider governance and performance, and this includes educating and talking to people who work in aged care. The goal is for those working in aged care to understand best practice, enabling older people to feel safe to speak out if they receive below-standard care.

In summary, while governance is a leadership function, its effectiveness directly impacts the support, culture, training, and resources available to frontline workers, ultimately influencing an organisation's ability to provide safe, high-quality, person-centred care and uphold the rights of older people.

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