Discusses the factors that influence long-term aged care demand and provides projections of future expenditure. Long-term aged care in this context comprises mainly residential care (nursing homes and hostels) and community care services for the infirm aged.

On 13 July 1998 the Treasurer referred the current and alternative funding methodologies for nursing home subsidy rates to the Productivity Commission for inquiry and report within six months. The Aged Care Structural Reform Package, announced in the August 1996 Budget, included a process of...