Key Takeaways
- Implementation Date: The new aged care act is set to commence on 1 November 2025, replacing the 1997 legislation.
- Personal Liability: Board members and executives (Responsible Persons) will face statutory duties to exercise due diligence.
- Civil Penalties: Breaches of these duties can result in significant fines and banning orders for individuals.
- Focus on Safety: The legislation mandates a shift from provider-centric processes to person-centric outcomes, focusing on the health and safety of older Australians.
- Governance Requirements: New requirements include the establishment of Quality Care Advisory Bodies to keep boards informed.
The regulatory landscape for Australian aged care is shifting. Following the recommendations of the Royal Commission into Aged Care Quality and Safety, the federal government is introducing the new aged care act. This legislation represents a fundamental change in how funded aged care services are delivered, monitored, and governed.
For aged care board members and executives, this is not merely an update to existing rules. It is a complete overhaul that introduces specific statutory duties. You must now take an active, verifiable role in the governance of your organisation. The days of passive oversight are over. You are now personally accountable for exercising due diligence to verify that your organisation meets its obligations.
This guide details the specific duties imposed on registered aged care providers and their leadership teams, helping you navigate this transition with confidence.
The Shift Towards A Rights-Based Framework
The Aged Care Act 1997 primarily focused on the funding and regulation of providers. The new aged care act flips this dynamic. It places the rights and needs of older people at the center of the system.
This "rights-based" approach means that all decisions, governance structures, and service delivery models must prioritize the safety, health, and wellbeing of the individual receiving care.
Why This Matters For Governance
As a leader in this sector, you must recognize that compliance is no longer just about ticking boxes. It is about demonstrating that your organisation actively upholds the rights of residents and clients. The legislation explicitly aims to:
- Create a simple, single entry point for older people to access the aged care system.
- Include a Statement of Rights that providers must uphold.
- Establish a risk-based regulatory model designed to increase the quality of care.
- Provide stronger protections for whistleblowers to encourage transparent reporting of faults.
Identifying Registered Providers And Responsible Persons
To understand your legal exposure, you must first clarify who the law applies to. The legislation introduces specific terminology that defines these roles.
Registered Aged Care Providers
Under the new framework, "Approved Providers" will become "Registered Providers." These are the organisations assessed and approved by the Aged Care Quality and Safety Commission to deliver government-funded services. If your organisation receives funding to care for older Australians, it falls into this category.
Who Are The Responsible Persons?
The definition of a "Responsible Person" is broad. It captures individuals who have significant influence over the planning, directing, or controlling of the provider's activities. This typically includes:
- Aged care board members and directors.
- Trustees of a charitable trust.
- Executive leaders, such as CEOs and CFOs.
- Senior managers with responsibility for clinical care or service delivery.
If you sit on a board or hold a senior executive position, you are likely a Responsible Person. This designation attracts the new statutory duties outlined below.
The Primary Duty Of Care For Registered Providers
The legislation imposes a primary duty on the entity itself. The registered provider must confirm, so far as is reasonably practicable, that their conduct does not cause adverse effects to the health and safety of individuals.
This duty is non-transferable. You cannot outsource this liability to subcontractors or third parties. The provider must maintain systems that:
- Identify risks to the health and safety of care recipients.
- Eliminate those risks where possible.
- Mitigate and manage risks that cannot be fully eliminated.
The phrase "so far as is reasonably practicable" is key. It implies that the law expects you to weigh the likelihood of a risk occurring against the severity of the harm and the availability of ways to remove that risk.
The Statutory Duties Of Responsible Persons
The most significant change for individuals is the introduction of the responsible persons duty. Section 180 of the proposed legislation outlines that Responsible Persons must exercise due diligence to verify that the registered provider complies with its statutory duties.
This creates a direct link between the organisation's failures and the board's conduct. If the provider fails to keep residents safe, regulators will look at the board to see if they exercised appropriate diligence to prevent that failure.
What Constitutes Due Diligence?
Due diligence is not a passive state. It requires positive, proactive action. You must demonstrate that you have taken reasonable steps to:
- Acquire Knowledge: You must maintain an up-to-date understanding of the new aged care act, the Aged Care Quality Standards, and general aged care administration.
- Understand Operations: You generally cannot govern what you do not understand. You must grasp the nature of the funded aged care services your organisation delivers and the specific risks associated with them.
- Allocate Resources: You must verify that the provider has appropriate resources (financial and human) to eliminate or minimize risks to health and safety.
- Monitor Performance: You must confirm that the provider has processes for receiving and considering information regarding incidents, hazards, and risks. Crucially, you must verify that the provider responds to this information in a timely manner.
- Verify Compliance: You must verify that the provider implements processes for complying with any duty or requirement under the Act.
Understanding Due Diligence In Practice
Theory is different from practice. For aged care board members, exercising due diligence means changing how board meetings function and how data is reviewed.
Moving Beyond Financial Oversight
Historically, many non-profit boards focused heavily on financial solvency. While solvency remains critical, the responsible persons duty demands equal focus on clinical governance and care quality.
- Scenario: A report shows a spike in falls at a residential facility.
- Passive Response: Noting the report in the minutes.
- Due Diligence Response: Asking management for a root cause analysis, authorizing budget for new flooring or sensor equipment, and requesting a follow-up report next month to verify the numbers have dropped.
The Information Gap
A common defense for board members is, "We didn't know." Under the new legislation, ignorance is rarely a valid defense if it is determined that you should have known. You must have systems in place that pull critical safety data up to the board level.
This involves looking at your digital infrastructure. Managing compliance across multiple sites requires accurate, real-time data. To achieve this, many organisations find they need to integrate disparate software solutions. Connecting Systems for Australian Aged Care Standards allows for better visibility of compliance data, reducing the risk of critical information being lost in silos.
Penalties For Non-Compliance And Serious Failures
The consequences for failing to uphold these duties are severe. The legislation distinguishes between the provider's liability and the individual's liability.
Civil Penalties For Individuals
If a Responsible Person fails to exercise due diligence, they may face civil penalties. The severity of the penalty depends on whether there was a "serious failure."
- Standard Breach: A failure to exercise due diligence without a serious outcome.
- Serious Failure: A breach where the individual's conduct exposed a care recipient to a risk of death, serious injury, or illness.
- Maximum Penalties: Fines can reach substantial amounts (up to 500 penalty units for serious failures involving harm).
Compensation And Bans
Beyond fines, the regulator generally has the power to ban individuals from holding senior roles in the aged care sector. Furthermore, the legislation creates pathways for compensation claims, allowing individuals to seek damages for breaches of their rights.
It is important to note that while the initial drafts discussed criminal penalties for individuals, the focus in the Aged Care Act 2024 has settled primarily on civil penalties for directors, reserving criminal penalties mostly for the entities themselves in cases of systemic failure resulting in death or serious harm.
The Role Of Advisory Bodies In Governance
To assist aged care board members in meeting their obligations, the legislation mandates the establishment of specific advisory bodies. These bodies act as a conduit for information between the operational floor and the boardroom.
The Quality Care Advisory Body (QCAB)
Registered aged care providers (specifically those delivering residential care and certain home care packages) must establish a Quality Care Advisory Body. This body must:
- Include a clinical lead (such as a senior nurse or GP).
- Monitor the quality of care provided.
- Report directly to the governing body on systemic issues and improvements.
- Be chaired by a member of the governing body (non-executive director).
The Consumer Advisory Body (CAB)
Providers must also offer care recipients and their representatives the opportunity to form a Consumer Advisory Body. This group provides feedback on the quality of care and services. The board must consider this feedback when making decisions.
Action Item: If you have not yet established these bodies, or if they are currently inactive, you must prioritize their formation immediately. They are your primary defense against the claim that you were out of touch with the reality of care delivery.
Practical Steps To Prepare Your Board
Preparation for the 1 November 2025 commencement date should start now. Below are practical steps you can take to align your governance structure with the new aged care act.
1. Conduct A Governance Skills Matrix Assessment
Review the skills currently present on your board. Do you have members with clinical experience? Do you have experts in risk management? If your board is comprised entirely of accountants and lawyers, you may struggle to meet the requirement of understanding clinical risks. You may need to recruit new directors with clinical care backgrounds.
2. Revise Board Charters And Reporting
Update your board charter to explicitly reference the statutory duties of Responsible Persons. Restructure your board agenda so that "Quality and Safety" stands as a permanent, priority item—preferably discussed before financials.
3. Implement Robust Reporting Frameworks
You cannot rely on sanitized reports from management. You need raw data on:
- Incident rates (falls, wounds, medication errors).
- Complaints and feedback trends.
- Staffing levels and turnover.
- Use of restrictive practices.
4. Education And Training
Schedule regular training sessions for all aged care board members. These sessions should cover the specific requirements of the new Act, the new strengthened Quality Standards, and contemporary issues in aged care. Document this training as evidence of your commitment to acquiring knowledge.
5. Review Whistleblower Protections
Confirm that your organisation has a functioning, anonymous whistleblower channel. Staff often know about risks long before management reports them. Creating a culture where staff feel safe to report issues is a critical component of due diligence.
6. Gap Analysis
Perform a gap analysis against the new legislation. Identify where your current policies fall short of the new "Statement of Rights" and the new "Support at Home" program guidelines if applicable.
Frequently Asked Questions
When does the new Act take effect?
The Aged Care Act 2024 is scheduled to commence on 1 November 2025. This allows providers a transition period to adjust their systems and governance structures.
Can I be personally fined for a clinical error made by staff?
Generally, you are not liable for individual clinical errors unless it can be proven that you failed to exercise due diligence in ensuring the provider had systems to prevent such errors. If you staffed the facility inadequately or ignored repeated warnings about a lack of training, you could be held liable for the systemic failure that led to the error.
Does this apply to home care providers?
Yes. The legislation applies to all registered aged care providers, including those delivering the new "Support at Home" program which replaces the Home Care Packages and CHSP.
What if I am a volunteer board member?
The statutory duties apply to responsible persons regardless of whether they are paid or volunteers. However, the penalties and expectations of "reasonable steps" may be interpreted in the context of the resources available to the provider.
Preparing Your Organisation For A Future Of Quality Care
The introduction of statutory duties for aged care board members signals a new era of accountability. While the penalties and requirements may seem daunting, they serve a vital purpose: to restore trust in the sector and guarantee the dignity of older Australians.
By accepting these duties, you commit to a standard of leadership that values safety as highly as solvency. Success in this new environment requires more than just reading board papers. It demands curiosity, specialized knowledge, and a willingness to ask difficult questions.
Start reviewing your governance frameworks today. Verify that your advisory bodies are active, your data is accurate, and your fellow directors are educated on their obligations. By taking these proactive steps, you protect yourself from liability and, more importantly, you contribute to a system that provides the high-quality care that every Australian deserves.
