From childcare to aged care, here’s how to deliver safer, more affordable care for all Australians

Too often in discussions about productivity, the care economy only gets mentioned as the problem child putting a drag on growth. This week, the Productivity Commission is seeking to change that narrative with the release of its fifth and final report ahead of the government’s economic reform roundtable next week.

The report, of which I am a co-author, is focused on delivering quality care more efficiently. The care economy is broad and includes health care, childcare, aged care, disability and veterans’ services.

Among our report’s recommendations are a new national screening clearance system for workers across childcare, aged care, the National Disability Insurance Scheme (NDIS) and veterans’ care. That would make it easier to stop people found to be unsafe from simply moving into another sector.

We also propose setting up a new independent advisory board to assess and provide advice on prevention and early intervention across the different levels of government.

By increasing productivity in the care economy, we can reduce current and future costs and, crucially, improve the quality of care for Australians.

Care is central to our lives – and our economy

More than two million Australians work in paid care-related roles. That’s 12% of the workforce: around one in eight workers.

The care sector contributes 8% of Australia’s gross domestic product and is growing fast.

Over the next 40 years, both the number of people working in the care sector and its value to our economy are expected to rise significantly.

Demand for care is growing, but so are the costs

Traditional measures of productivity don’t capture the full story in the care economy.

While care sector productivity is low when you just consider the amount of services provided, when you account for the quality of those services the picture is different. Adjusted for quality, previous commission research has found productivity in a subset of health care grew by 3% annually between 2011-12 and 2017-18 – far above the market-sector average.

While the quality of our services has improved, demand is rising – along with costs.

Increased demand for care services is being driven by an ageing population, rising chronic health conditions, changing family structures, and increased expectations for quality care and independence.

To provide high-quality care more efficiently, we should start by removing silos and enabling a more cohesive, efficient system.

A person might need aged care, disability support, and health services all at once. Our system needs to reflect that reality.

Improving safety and quality with national oversight

Different sectors of the care economy operate under separate regulatory regimes. Providers must navigate multiple audits, standards, and registration systems. Workers often need separate clearances for each sector.

This duplication wastes time and money. It limits workforce mobility. It makes it harder for users to access and compare services.

These fragmented systems can also mean unsafe workers slip through the cracks unnoticed – putting care users at risk.

We are recommending a national screening clearance system and national registration for workers in the aged care, NDIS, veterans’ care and early childhood education and childcare sectors – making it harder for a worker found to be unsafe in one sector to move to another without detection.

This would replace existing clearances such as working with children/vulnerable people checks.

Real-time continuous checking should be undertaken between renewal dates to ensure prompt action if a worker engages in inappropriate behaviour.

We also need a unified approach to worker registration across aged care, the NDIS and veterans’ care.

The commission found more than 42% of aged care providers are also registered NDIS providers, and 82% of veterans’ care providers operate in aged care and/or the NDIS. These are often large providers, delivering a significant share of services. Yet they must comply with separate systems, diverting resources away from frontline care.

All of this is not just about efficiency – it’s also about safety, trust, and quality.

Delivering better care more efficiently

Another key reform is collaborative commissioning, where organisations work together to plan, procure, and evaluate services based on local needs.

In this report, we focus on removing the barriers and supporting collaboration between the federally funded local primary health-care networks and the state-controlled local hospital districts.

Greater collaboration in health care can reduce potentially preventable hospitalisations.

Even modest gains could be transformative. Our report estimates a 10% reduction in preventable hospitalisations could save A$600 million annually. But the real value lies in better care: fewer gaps, smoother transitions, and services tailored to communities.

Prevention is the ultimate productivity lever

Perhaps the most powerful lever for productivity is prevention and early intervention. Stopping problems before they start, or before they escalate, can improve lives and reduce long-term costs across government.

The evidence for this is all around us: from housing-first models that reduce homelessness and hospitalisations, to early childhood programs that boost lifelong outcomes.

However, investment in one area is often not supported because benefits occur over a long timeframe, or accrue to different areas and levels of government.

To address this issue, we’re proposing a national prevention investment framework. A new national independent advisory board would provide expert guidance on the cost effectiveness of new and existing prevention programs.

We need better outcomes

Care is one of the most complex and consequential parts of our economy.

If we don’t act in the face of rising demand, we risk a future where care becomes unaffordable, inaccessible, and inequitable.

But if we embrace reform through aligning regulation, improving collaboration, and investing in prevention, we can build a care economy that delivers better outcomes at sustainable cost. This is what productivity growth is all about.