$3.7 Billion Aged Care overhaul

The overhaul will be implemented over five years:

• $1.9 billion for better access to aged-care services.
• $1.2 billion to strengthen the aged-care workforce.
• $268.4 million for dementia.
• $54.8 million to support carers.

Julia Gillard says the changes are designed to make the system fairer.

"For the first time in aged care, fairness will also get a look-in. For too long pensioners have had to subsidise those who are much better off than themselves," she said.

"Under these changes - which I emphasise will only apply to new people entering care from July 1, 2014 - ability to pay will be taken into account.

"This recognises a simple reality that those who can support themselves and contribute a bit more should, and that we must look after the needs of those who can't."

"Instead of a bond up to $2.6 million and bearing no resemblance to the actual cost of accommodation, you will be able to pay, through a lump sum or a periodic payment or a combination of both, whatever you choose," she said.

"People will also have long to make that choice, with a cooling-off period introduced so they can take up their aged care place and then think about the best way to pay."

The overhaul is being welcomed by those who work in the aged care system.

Aged Care Association spokesman Rod Young says it is desperately needed because of the enormous growth expected in the industry.

"Our difficulty is that we have 300,000 workers at the moment in the industry. By about 2030, we have to increase that number to about 600,000, and by 2045 by about another 200,000," he said.

Martin Laverty from Catholic Care Australia says the changes will make the sector more sustainable.

He says the package delivers on what aged care providers and consumers were looking for, but there is still a lot of work to be done.

Other measures:

• $192 million over five years to support people from diverse background accessing age care.
• $39.8 million for consumer support and research.
• $256.4 million through Aged Care Reform package.
• $26.4 million to establish new Aged Care Financing Authority.
• $16.6 million for greater transparency, including establishment of My Aged Care website.