Aged care organisations have applauded the Productivity Commission's recommended reforms to the sector but nurses say the draft review ignores key workforce issues.
The Caring for Older Australians draft report, released on Friday, paints a picture of a failing aged-care system with long waiting lists and inconsistent quality and pricing.
The commission recommended setting up an agency to maintain a national aged-care database and standardising care arrangements.
Council on the Ageing (COTA) called the review a "historic moment", saying the changes could make a lasting effect over the next 20 to 30 years.
"(The industry) has become rigid and often unresponsive to older Australians' real needs," COTA chief executive Ian Yates said in a statement on Friday.
"It is suffocated in red tape and outdated service menus and it is badly underfunded and inequitable."
Pat Sparrow, acting chief executive of Aged and Community Services Australia (ACSA), says caring for older Australians is a priority, especially for those living in rural, remote and disadvantaged communities.
"The commission has proposed payment options for residential care and accommodation which addresses fairness and equity for consumers and a more balanced funding structure for aged care providers," Ms Sparrow said in a statement.
Aged Care Association Australia (ACAA) chief executive Rod Young also applauded the recommendations but warned about the rate of change.
"It will be essential that the transition from the old scheme to the new is handled sensitively and in a manner that the industry can absorb," Mr Young said in a statement.
Alzheimer's Australia chief executive Glenn Rees said the new system would give greater access to those in need.
"Currently, older people and their family carers are confronted by a system that is heavily rationed and involves significant delays in accessing a community care package or residential care," Mr Rees said in a statement.
But the Australian Nursing Federation (ANF) says the draft report doesn't address staffing issues that have a direct impact on patient care.
"While there is mention of competitive wages, the report pays only scant regard to this issue," ANF federal secretary Lee Thomas said in a statement.
"Ignoring this issue means the problem of attracting nurses and assistants in nursing to aged care will continue long into the future."
The Benevolent Society's general manager of ageing, Barbara Squires, said older people wanted to live as independently as possible while remaining connected to their community.
"Changes are needed to increase housing options for an increasing number of older Australians whether they own their homes or rent," she said.
The Benevolent Society has backed the report's recommendations for a redesign of government policies, programs and regulations.
"The society also welcomes the commission's support for the removal of stamp duty, relaxation of the pension's assets test and other disincentives for older Australian home-owners to move to more suitable housing as they age," Ms Squires said.
Charmaine Crowe, policy co-ordinator at the Combined Pensioners and Superannuants Association (CPSA), said she opposed an expansion of the bonds system to address funding shortfalls.
"They impose a huge and immediate burden on the person needing care and their family," she said in a statement.
"Older people don't choose to move into a nursing home, as they would move house.
"Moving into a nursing home is therefore fundamentally different in terms of the older person meeting accommodation costs, especially when average bonds are currently $233,000."
But if the government insisted on going down this track, Ms Crowe said the money should only come out of the person's estate following their death.
She called on the government to carry out an independent assessment of the cost of care and welcomed the formation of an Aged Care Regulation Commission, although she said it was disappointing it could take up to five years.
"An independent body to assess the cost of care, handle complaints and carry out accreditation is long overdue," Ms Crowe said.
The CPSA also backed criticism from nurses that the report failed to recommend staff to resident ratios.
"Poor care typically occurs as a result of short-staffing and inappropriate skill mixes," Ms Crowe said.
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