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In August 2025, the Productivity Commission released its interim report Delivering Quality Care More Efficiently, followed by the final inquiry report tabled in Parliament on 29 January 2026 (Productivity Commission, 2025; 2026). Both landed in a policy environment where demand for health, aged care, disability, veterans’ services, and early childhood education is rising steeply, while workforce shortages, cost pressures, and regulatory complexity stretch the system thin.
As PC Commissioner Angela Jackson put it, discussions about productivity too often treat the care economy as the “problem child putting a drag on growth” (Jackson, 2025) rather than as a legitimate source of human, social, and economic value. The Commission’s report is a direct challenge to that framing. It positions the care economy as one of Australia’s most consequential reform fronts and sets out three interconnected recommendations that, if taken seriously, would reshape how care is designed, funded, and delivered.
Three reforms, one diagnosis
The three reform areas recommended by the Commission are deceptively simple to list (Productivity Commission, 2025):
— Quality and safety regulation. Align regulation across the care economy, including through a national approach to screening care workers and a single provider portal across aged care, the NDIS, and veterans’ care.
— Collaborative commissioning. Embed joint planning and funding between Local Health Networks and Primary Health Networks, initially focused on reducing potentially preventable hospitalisations.
— A National Prevention Investment Framework. Support government investment in prevention and early intervention across portfolios, with rigorous assessment of long-term value.
Each is significant on its own. Read together, they describe something more substantial: a deliberate shift away from siloed programs, regulators, and workforces toward a more coherent care system.
The Commission’s own data make the fragmentation visible. 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 (Productivity Commission, 2025). The people, organisations, and consumers already move across these boundaries constantly. The regulatory, funding, and workforce architecture does not.
Prevention as infrastructure, not add-on
Of the three recommendations, the National Prevention Investment Framework may be the most strategically important. Governments have long acknowledged that prevention produces better outcomes at lower long-term cost. They have rarely funded it accordingly. The Australian Prevention Partnership Centre, responding to the Commission, observed that prevention is among the most effective long-term investments available to governments, yet has “consistently struggled to attract sustained and adequate funding” (Prevention Centre, 2025).
The reasons are structural. Prevention benefits accrue slowly, are distributed across portfolios, and rarely show up cleanly in the accounts of the treasury or department that actually funds them. A national framework with actuarial-style assessment, equity weighting, and cross-jurisdictional cost-sharing could begin to change that — making prevention legible in the language that government budgets actually use.
This sits squarely in the lineage of Sir Michael Marmot’s work for the WHO Commission on Social Determinants of Health, whose 2008 report Closing the Gap in a Generation has shaped health equity thinking internationally. Marmot’s argument is that the most consequential determinants of health — housing, education, income, working conditions, early childhood environments — sit largely outside the health system (CSDH, 2008). An efficient care economy cannot be built purely inside health; it must be built across portfolios.
In the Australian context, Professor Fran Baum AO (University of Adelaide) has made the same case with particular force for decades. Baum’s work argues that population health outcomes are shaped less by the health care system and more by the conditions in which people live and work, and that meaningful progress on equity requires what she terms the “nutcracker” effect: top-down political commitment combined with bottom-up action from civil society (Baum, 2008; 2018). Australia’s National Preventive Health Strategy 2021–2030 articulates this principle at the level of strategy. A National Prevention Investment Framework would give it operational teeth.
The workforce that has to carry it
No reform of the care economy is credible without reform of the workforce that carries it. Nurses are the single largest profession in Australian healthcare, making up more than 40% of the total health workforce (Department of Health and Aged Care, 2024). Federal modelling has projected a significant shortfall in the nursing workforce through the late 2020s and beyond.
Australia’s first National Nursing Workforce Strategy — developed by the Commonwealth in partnership with the Victorian Department of Health and Safer Care Victoria, and led on the Commonwealth side by Chief Nursing and Midwifery Officer Professor Alison McMillan — represents the most coordinated attempt to address the workforce challenge in a generation (DoHAC, 2024). Its logic dovetails directly with the Commission’s call for integration: a workforce planned, regulated, and credentialed nationally, able to operate across aged care, acute care, disability, primary care, and community health rather than being siloed by sector or funding stream.
The tension worth watching is whether the Strategy meaningfully dissolves the artificial divisions between sectors — or whether it simply consolidates sector-by-sector thinking under a single banner. The difference is more than semantic. Nurses who can move fluidly between aged care, disability, and acute settings without re-credentialing, re-clearing, and re-inducting carry integration with them by default. Nurses who cannot, don’t.
Why silos are the real productivity drag
Across all three of the Commission’s recommendations, the consistent diagnosis is fragmentation. Professor Stephen Duckett — former Secretary of the Commonwealth Department of Health, former health program director at the Grattan Institute, and one of the most enduring chroniclers of the Australian system — has argued for decades that Australian health care is defined by structural fragmentation: split financing between Commonwealth and states, primary care divided from hospital care, health disconnected from social services, and prevention severed from treatment (Duckett & Willcox, 2023).
The fragmentation is not accidental. It has been engineered by federation, funding models, and the cumulative history of how each program was built. Addressing it therefore requires more than exhortation; it requires changes to the rules of the game.
Recent research published in The Lancet Regional Health – Western Pacific examined exactly this in the New South Wales context. The study explored how Collaborative Commissioning — essentially the reform the Productivity Commission is now recommending at a national level — can begin to resolve fragmentation through meso-level regional alliances between Local Health Districts and Primary Health Networks, organised around shared outcomes and pooled funding (Lancet Regional Health – Western Pacific, 2024). Early evidence suggests this approach can support earlier detection of frailty, reduce potentially preventable hospitalisations, and better align hospital discharge with community support. The evidence base is still developing. The direction of travel is clear.
What integration actually requires
Integration is easy to advocate for and genuinely difficult to do. In practice, integrated care depends on three ingredients that are unglamorous and hard to procure:
— Shared outcomes. Parties to a collaboration must agree not only on activities but on what success actually looks like for the person receiving care. Without this, “integration” quietly slips back into process coordination.
— Shared data. Integration depends on being able to see the same person across settings. Privacy-respecting, interoperable data infrastructure is the substrate on which everything else sits.
— Shared accountability. If Commonwealth, state, and community partners each answer to different KPIs, their behaviour will diverge even when their rhetoric aligns. Joint accountability for population outcomes — not just for one’s own activities — is the structural feature that forces behaviour change.
None of these ingredients is solved by a single organisational restructure. They are solved slowly, through the patient work of building the governance, relationships, and capability that allow different actors to behave as part of a single system.
Implications for practitioners
For consultants, commissioners, evaluators, and service designers working across the Australian care economy, the practical implications of the 2025 reform agenda are significant.
The business case logic is shifting. Proposals that previously justified themselves within a single portfolio budget will increasingly need to show cross-portfolio value. A well-designed prevention program may need to demonstrate returns to health, justice, education, and employment portfolios simultaneously. Evaluation methodology needs to catch up.
Commissioning and evaluation practice will need to hold multiple organisations accountable to a shared outcomes framework. That is technically demanding and politically delicate work — but it is precisely what the PC’s collaborative commissioning recommendation requires, and it is increasingly what funders will ask for.
Co-design matters more, not less. Integrated systems require integrated voices. When a single person is, at the same time, a patient, a client, a participant, and a carer, designing services around them requires genuinely bringing them into the room as a designer — not as a case study in a consultation report.
At Ethicol, this work sits at the intersection of evaluation methodology, commissioning advisory, and co-design practice. The reform window the Commission has opened is real — and the quality of the translation from recommendation to implementation will depend on whether the sector can resist the gravitational pull of its own silos.
The reform window
The Productivity Commission’s recommendations will not implement themselves. They will need political continuity across federal and state governments, technical capability in commissioning and evaluation, and a sector willing to think outside its own sector.
The payoff is substantial. A care economy that delivers prevention before acute intervention, that commissions collaboratively rather than transactionally, and that plans its workforce across sectors rather than within them is not merely more efficient. It is more humane. Over time, it is also the only version of the system that is financially sustainable.
What Australia cannot afford is another decade in which the recommendations are accepted in principle and lost in implementation. The question now is not whether silos are a problem — the evidence on that is settled. The question is whether the political, institutional, and professional will exists to build something better in their place.
References
Baum, F. (2008). Cracking the nut of health equity: top down and bottom up pressure for action on the social determinants of health. Promotion & Education, 15(2), 17–20.
Baum, F. (2018). People’s health and the social determinants of health. Health Promotion Journal of Australia, 29(S1), 8–9.
Commission on Social Determinants of Health [CSDH] (2008). Closing the Gap in a Generation: Health Equity through Action on the Social Determinants of Health. Final Report of the Commission on Social Determinants of Health. Geneva: World Health Organization.
Department of Health and Aged Care [DoHAC] (2021). National Preventive Health Strategy 2021–2030. Canberra: Australian Government.
Department of Health and Aged Care [DoHAC] (2024). Draft National Nursing Workforce Strategy — Public Consultation. Canberra: Australian Government. Available at: https://www.health.gov.au/our-work/national-nursing-workforce-strategy
Duckett, S., & Willcox, S. (2023). The Australian Health Care System (6th ed.). Melbourne: Oxford University Press.
Jackson, A. (2025). Commentary on the Productivity Commission interim report. The Conversation and Productivity Commission media release, 14 August 2025.
The Lancet Regional Health – Western Pacific (2024). Overcoming silos in health care systems through meso-level organisations – a case study of health reforms in New South Wales, Australia.
Productivity Commission (2025). Delivering Quality Care More Efficiently: Interim Report. Canberra: Australian Government, August 2025. Available at: https://www.pc.gov.au/inquiries-and-research/quality-care/interim/
Productivity Commission (2026). Delivering Quality Care More Efficiently: Inquiry Report. Canberra: Australian Government (released 19 December 2025; tabled in Parliament 29 January 2026).
The Australian Prevention Partnership Centre (2025). Response to the Australian Productivity Commission Interim Report: Delivering Quality Care More Efficiently. Sax Institute, Sydney. Available at: preventioncentre.org.au
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