The wait for adequate home-care packages is so long thousands of older Australians have been forced into residential homes, the department has revealed.

Scott Morrison promised an extra $537m in aged care last month, with the bulk being spent on an additional 10,000 home-care packages following a damning assessment in the royal commission interim report.

“The government’s job is to ensure that we’re facilitating the choices that Australians want to have as they grow older, as their healthcare needs change, as their support needs change,” Morrison said last month.

“It’s not to run an institutional system. It’s not an end in itself. The purpose is to help people with the choices they want to make about their future.”

But with a waiting list of 120,000 people, the additional $496m the prime minister committed to additional packages is not expected to go far. Clearing the entire waiting list is estimated to cost $2.5bn.

In the meantime, older Australians are being forced to leave their homes for residential care. In 2017-18 the department reported 13,340 had abandoned the waitlist for a residential home.

In response to questioning from Labor’s Murray Watt during the last Senate estimates hearings, the department reported that number has now jumped to 18,914.

In answering the question, the department noted that because people will be approved for both homecare and residential care, it cannot be assumed that these exits to residential care were people intending to accept an offer of a home care package”.

But the shadow aged care minister, Julie Collins, said that’s not the case.

“This system was meant to give older Australians the opportunity to age at home, but the Liberals’ failure means more and more older Australians are entering residential care instead of having this choice,” she said.

“The prime minister says the government wants to help people with ‘the choices they want to make about their future’ but these figures prove older Australians have very little choice.”

The additional funding announced in November was slated to begin on 1 December, when the first of 5,500 packages were to be rolled out.

The extra money was weighted towards the higher care level packages to try and also address the number of people on interim packages receiving less care than they have been approved for.

In October, the head of the Aged Care Financing Authority told Senate estimates he had concerns for the financial viability of the aged care sector, reporting a “sizable proportion” of residential care providers were recording losses and looking to exit the industry.