When an elderly person signs up to live in a nursing home, how can they be sure the Federal Government's contribution to their care is adequate and will go far enough?

The Government says it is willing to "invest heavily", after Prime Minister Scott Morrison announced a royal commission to investigate systemic abuse and neglect within the sector.

But since the Coalition came into power, there have been funding cuts to aged care. Federal Labor argues they amount to nearly $2 billion in total, and $1.2 billion since Mr Morrison handed down his first budget as treasurer.

Yet, research from the parliamentary library suggests the drop in overall funding since the 2016-17 budget was more like $900 million.

What's really happened?

In last year's budget, the Government revealed it would "achieve efficiencies" of $1.2 billion over four years by tweaking the Aged Care Funding Instrument (ACFI), the formula used to determine residents' needs.

That came on top of a $472 million cut to the same funding instrument in the previous mid-year economic update.

Those are the figures Labor is using to back its claim that the Coalition has cut nearly $2 billion in funding for the sector.

Aged care providers use the ACFI to ask residents a series of questions and establish the level of care they require. The greater a person's need, the higher the subsidy a provider can allocate them.

But the Government has argued the cost of this system has blown out, and it has been sceptical of the rapidly rising demand from providers wanting subsidies for seriously ill and frail residents.

There are long-held concerns that some aged care providers have rorted the system, using taxpayer dollars designated for care of the elderly, to pump up their own profits.

There are concerns some aged care providers have used funds to boost their own profits. ( Supplied: Rosie O'Beirne )

How much worse off is the sector?

The Coalition claimed it would redirect the savings from last year's budget and MYEFO to fund "health policy initiatives", and promised to set up a $53 million "transitional assistance fund" for providers.

But aged care providers remain outraged about the cuts, and warned at the time that the quality of residential care could be affected.

There was also backlash over the Government's decision to halve the indexation of payments for patients with more complex health problems. That cap has since been removed.

While the Government certainly tightened the funding for aged care providers in last year's budget, it topped up money for regional aged care and information services for residents and their families.

The parliamentary library says: "The combined affect of aged care measures in the 2016-17 budget is a reduction in expenditure of $902.7 million over five years."

The Government made aged care a focus in its most recent budget, providing money for mental health services and $1.6 billion to help elderly people stay at home for longer.

It maintains it is tipping an extra $1 billion a year into aged care and that overall, funding will rise to $23 billion over the forward estimates.

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