Objective: To estimate the cost of completing all chronic care tasks recommended by the Central Australian Rural Practitioners association Standard Treatment Manual (CARPA STM) for patients with type 2 diabetes and chronic kidney disease (CKD). Design and setting: The study was conducted at a health service in a remote Central Australian Aboriginal community between July 2010 and May 2011. The chronic care tasks required were ascertained from the CARPA STM. The clinic database was reviewed for data on disease prevalence and adherence to CARPA STM guidelines. Recommended tasks were observed in a time-and-motion study of clinicians' work. Clinicians were interviewed about systematic management and its barriers. Expenditure records were analysed for salary and administrative costs. Main outcome measures: Diabetes and CKD prevalence; time spent on chronic disease care tasks; completion of tasks recommended by the CARPA STM; barriers to systematic care identifi ed by clinicians; and estimated costs of optimal primary care management of all residents with diabetes or CKD. Results: Projected annual costs of best-practice care for diabetes and CKD for this community of 542 people were $900 792, of which $645 313 would be met directly by the local primary care service. Estimated actual expenditure for these conditions in 2009-10 was $446 585, giving a projected funding gap of $198 728 per annum, or $1733 per patient. High staff turnover, acute care workload and low health literacy also hindered optimal chronic disease care. Conclusion: Barriers to optimal care included inadequate funding and workforce issues. Reduction of avoidable hospital admissions and overall costs necessitates adequate funding of primary care of chronic disease in remote communities.