The residential aged-care reforms implemented a decade ago in Australia have seen the planning of nursing-home beds, hostel places and home/community care using a rigid, demographically-based formula. This planning had its roots in a number of commissioned reports and reviews, and the aim was control over the unsustainable growth of the nursing-home industry and a reversal of the trend toward institutionalisation of the elderly. The demographic profile of the Australian population is changing and the profile of nursing-home and hostel residents has also changed. Community services appear inadequate for a continuum of care and de-institutionalisation. Acute services have adopted a casemix-based system of funding, which has an effect on appropriate care of the elderly by moving more elderly patients out of the acute institutions into the community, hostels and nursing homes. Despite all these shifts, the planning ratio for nursing-home beds remains as set in 1986. This paper provides an overview of the federal government's planning of aged care in Australia from an historical perspective, one which identifies some of the influences that have had a bearing on the planning process. Further discussion centres around what is occurring in aged care, as related to the planning arrangements and with an emphasis on nursing-home-based care. The present planning ratio is restrictive and has not been researched for appropriateness or validity on a national basis, which brings into question its reliability in planning for the future health-care needs of the elderly population. The planning of aged care can only be accomplished with any reliability when the many variables impinging on aged care have been clearly defined.