A new report by the Australian Institute of Health and Welfare released on Wednesday showed the ACT had the second lowest aged care funding per capita of all states and territories, behind the Northern Territory.

In 2013 the ACT received $161 million of funding for aged care programs, about $420 per Canberra resident. In comparison, the national average was $584 per person, placing the territory second last.

But federal assistant minister for Social Services senator Mitch Fifield said aged care funding reflected local needs and was increased in ratio to the growth in population.

Just Better Care Canberra managing director Fergus Nelson said everyone in service provisions knew the funding in the ACT had been below what it needed to be for some time.

He said he had personally experienced the dire situation in Canberra's aged care system.

"My father-in-law needed to find a nursing home recently and he ended up, for various reasons, in one in Sydney. There were very few options in Canberra and he was going to be on a few waiting lists and he'd already spent close to two months waiting in Canberra Hospital for a bed," he said.

"There's definitely a shortfall in residential care."

Mr Nelson said in addition to this, most senior citizens don't receive funding for more than 12-14 hours of in-home care a week, which pushes them out of their homes and into residential care, putting further pressure on the system.

"Essentially there's a lot of talk and very small steps, but we're not ready for the [senior] population boom that's going to happen," he said.

Council of the Ageing ACT executive director Paul Flint said Canberra had gone through a stage five to ten years ago where a significant number of new nursing homes had been built.

He said now there were few new facilities being built as the high cost and low funding deterred providers.

"We don't have that capital stock in facilities that some other states have and it shows that there are not a lot of people at the moment willing to risk their finances building facilities in the ACT," he said.

Mr Flint said the number of people in the hospital system who were waiting to go into residential care or nursing homes had steadily increased in recent times.

"That's an indicator that we're on the edge and that it could be more difficult in the future," he said.

National Centre for Social and Economic Modelling professor Laurie Brown said the ACT had a focus on younger people coming into the public service and families rather than the elderly.

She said Canberra had to look into ways to retain senior citizens after they retire.

"I think we do have really good providers, but we do need to look at the aged care services that people want and also providing appropriate support for people to stay in their own homes," she said.

Minister Fifield said the Commonwealth Government ensured the growth in aged care places was based on growth in the aged population, as well as differing levels of care needs.

He said the ACT had the third highest ratio of aged care places to population in the country.

"The Government also has system in place that will increase aged care places to a ratio of 125 places for every 1,000 people aged 70 years and over by 2021–22," he said.

A spokeswoman for ACT minister for ageing, Mick Gentleman, said funding and regulating aged care services was the responsibility of the Commonwealth Government.

But she said the ACT government also invested in a range of areas to support older residents, such as building public housing for older tenants.