In its first, interim report, the royal commission also said urgent work was needed to stop the flow of younger people with disability going into the aged care system, describing it as a "human rights issue".

The report, titled Neglect and delivered on Thursday in three volumes, said a "fundamental overhaul" is needed of the aged care system and the way it is designed, funded and regulated.

The report said there was "widespread over-prescribing, often without clear consent, of drugs which sedate residents, rendering them drowsy and unresponsive to visiting family". It pointed to research from University of Tasmania pharmacist Dr Juanita Breen, which found more than 21 per cent of aged care residents surveyed in 2018 were given antipsychotic drugs.

About 6000 people under 65 live in residential care in Australia and that number has been "relatively unchanged" for more than a decade. Noting this group included people with disability and people with terminal illness, the royal commission said there was a "lack of clarity" about who these young people are and "uncertainty" about why they are admitted to aged care homes.

It said there were "real concerns" about whether younger people with disability living in aged care homes were enjoying the right - under international human rights law - to "choose their place of residence".

The report also noted the "large numbers" of people who are waiting for a home care package, and that people regularly wait almost three years. As of June 2019, the waiting list was about 120,000.

"Many people die waiting," the royal commission said, noting that about 16,000 people passed away while waiting for a package in 2017-18. "We regard this as unacceptable."

Prime Minister Scott Morrison announced the royal commission in September 2018 in the wake of multiple nursing home scandals. Since it began taking evidence, the commission has heard shocking stories of abuse and neglect.

This includes the case of Muriel Barnes, who died in 2018, having developed pressure sores infected with faecal matter at her nursing home. The commission has also heard stories of physical and sexual assaults, "manhandling", name-calling, "dreadful" food, lack of staff and lack of assistance for toileting.

Federal Minister for Aged Care Richard Colbeck told reporters in Canberra on Thursday afternoon the government was "shocked about the extent" of what had been found by the royal commission.

But when pushed, Senator Colbeck would not commit to any extra funding or any immediate increase in home care packages. "I've had the report for a couple of hours," he said. "We need to digest the report."

The Morrison government introduced new aged care quality standards in July 2019. Earlier this year, it introduced regulations around physical and chemical restraints and set up a new, independent Aged Care Quality and Safety Commission. It says home care packages are due to increase by 161 per cent between 2012-13 and 2022-23.

The interim report was completed at the end of September by late commissioner Richard Tracey QC, who died in October, as well as fellow commissioner Lynelle Briggs.

"Our interim report will be his interim report," Ms Briggs said at the time of Mr Tracey's death.

At the commission's request, in September 2019, it was extended by six months. The commission will hand down a final report in November 2020.