The government will inject a further $1 billion into aged care, most of it for home care packages, in Thursday’s budget update.

Prime Minister Scott Morrison is also likely to elevate the troubled policy area to cabinet, in his imminent ministerial reshuffle.

Some 10,000 home care packages will be provided, costing $850 million, in the latest funding – 2500 packages will be released across each of the four levels of care.

The funds – announced Wednesday and included in Thursday’s Mid-Year Economic and Fiscal Outlook – come ahead of the final report of the royal commission into aged care due in February. An interim report more than a year ago was scathing about conditions in the sector.

Aged Care Minister Richard Colbeck is in the outer ministry and struggled during the pandemic. COVID’s largest death toll was in the residential aged care sector – approaching 700 deaths out of the total Australian deaths of just over 900.

Colbeck, a Tasmanian senator, was with Morrison in Tasmania on Tuesday and it is understood the Prime Minister went to Colbeck’s Devonport office after a function.

The reshuffle is expected to be modest, with most interest in who gets the trade portfolio, presently held by Simon Birmingham who took over finance when Mathias Cormann left parliament.

Trade is high profile with the attacks by China on a range of Australian exports. Education Minister Dan Tehan has been widely speculated for the post.

Tehan has experience in the area. He served in the Foreign Affairs and Trade Department; in 2002 he was seconded to the office of trade minister Mark Vaile as trade adviser. Later he worked for the Australian Chamber of Commerce and Industry as director of trade policy and international affairs.

If Tehan moved to trade, that would leave the education portfolio open - with the new incumbent facing the problems of a higher education sector that has taken a beating from the pandemic, which has blocked overseas students’ entry to Australia.

David Coleman, who has been on leave from the ministry for personal reasons for a year, is expected to step down from it in the reshuffle.

There is some room for backbench promotions to the frontbench.

The government said the new aged care money would bring to nearly 50,000 the number of home care packages funded since the commission’s interim report, at a cost of $3.3 billion.

In September more than 100,000 people were waiting for packages. The government says 99% of people on the home care waiting list are already receiving some level of support package.

The latest funding also includes $63.3 million for increased access to allied health services and improved mental health support for people in residential aged care.

An extra $57.8 million will be provided for aged care under the National Partnership on COVID-19 Response. This will strengthen protection, including training and and support in infection prevention and control.

There will be $8.2 million to extend the Victorian Aged Care Response Centre until June 30.

The budget update will show the projected deficit not to be as large as forecast in the budget only two months ago.

The update is expected to adopt conservative assumptions about the iron ore price which has skyrocketed recently.