The private sector has been the major beneficiary of a large rise in aged care spending in recent years, evidence from the Productivity Commission shows.

The PC has begun releasing its annual Report on Government Services, which examines expenditure on services and its effectiveness. The first tranche of the report, on community services and housing, was released on Thursday.

Its aged care report sheds light on a sector that was the subject of a scathing interim report by a royal commission last year, which savaged the sector's failings in caring for Australian seniors.