Aged care providers operating in Australia have been accused of “gaming” federal funding models by threatening to withhold wage increases for their staff, after the Fair Work Commission (FWC) ruled aged care workers should receive a 15% pay rise from July this year.
Australian Nursing and Midwifery Federation federal secretary Annie Butler has called on the government to legislate a mechanism forcing providers to pass on the increase in full, after the union’s members reported pushback from a “majority” of providers.
“Unfortunately we are concerned that it’s going to be more along the lines of a majority rather than a minority who won’t pass them on because of the indications they made in the Fair Work Commission hearing on February 13,” Butler told Crikey.
“The providers’ lawyers claim they have a legal right to absorb the funds.”
In November last year, the FWC announced its decision to authorise an interim 15% pay rise for “historically undervalued” aged care workers, after a royal commission found low pay was a driver of worker shortages. The interim increase fell short of the 25% unions were asking for.
In December, the government announced it would phase in the increase over two years, citing budget restraints for the delay. The first 10% would come in 2023 and the additional 5% in 2024.
That decision was eventually overruled by the FWC earlier this month, when it ordered the increase be passed on to workers in full. Butler said early signs of resistance from providers to pass on the increase should prompt government intervention.
“I’ve spoken to the minister, and we know the government intends for the additional funding to be for wage increases. But unless there’s a mechanism that absolutely locks that funding down and guarantees it, we know it won’t happen,” she said.
“Because several times when governments have tried before, increased funding has never reached the aged care workers themselves.”
The wage increase is estimated to cost about $1.9 billion a year. The government, following its December proposal, has only budgeted two-thirds of the wage increase, exposing providers to early concerns they will be left to foot the bill for the remaining third, which could cost an estimated $575 million.
Fears of added costs for the sector come as many providers struggled to keep the lights on. The government’s financial snapshot for the aged care sector for the September quarter of 2022 showed 66% of private providers were operating at a loss, losing $28 a resident daily.
With just 34% of private homes operating in the black, Aged and Community Care Providers Association CEO Tom Symondson called on the government to urgently fund the wage increase in full.
“We have publicly supported the need for significant pay rises for our workforce, and fully supported the government’s 2022 election commitment to fully fund them. However, this must not be at the costs of our sector’s ability to deliver care to older Australians,” Symondson said in a statement last week.
“We continue to engage with the government to find a workable solution.”
Until budgetary commitments are revealed in May, Butler said she would continue to urge the government to mandate providers pass on the increase in full.
“[The mechanism] should be they have to demonstrate through audited reports that the funding they gain is passed on as wage increases as a condition of ongoing subsidy. That’s what we’ll be seeking, rather than just a voluntary reporting approach,” she said.
Aged Care Minister Anika Wells couldn’t be drawn on the progress of discussions between the government and representatives from across the sector.
A government spokesperson told Crikey that such a mechanism was being discussed, but a decision on how the wage increase would reach workers would be announced in the “near future”.
Aged care gets itself into trouble because it is privatised and under Friedman economics, which is what we have been cursed with since Thatcher and Reagan, greed is good. That means private operators have basically got permission from society in general to run down services and pocket the money saved even if it kills people. Aged care is one of many things that should never be privatised and be exposed to the full force of private greed. Next they will be talking about “self regulation”. God help us.
There is a relatively easy and obvious answer to the ongoing schemozzle of Aged care in Australia. Take the profit motive our of it, revert to public provision as with hospitals, and better manage and regulate both.
Those workers covered by Enterprise Agreements may not receive the increase because they are not subject to Award rates of pay. Yet another perversion of our broken Industrial Relations system in which workers have, for all intents and purposes, no power
As the Aged Care Royal Commission final report noted: Successive governments have made several failed attempts to improve staff wages “by providing additional funds to providers in the hope (my italics) that they would be passed on to aged care workers by way of increased wages. They were not.”
The person centred care legislation is a pandoras box of responsibility, the charter of aged care rights July 1st 2019 and the accompanying training required to follow it is so comprehensive that it could be applied to peoples rights cart blanche.
For a provider to adhere to these requirements is for Neoliberalism to remove itself from this market place,, in good faith the people who drew this up must have known that it cuts straight to the profitability versus service that a provider can muster except they could not have envisaged a pandemic.
The timing of Covid couldn’t have been much worse because at the very core of aged care and ageism is the need to include and develop stronger ties between itself and the broader community.
The fear that overall productivity will be hampered by freeing up both the employed and the unemployed to enable them to support lonely people seeing out their end days in facilities is the real fight providers should be taking to a government with their lobby groups, with the help of the rest of the population the load of responsibility could be shared more equitably.
There is a place for privately owned providers but profit has to be fairly marginal, if 65% of all providers are operating at a loss then how is it that they survive? Either those figures are complete rubbish of the sector is about to return to publicly owned anyway.
A complete shambles, 25 years in the making, brought to you by the Liberal’s great hero John Howard, and his mate and political donor Doug Moran, the then biggest private nursing home owner in the country. What a shambles! Will it now take another 25 years to sort out, so that our vulnerable aged, and their carers, will finally be treated with dignity?
If we had a government instead of a septic rabble…