How much will Labor’s commitment to fully fund a pay rise for aged care workers cost?
The government is criticising Labor for not saying how it will be funded, even though it has stolidly refused to respond to repeated requests to clarify its own position.
The cost will certainly be substantial: if the Fair Work Commission agrees to increase wages by the kind of levels urged by unions — 25% — that would cost around $4 billion a year in additional grants to aged care providers from the Commonwealth, according to one estimate from Uniting Care.
But it’s more complicated than that: the Fair Work Commission has only been asked to undertake a “work value” case, in which it reappraises the value of a job and what remuneration it should attract. While there are plainly consequences flowing from the extent to which the FWC deems that aged care work has been undervalued, it is not the FWC’s role to address issues like workforce planning or the competition that aged care faces for labour from other sectors. It might decide that the value of aged care work should only be revised upwards by 10%, or 15%.
For once, employers aren’t standing in the way of any wage rise — while there may be some minor differences, there is broad agreement across the sector that an increase of the level urged by unions is justified.
But any increase is likely to be introduced relatively slowly, over several years, rather than in one hit. The initial bill will probably be less than $1 billion a year before growing as wages are increased.
But importantly, the FWC’s decision will only be a first step. Consistent with the aged care royal commission recommendations, a new Independent Hospital and Aged Care Pricing Authority — expanded from the existing hospital pricing authority — will be set up to administer a new Australian National Aged Care Classification funding model for both residential and home care. That will have responsibility for establishing how the government will price the services aged care providers provide — and thus how much they will pay workers.
The problem is that the new authority is, along with a raft of other reforms, contained in the Aged Care and Other Legislation Amendment (Royal Commission Response No. 2) Bill 2021, which passed the Senate earlier this week with an amendment by Rex Patrick bringing forward the requirement for all services providers to have a registered nurse on site 24/7. That bill, now back before the Reps, almost certainly won’t be passed before the calling of the election.
We should also remember, now that the government is demanding to know how an increase will be funded, that the royal commission addressed that issue, although the two remaining commissioners, Tony Pagone and Lynelle Briggs, differed over the process: they wanted an additional income tax levy. Briggs suggested 1%. But the narrative in Canberra currently is all about cutting taxes, not lifting them, despite a decade of budget deficits looming ahead.
Labor has also committed to implement another royal commission recommendation to have a registered nurse in all aged care facilities 24/7, rather than 16 hours a day as the government has committed to — consistent with Patrick’s amendment to the aged care reform bill.
But finding the nurses is the problem — especially given the pay differential between the aged care and health sector. Paul Sadler, head of Aged & Community Services Australia, the peak body for not-for-profit providers, told Crikey that around 80% of aged care facilities already have registered nurses on staff 24/7. Those that do not tend to be either what are now called “low care” facilities (previously called hostels), or facilities in rural and remote communities. Obtaining registered nurses in those facilities will either significantly increase costs for providers, or they will struggle to find staff, especially in regional areas where state-funded health services find it difficult to secure qualified staff, let alone aged care providers.
“What if providers can’t find a registered nurse? What will be the penalty for failing to provide a nurse overnight?” said Sadler. “The last thing we want is facilities closed and residents to be homeless.”
It’s all part of a bigger workforce challenge that, even with lots of money and good intentions, will take years to remedy.
