It seems clear not all that glitters is gold when it comes to how the Fair Work Commission’s recent 15 per cent pay rise for aged care workers will be funded.
The federal government’s recent announcement it would fully fund the Fair Work Commission’s 15 per cent pay rise for aged care workers was a day of joy.
However, while the commission’s May 9 2023 ‘work value’ decision gave the impression of an early Christmas (on July 1), the subsequent details emerging from the proposal indicate a Grinch-like grip on reality.
At the 11th hour, well after promises had been made and budgets for FY23-24 locked in, the government has released the detail on how the pay rise will be funded.
And it seems not all that glitters is gold.
There are substantial discrepancies in how the cost of the pay rise is funded for workers in residential care versus those in community care.
Yet again, it will be the providers left to fund the gap.
For workers in residential care, the cost of the increase is provided through a direct increase to the aged care funding subsidy received by providers.
This mechanism ensures the increase reaches the workers without undue complications.
On the other hand, workers in community care face a far less equitable and accessible mechanism for funding the increase.
Community care workers usually deliver services to clients across various funding programs, such as Home Care Packages (HCP), the Commonwealth Home Support Programme (CHSP), and short-term restorative care.
While all workers in community care are entitled to the wage value uplift, the government’s approach to funding under each model is different and has created disparities.
For HCP, the government has allocated some funding through an increase to the HCP subsidy, which is paid to client accounts.
Access to this funding for providers can then only be granted with approval from each client and via service rate increases.
This puts an additional burden on providers and introduces unpredictability in securing the necessary funds to cover the wage increase.
Furthermore, for CHSP providers, the government has announced a grant.
However, unlike other funding mechanisms intended to meet the full cost of the wage increase, providers will only be able to claim costs equivalent to the new award rate.
This means that workers who were already paid above the award rates are not intended to receive the full value of the wage increase, contrary to the government’s stated commitment.
As a result, providers in the community care sector are left with the responsibility of funding the gap to pay their staff the promised wage increase.
This late announcement and the financial burden it places on an already struggling sector will only deepen the financial crisis.
Moreover, this decision creates a two-tier workforce, where staff performing similar roles experience different wage hikes.
The impending merger of HCP and CHSP into a single community care program in 2025 raises concerns about how this policy misalignment will escalate into a larger workforce issue.
These discrepancies between government promises and reality have left providers struggling to bridge the funding gap.
They are still in the middle of a workforce crisis and competing with other adjacent sectors for workers.
They can’t afford to pay workers differently for the same work or not to honour the promises the government has made on their behalf.
The magnitude of the unfunded wage increases is significant and strains individual providers while risking the destabilisation of the broader aged care sector.
The management of funding the 15 per cent pay rise highlights a glaring disconnect between the government’s promises and actual implementation.
It exposes a lack of consultation and foresight in policy decisions that should benefit the entire aged care workforce.
Urgent and decisive action is needed to rectify the funding gap and prevent further repercussions.
The government must move beyond rhetoric in its policy making and take concrete actions to fulfil its promises.
It’s high time we had a genuine Christmas in July for the sector, not a Grinch-like illusion of it.
The wellbeing of Australia’s elderly population depends on it.
- Amber Crosthwaite is a commercial lawyer specialising in seniors living, aged care and disability
