The Government has said it will cover the cost of the aged care wage increase that will be awarded by the Fair Work Commission – but will it, and will that be enough? We now hear that the sector is being “softened up” for disappointment. 25% on-costs like super won’t be covered, and a sub-5% increase will do little to retain staff.
The Minister, Anika Wells, states that the Government is committed to a “significant, meaningful” wage increase. The unions are demanding a 25% increase. Each 1% equates to $10 per week for the base award. 25% will add $4 billion a year (then indexed) to the cost of aged care – which already costs more than defence.
The wording now being used is that the government will cover the “base” cost increase, being the wage itself. Operators will have to cover the on-costs. Grant Corderoy, Senior Partner at StewartBrown, told us this week that the on-costs will be about 25% – or $1 billion if 25% is awarded – on top of the wage, and includes the super increase, workers compensation, loadings and payroll tax for private operators, to name a few.
That is $1 billion the operators would have to find at 25%, or $200 million at 5%.
Word also on the street is that the Government wants to spread the wage increase over five years (and even some talk of nine years), with this first wage increase being less than 5%.
If this is the case, then expect a continued departure of workers from the sector and shifts increasingly short staffed (we are told by many operators that all shifts are 20% or more undermanned). This places greater pressure on staff and undermines any prospects of reliable high quality of care, both drivers for staff departures.
Politicians and bureaucrats are in a tough position. Is there the money to increase wages by 20 to 25%? They don’t have a mandate to introduce an Medicare-style aged care levy, which will be branded as a new tax – but the cash has to come from somewhere, or aged care will simply stop. No workers, no aged care.
Plan B is the only viable solution: increased co-contribution by the consumers of aged care.
The sector has to do the heavy lifting to make this easy for the government to introduce.
There is movement on Plan B. We will bring you more information in coming weeks.
Meanwhile, listen carefully to the language of the Government as it prepares the sector for the Commission’s verdict – and perhaps disappointment.
